Environmental Social Governance (ESG): Energy-Efficient Homes Through EPCs

UK's energy assessment training provider Elmhurst Energy is calling for some drastic changes in the EPCs. Whilst their heat is in the right place, (they want Energy Performance Certificates to support net zero efforts and be renewed three yearly) can tax-drained, compliance-exhausted landlords afford the cost? Let us not joke; we cannot afford more landlords to leave the market. We are all familiar with the basic market dynamics behind this phenomenon: a severe mismatch between supply and demand. The situation is self-reinforcing - a lack of supply makes housing more expensive, which makes buying more difficult, which means more people rent for longer.
Improve the state of buildings, and tackle fuel issues better.

Elmhurst Energy recently shared its views and had these policy recommendations:

Elmhurst Energy recently shared its views and had these policy recommendations:

The EPC must be redesigned to include the three Cs consumption, cost, and carbon emissions.

The Golden Triangle (cost, efficiency, lifetime) must be applied for EPCs
The EPCs must showcase the current state of the building
Energy efficiency awareness must be made a priority

Assessment methods must be regularly updated

Assessment methods must be regularly updated

These moves would move qualified energy assessors into the role of advising homeowners and businesses about the benefits of renewable technologies and convince them to make a change. They go on to say that, the government must also focus on rebalancing the tax structure applied to fuels to favour low-emission fuels instead of fossil fuels. Elmhurst wants to use technology to measure building energy consumption and heat loss in real-time. A national standard for Net Zero buildings must be developed on top priority. Energy Assessors have proposed an independent certification.

According to the firm’s Managing Director, the EPC which was developed some 15 years ago does not work in today’s climate and is not primed to deal with the industry's challenges. What is suggested is that the EPC must be updated so that critical information can be communicated about the forecasted and actual energy use and carbon emissions of a building. The property industry has always been critical of EPCs. They got more reasons to criticize it further as the Sunday Times published advanced research results by a firm called Carbon Laces. According to the research, EPCs overestimate energy use by up to 344 percent. Despite such significant shortcomings, EPCs continue to be a part of the legislation and adversely impact landlords and other homeowners.

This research compared the EPCs of more than 17,000 homes with their actual use. Smart meters tracked energy use every half hour for at least 300 days to calculate energy bills.

According to the Sunday Times report: The average metered gas and electricity use for all the properties studied was 125kWh per square meter a year 91 percent lower than their EPC claim (239kWh/m2/yr). The lower the EPC rating, the bigger the overestimation. For properties with the worst rating of G, EPCs estimate they use 656kWh/m2/yr. Yet their smart meters show they use only 151kWh/m2/yr a 344 percent gap.

Discrepancies in EPC Ratings and Energy Consumption: Implications for the UK Lettings Market

Carbon Laces claim that there is a staggering difference between the EPCs claim and actual energy consumption. EPCs also overestimate carbon emissions by 20 percent (for EPCs rated C) and 308 percent (for EPCs rated G).

The lengthy Sunday Times report states that the gap between reported and actual consumption can be even wider in EPCs on new build homes as the EPCs are issued by considering only the design data. It is based on the assumption that everything is fitted to perfection, but that need not be the case in all new homes. This issue assumes critical importance to the lettings industry. As we know, the UK government has promised to reduce energy consumption from buildings and industry by 15 percent by 2030. They also want properties to have a minimum EPC rating of C in England and Wales by April 2025. However, the current regulations prevent landlords from spending not more than 3,500 on upgrades to meet a rating of E.

There is hope as the proposed changes as rental properties suggest an EPC rating of C by 2028 and a potential increase to the spending cap to 10,000. It could allow landlords to spend a decent amount to meet minimum requirements.

The Road Ahead for EPCs and Net Zero Goals

The current EPC framework faces significant challenges, particularly in accurately predicting energy consumption and carbon emissions. Despite their flaws, EPCs remain integral to the UK’s efforts to achieve net zero. As the demand for energy-efficient homes grows, EPCs must be updated to better reflect actual energy use and guide improvements. Proposed changes, such as increasing the spending cap and pushing for EPC ratings of C by 2028, may provide the flexibility needed for landlords to meet sustainability targets while ensuring affordability and energy efficiency for tenants. Adaptation of EPCs to align with real-world data is key to driving progress toward net zero.