ESOS and MEES affecting business properties
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MRICS FAAV, Partner, Head of Resources and Energy. Strutt & Parker
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ESOS and MEES affecting business properties
- 1. FMP EVENT Strutt & Parker Resources & Energy Alexander Creed BSc(Hons) MRICS FAAV Partner, Head of Resources and Energy 15th October 2015 ESOS and MEES Two energy acronyms that are affecting business properties
- 2. ESOS and MEES Two energy acronyms that are affecting business properties ESOS MEES Reforming the Energy Efficiency Tax Landscape
- 3. Greenhouse Gas Emissions Targets
- 4. Electricity Price – the last five years 0.00 2.00 4.00 6.00 8.00 10.00 12.00 2010 2011 2012 2013 2014 2015 Pence/kWh Wholesale Price Non-Domestic Price
- 5. ESOS 5th December 2015 29th January 2016 (subject to notification by 5th December 2015) Qualification – 31st December 2014 – >250 employees, or – Turnover > £38.94m & balance sheet > £33.49m
- 6. ESOS Headline Penalties Penalty Non-compliance will be published online, along with details of the penalty amount imposed. Failure to notify the Environment Agency of compliance Fixed penalty £2,500 and/or £500 per day up to a max 80 days Failure to maintain adequate records Fixed penalty of £5,000 and/or auditing costs to confirm previous compliance Failure to undertake an ESOS Assessment Up to £25,000 and/or £250 per day up to a max 80 days Failure to comply with an enforcement, compliance or penalty notice Fixed penalty of up to £5,000 and/or £500 per day up to a max 80 days For making a false or misleading statement Up to £50,000
- 7. ESOS Data Pack of all energy used in 12 month period 12 months to include 31st December 2014 Lead Assessor Main Board Director sign-off
- 8. Lease Length Source: IPD Lease Review
- 9. Total Returns to tail off post-2016 Source: Real Estate Strategies Property Model – August 2015
- 10. Minimum Energy Efficiency Standards Energy Act 2011 April 2018 Regulations 26th March 2015 April 2023
- 11. EPC
- 12. MEE’s - FINES Infringement Penalty Providing false or misleading information £5,000 Publication of non-compliance Failure to comply with compliance notice £5,000 Publication of non-compliance Renting out of a non-complaint property Less than 3 Months non- compliance 10% of rateable value, but with a minimum penalty of £5,000 and a maximum penalty of £50,000 Publication of non-compliance 3 months or more non-compliance 20% of rateable value, but with a minimum penalty of £10,000 and a maximum penalty of £150,000 Publication of non-compliance
- 14. HM Treasury Consultation May replace the following schemes: Climate Change Levy (CCL) Carbon Reduction Commitment Energy Efficiency Scheme (CRC) Climate Change Agreements (CCA) Mandatory Greenhouse Gas (GHG) reporting Energy Savings Opportunity Scheme (ESOS) Enhanced Capital Allowances (ECAs) Electricity Demand Reduction Pilot (EDR) Taxes on fuels
- 15. HM Treasury Consultation Proposals within the consultation: A single reporting framework, likely to require publication and reporting of actions taken upon audit recommendations. A single tax across fuels that are used by a business. New incentives to invest in energy efficiency and carbon reduction by a business through the tax system.
- 16. ESOS – Key Points Data management Metering (& P272) Portfolio Review of EPC’s
- 17. Quality of EPC’s Pre April 2012? Appropriate recommendations Action before commissioning
- 18. Low cost actions: + Boiler replacement + HVAC controls + Replace inefficient lighting + Metering + Behavioural change Longer term strategy: + Thermal improvements + On-site generation Non-domestic Energy Efficiency Opportunities
- 19. Financing Works ESCO / EPC Measurement & Verification
- 20. FMP EVENT Strutt & Parker Resources & Energy Alexander Creed BSc(Hons) MRICS FAAV Partner, Head of Resources and Energy 15th October 2015 ESOS and MEES Two energy acronyms that are affecting business properties
Editor's Notes
- The other main factor driving the industry is climate change and greenhouse gas emissions. The red lines here run from 1990 to 2050 and the y axis here measures total greenhouse gas emissions in millions of tonnes of carbon. The black line charts the targets set by the Kyoto Protocol and the Climate Change Act with the 2020 interim target. The principle behind this is simple – if you burn fossil fuels, you release carbon dioxide which acts as an insulating layer in the upper atmosphere. So far in the UK we have not done too badly, but mainly due to recession causing the 2008 dip. The task is about to get tougher. About 50% of our emissions come from buildings – that’s domestic and commercial combined and almost 10% comes from agriculture; so this target is largely a target for buildings. Houses, offices, shops and sheds all have to reduce their carbon emissions.
- Firstly, it is important that you assess the risk, identifying any of your properties currently with an E, F or G rating. That must include verifying the accuracy of the existing EPCs, as variations in assessments can lead to incorrect ratings. Close attention must be paid to certificates produced shortly after EPCs were introduced in 2008 and to those where there is a reliance on default settings in the calculation of the rating. Next, once your potentially “at risk” properties have been identified, we recommend that you develop a plan of improvements and determine what works can be undertaken as part of regular maintenance and refurbishment works
- The energy efficiency measures for the non-domestic buildings are similar, although they have different energy requirements and the energy saving opportunities are greater. Low cost actions: Modern boilers achieve an efficiency of 94%. In commercial buildings is very important to set the HVAC thermostats and timers correctly, as well as reviewing that the installations are well designed according to building requirements. Replacing incandescent and halogen bulbs with high efficiency technology (LED) can achieve large savings with a typical payback between 3-5 years. Identifying the pattern of consumption of the buildings is crucial to reduce energy usage. Linking metering with behavioural change can be an effective and inexpensive way to save significant amounts of energy Longer term strategy: Fabric improvements are usually a large investment but it can achieve large savings, making the building much more efficient. (Wall insulation, Replacing SG, Roof insulation, etc.) Implement Energy Efficiency policies, such as ISO 5000, which will help to find more efficient ways of working, with better cost control, reduced waste and the ability to implement new working practices faster and more efficiently. On-site generation will help your business to be more sustainable and efficient, providing a hedge against future energy price rises as-well as providing a secure investment.