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The Smart Readiness Indicator: A potential, forward-looking EPC complement?

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In buildings significant untapped cost-effective energy saving potentials remain. Therefore, the building sector is at the heart of many policies and strategies aiming to increase the efficient use of energy, to further promote renewable energy use. A major concern is, that strategies and resulting measures do not yield the expected savings. It is well-known that too often energy efficiency renovations fail to achieve predicted savings in practice and also very low energy buildings seem to be vulnerable to have higher real than calculated consumption. This gap becomes obvious in a world where both asset based (i.e. calculated) energy performance certificates (EPC) and consumption based EPC are allowed.

The major question that we want to address in this discussion paper is, to what extent the just updated energy performance of buildings legislation (EPBD) and specifically the Smart Readiness Indicator (SRI), which is under development, may have on reducing that gap and what secondary benefits this may have. This comes with a closer look at the complementary function the SRI may have in relation to EPC.

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The Smart Readiness Indicator: A potential, forward-looking EPC complement?

  1. 1. The Smart Readiness Indicator: A potential, forward-looking Energy Performance Certificate complement? Discussion Paper
  2. 2. ECOFYS Germany GmbH | Am Wassermann 36 | 50829 Cologne | T +49 (0)221 27070-100 | F +49 (0)221 27070-011 | E info@ecofys.com | I www.ecofys.com Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615 The Smart Readiness Indicator: A potential, forward-looking Energy Performance Certificate complement? Discussion paper By: Dr. Nesen Sürmeli-Anac, Dr. Andreas H. Hermelink Date: 28th May 2018 Project number: UENDE18068 © Ecofys 2018 by order of: ECI
  3. 3. ECOFYS Germany GmbH | Am Wassermann 36 | 50829 Cologne | T +49 (0)221 27070-100 | F +49 (0)221 27070-011 | E info@ecofys.com | I www.ecofys.com Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615 Table of contents 1 Introduction 1 2 Brief overview: the EPBD update and the Smart Readiness Indicator (SRI) 2 3 Step 1 – Lessons learned from EPCs 8 4 Step 2 - Potential interaction between SRI and EPC over smartness aspects 12 4.1 Smart Readiness Aspect 1: “Occupants’ needs” – or to adapt in response to the needs of the occupant 18 4.2 Smart Readiness Aspect 2: “Buildings’ needs” – or to facilitate maintenance and efficient operation of the building 21 4.3 Smart Readiness Aspect 3: “Energy grid’s needs” – or to adapt in response to the situation of the energy grid 25 5 Concluding remarks 29 6 Further thoughts 31
  4. 4. UENDE18068 1 1 Introduction Buildings are a key sector in reaching the EU energy and climate targets as well as long-term sustainability goals by 2050. Significant untapped cost-effective energy saving potentials in buildings remain in all Member States. Therefore, the building sector is at the heart of EU policies and strategies aiming to increase the efficient use of energy, to further promote renewable energy use. A major concern is, that strategies and resulting measures do not yield the expected savings. It is well-known that too often energy efficiency renovations fail to achieve predicted savings in practice and also very low energy buildings seem to be vulnerable to have higher real than calculated consumption. This gap becomes obvious in a world where both asset based (i.e. calculated) energy performance certificates (EPC) and consumption based EPC are allowed. The major question that we want to address in this discussion paper is, to what extent the just updated energy performance of buildings legislation and specifically the Smart Readiness Indicator (SRI), which is under development, may have on reducing that gap and what secondary benefits this may have. This comes with a closer look at the complementary function the SRI may have in relation to EPC.
  5. 5. UENDE18068 2 2 Brief overview: the EPBD update and the Smart Readiness Indicator (SRI) During the preparation of this paper, the EU legislative framework has been undergoing amendment where new requirements and updates were entering into force for enhancing the energy performance of building in order to deliver on the energy efficiency ambition for 2030. EPBD impact assessment The Energy Performance of Buildings Directive (EPBD) impact assessment 1 acknowledges that 95% of the cost-effective energy saving potential that goes beyond the the current legislative framework, sits in the existing buildings. EPBD impact assessment formulates four main measures to tackle the current shortcomings of the legislation; • Measure 1: Accelerate the decarbonisation of buildings by significantly increasing renovation rates • Measure 2: Fine-tune the implementation of minimum energy performance requirements • Measure 3: Modernisation using smart technologies and simplification of outdated provisions for the benefit of citizens (that includes “modernising provisions (of EPBD) on technical building systems to progress on smart technologies by introducing a smartness indicator for all buildings at the moment of transaction (sale or rent)” • Measure 4: Enhance financial support and information to users through reinforced energy performance certificates As mentioned above, this paper focuses particularly on Measure 3 - an indicator for smart readiness - and its implications, emphasising technological progress towards ‘smarter’ building systems. 1 COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 2010/31/EU on the energy performance of buildings, Brussels, 30.11.2016 SWD (2016) 414 final
  6. 6. UENDE18068 3 EPBD revision Based on the input provided by the EPBD impact assessment, the Commission provided its proposal for a revised EPBD2 . On 14 May 2018 the Council of the European Union formally endorsed the political agreement on the proposed revision of the Energy Performance of Buildings Directive. Through recitals the proposal for the revised EPBD emphasises the importance of: • Adopting the Directive, thus its implementation to the technical progress by promoting digital solutions in buildings; • Coupling the energy performance improvement options, smart readiness indicator (SRI) and building automation and control systems (BACS) with energy performance certificates (EPCs); • Reinforcing the use of building electronic monitoring, automation and control in order to streamline inspections. Within particular relevance for this paper, in the revision of the EPBD, Article 8 is amended to take into account a revised definition of technical building systems (TBS) and new paragraphs. Additional paragraphs are as follows; Article 8 new paragraph 1 third sub-paragraph: “Member States shall require new buildings, where technically and economically feasible, to be equipped with self-regulating devices that regulate room temperature levels in each individual room or where justified, in a designated heated zone of the building unit. In existing buildings, the installation of self-regulating devices to individually regulate the room temperature shall be required when heat generators are replaced, where technically and economically feasible.“ Article 8 new paragraph 5: “Member States shall ensure that, when a technical building system is installed, replaced or upgraded, the overall energy performance of the altered part, and where relevant, of the complete altered system is assessed. The results shall be documented and passed on to the building owner, so that they remain available and can be used for the verification of compliance with the minimum requirements set pursuant to paragraph 1 and the issue of energy performance certificates. Without prejudice to Article 12, Member States shall decide whether to require the issue of a new energy performance certificate.” Article 8 new paragraph 6: “The Commission shall, by 31 December 2019, adopt a delegated act in accordance with Article 23, supplementing this Directive by establishing an optional common 2 Interinstitutional file 2016/0381 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2010/31/EU on the energy performance of buildings – analysis of the final compromise text with a view to agreement, Brussels, 25 January 2018. Please note that we cite the original EC proposal. Negotiations on the actual update of the EPBD based on this proposal have been ongoing between European Parliament, European Council and European Commission while preparing this paper. The current status is, that the SRI is to be issued on a voluntary basis.
  7. 7. UENDE18068 4 European Union scheme for rating the smart readiness of buildings. The rating shall be based on an assessment of the capabilities of a building or building unit to adapt its operation to the needs of the occupant and the grid and to improve its energy efficiency and overall performance.“ Annex I a is added to the EPBD that provides a general framework for rating the smart readiness of buildings. Annex I a defines the key functionalities relating to buildings and its technical building systems and also emphasises that it should take into account the interoperability between various digital systems and positive influence of existence of high speed communication networks. The recitals strongly emphasize the emerging importance of digital solutions, and the updated EPBD articles introduce the implementation of potentially higher frequencies for EPC update and issuing of a smartness indicator. However, a clear formulation of the way SRI is meant to complement the current EPC scheme is not available within the latest revised EPBD. As stated in the previous chapter the revised EPBD refers to the enforcement of the SRI scheme as follows in article 8 new paragraph 6 “The Commission shall, by 31 December 2019, adopt a delegated act in accordance with Article 23, supplementing this Directive by establishing an optional common European Union scheme for rating the smart readiness of buildings.”
  8. 8. UENDE18068 5 The SRI project The ongoing project “Support for Developing a Smart Readiness Indicator for Buildings” (SRI project) is commissioned by EC Directorate-General for Energy. The purpose of the project is summarized as to provide technical support to feed decision processes and deriving a viable harmonized SRI calculation methodology. The main components of the project are summarized below based on the project presentation from the stakeholder consultation meeting. 3 o Quantify and assess impacts of smart technologies in buildings o Propose a harmonised methodology to calculate and present the SRI of a building o Compare policy options by an impact analysis The three main pillars of the SRI are defined as follows considering ten main domains: heating,domestic hot water, cooling, mechanical ventilation, lighting, dynamic building envelope, energy generation, demand side management, electric vehicle charging, monitoring and control. o Readiness to adapt in response to the needs of the occupant and to empower building occupants by taking direct control of their energy consumption and/or generation (e.g. management of heating system based on occupancy sensors; dashboards displaying current and historical energy consumption) o Readiness to facilitate maintenance and efficient operation of the building in a more automated and controlled manner (e.g. signal when systems need maintenance or repair; use of CO2 sensors to decide when to increase ventilation) o Readiness to adapt in response to the situation of the energy grid (e.g. reduce power consumption when grid demand is high; provide smart electricity grid with data on available flexibility and future expected consumption). The SRI aims to address all key stakeholders of the building industry by creating a framework that is able to provide relevant information at the level required by each actor’s needs. However, ultimately the most important audience is determined as the building occupants, bill payers and owners who primarily will use and benefit from the SRI framework. For its acceptance and delivering the results, the SRI and its methodology should ensure integrity and credibility of the rating and assessment process; be adaptable to relevant contextual factors; be future proof, allowing and enhancing innovation thus avoiding negative lock-in effects. The current concept of the SRI is summarised in the figure below. 3 Presentation from Stakeholder consultation meeting, Support For Developing A Smart Readiness Indicator For Buildings, 21 December 2017, Brussels
  9. 9. UENDE18068 6 Figure 1: SRI calculation methodology.
  10. 10. UENDE18068 7 We acknowledge that the impact of smart technology on energy consumption is being considered within the SRI project in a technically detailed way at system and service level as well as aggregated level and between EPCs and SRI schemes. We aim to take a more abstract point of view to identify how the SRI as a (kind of) label can contribute to reduce the energy performance gap and thus complement EPCs. The following chapters are organised as follows: chapter 2 provides an overview about the just approved EPBD update and its reference to the SRI. Chapter 3 continues with lessons learned from EPC schemes in order to identify potentially influential factors for a successful SRI scheme. Chapter 4 presents the discussions on the potential interaction between EPC and SRI. The focus of this exploration is on the extent that the SRI may possibly reduce the performance gap between assessed and actual performance of the building and thus may complement EPCs. Chapter 5 summarises conclusions from the more technical part of the discussion in chapter 4, while in chapter 6 we intentionally split up some further thoughts that refer to SRI’s potential impact on financing energy efficiency improvements and its relation to EPC.
  11. 11. UENDE18068 8 3 Step 1 – Lessons learned from EPCs Different national regulations in Member States result in different implementation approaches for EPC schemes (e.g. chosen calculation methods, quality control mechanisms and enforcement systems). The substantial knowledge gathered4, 5 and the experience on the implementation of EPC schemes in MS over the years provide useful insights on important aspects to consider in implementation of SRI, these are summarized in following points. Furthermore, the lessons learned can point towards areas where SRI can complement a more efficient building performance certification scheme. These are aspects that can further enhance the EPC credibility and market impact to become effective instruments to track buildings’ energy performance and the outcomes of building policies. They are briefly mentioned under each relevant point to facilitate the further discussion in detail in chapter 3. • The evaluation method chosen for assessment of performance has a great influence on the accuracy, therefore credibility and acceptability of the EPC scheme. Energy consumption of a building can be quantified using different methods, both in the design stage (e.g. asset ratings) and operational stage (e.g. operational ratings) of a building. Combined use of the two have been cited among the best practice examples as the approach exploits benefits of both, thus providing the most accurate representation of actual energy performance. This consecutively contributed to higher uptake of EPC, providing links to its use in monitoring and financing mechanisms for renovation activities. It is important to provide tools for the assessment of SRI that can reflect the actual potential of the building. Calculation procedures for quantifying the energy use of a building generally use standard values and/or simplifications of real life with a series of assumptions. The results of such design values often show significant discrepancies to measured energy use during occupation. Therefore, their use as a baseline for actual performance is limited as it would risk not achieving regulated targets6 . An analysis of several case studies on non-residential buildings 4 Buildings Performance Institute Europe (BPIE) (2014) Energy Performance Certificates Across the EU – A mapping of National Approaches 5 Bio Intelligence Service, Ronan Lyons and IEEP (2013) Energy performance certificates in buildings and their impact on transaction prices and rents in selected EU countries, Final report prepared for European Commission (DG Energy) 6 Hermelink, A. and Machinchick, T., Avoiding common traps in energy savings (mis)calculation, 2018, available at http://www.euractiv.com/section/energy/opinion/avoiding-common-traps-in-energy-savings-miscalculation/
  12. 12. UENDE18068 9 showed that the measured energy use is on average 34% more than predicted values7 . Using asset rating alone, without verifying its result via actual performance data may fail to deliver reliable performance data. Several studies have shown that there are notable differences between the predicted and actual energy performance of a building once it is inhabited8,9 . The findings in case studies10 highlight the discrepancies between predicted and actual energy performance, even when the energy simulation was very accurate with respect to their occupant behaviour assumptions. CIBSE summarizes11 the findings from large scale post occupancy performance evaluation studies as ”Findings from the PROBE studies (Post Occupancy Review of Buildings and their Engineering) demonstrated that actual energy consumption in buildings will usually be twice as much as predicted. This was based on postoccupancy reviews of 23 buildings previously featured as ‘exemplar designs’ in the Building Services Journal (BSJ) between 1995 and 2002. More recent findings from the Carbon Trust’s Low Carbon Buildings Accelerator and the Low Carbon Buildings Programme have demonstrated that in-use energy consumption can be 5 times higher than compliance calculations”. Smart technologies and services can play an important role in quantifying the performance deviations. Furthermore, SRI can play a role in reducing the performance gap between expected and actual performance. • Frequent update of EPC is required to leverage the awareness on energy use in buildings in EU and the market value of energy efficiency improvements. Update of EPCs on established milestones of the building life time will enable availability of up-to-date actual data fed in with technical accuracy. In the majority of MS the validity period of EPC is set to default 10 years, where in few cases (e.g. Denmark) this period is linked to the identified energy saving potential of the building. We suggest renewing EPC (at least) after major renovation, additionally potentially “when a technical building system is installed, replaced or upgraded”12 . The exploitation of EPC’s theoretical potential as tool for accelerating the cost- 7 van Dronkelaar C, Dowson M, Burman E, Spataru C and Mumovic D (2016) A Review of the Energy Performance Gap and Its Underlying Causes in Non-Domestic Buildings. Front. Mech. Eng. 1:17. doi:10.3389/fmech.2015.00017 8 Gram-Hanssen, K., Georg, S., Christiansen, E. T., & Heiselberg, P. K. (2017). How building regulations ignore the use of buildings, what that means for energy consumption and what to do about it. Summerstudy, ECEEE, European Council for an Energy Efficient Economy. 9 Majcen, D., Itard, L. C. M., & Visscher, H. (2013). Theoretical vs. actual energy consumption of labelled dwellings in the Netherlands: Discrepancies and policy implications. Energy Policy, 54, 125–136. doi: 10.1016/j.enpol.2012.11.008 10 Martinaitis V, Zavadskas EK, Motuziene V, Vilutiene T. Importance of occupancy information when simulating energy demand of energy efficient house: a case study. Energy Build 2015;101:64–75. 11 Anne Menezes, 2012, CIBSE, Energy Performance group, Carbon Bites, The performance gap, available at https://www.cibse.org/getmedia/55cf31bd-d9eb-4ffa-b2e2-e567327ee45f/cb11.pdf.aspx 12 As mentioned in Article 8, new paragraph 5 in COM (2016) 765 final 2016/0381 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 2010/31/EU on the energy performance of buildings, Brussels, 30.11.2016
  13. 13. UENDE18068 10 effective renovation of existing buildings requires more dynamic and informative EPC system possibly coupled with or triggered by SRI update respectively. Implementation of SRI can be a gate opener for implementation of operational rating with real time performance monitoring and even self-assessment of the building technical system, monitoring the necessity of its own upgrading. • Almost all MSs have established EPC databases that register EPC data. Although it is not required by EPBD, the registers served the purpose of monitoring and quality control. EPC databases have proven to be an important source of information for different stakeholder groups including policy makers as well as becoming crucial in quality control. A similar approach in creating a data repository for SRI, potentially integrated to EPC databases as e.g. assumed in the EPBD Impact Assessment, can improve the knowledge about the energy performance of the building stock and extend the benefits from making use of building performance data for policy making, monitoring and planning energy services. • The display of the EPC, including comprehensive and useful information, e.g. in public buildings and mandatorily in commercial advertisements while the building is sold or rented, has critical importance for the uptake of the EPC mechanism by the market. This has provided an understanding among buyers and tenants of the benefits of having a better energy rating, in particular with regards to its impacts on energy bills. A similar approach for displaying SRI can reinforce the understanding of future technical potential of building not only in terms of energy savings but also when the building and the grid interaction is considered, thus can lead to acceleration of actions for realizing this potential towards overall energy efficiency. Yet, due to the very dynamic development of Technical Building Systems, the SRI may also need frequent updates. This may call for online availability of SRI. • A strong incentive for energy efficiency improvements have been created by linking financial measures to EPC data, specifically to the monitoring of performance before and after renovations. This in turn strongly increases the perceived value of EPC, moving away from being seen as an administrative burden, provided that it is an up to date reliable measure of energy saving achieved via renovation. SRI implementation thus should also consider the integrated use of the data within the larger context of energy efficient transformation of the building stock and its financing. Smart technologies can help determine the right time for EPC updates and its reliability, and thus drive lifecycle energy performance. Acceleration of cost-efficient renovation is the core target of EPBD update. Yet cost-optimality is calculated on the basis of whole life time of the building, which requires that achieved performance (e.g. after renovation) needs to be preserved (if not improved further) by correct functioning of technical systems and building envelope components (persistence of renovation depth). SRI could complement EPC in identifying the buildings potential in maintaining the performance level and can help to shape a clear vision about the role of digitization, more advanced technologies for increased efficiency and flexibility (technical systems) beyond simple measures in the uptake of cost-efficient renovation. For example, according to a recent Ecofys
  14. 14. UENDE18068 11 study13 the optimisation of technical building systems quickly delivers cost-effective significant savings without creating lock-in effects. Such optimisations could be implemented at a much higher renovation rate than its indispensable counterpart “building insulation”. TBS update happens at least at the rate of heat generator replacement, that is 3.6%. 13 Ecofys (2017) Optimising the energy use of technical building systems – unleashing the power of the EPBD’s Article 8
  15. 15. UENDE18068 12 4 Step 2 - Potential interaction between SRI and EPC over smartness aspects In the following we would like to systematically explore the potential interaction between EPC and SRI. This is not meant to be exhaustive, but to provide input and food for thought for the upcoming discussion on how to use the SRI after its definition will have been finalised. The focus of this exploration is on the extent to which the SRI may possibly reduce the performance gap between asset rating and performance rating. For a systematic discussion, at this point we would like to consider the following elements which we then intertwine as far as needed to explore the potential the SRI may have in conjunction with EPC: • The cascade from the building user needs (energy service) to primary energy. • SRI: The dimensions and impact categories of an SRI that so far have been elaborated in the ongoing SRI project plus the well-known three smart readiness aspects. • The elements an EPC is to include according to the EPBD. The cascade from (building) user needs (energy service) to primary energy Energy efficiency in buildings is about satisfying building users’ needs for an energy service with least possible energy input. It is important to understand that users certainly do not have the need for a certain amount of “kWh” but e.g. for a well-lit room, a comfortably conditioned room etc. The resulting energy consumption is just a consequence of the level of this energy service, the characteristics of the building envelope and its components and the technical building systems (TBS) and their efficiency. Finally it matters how components and TBS are operated. If a gap between “on paper” asset rating and operational rating occurs, reasons may be found at each step from the energy service to primary energy. According to energy performance of buildings (EPB) standards EN ISO 15603 or its successor 52000- 1 (“Energy performance of buildings — Overarching EPB assessment – Part 1: General framework and procedures) the cascade from energy service to primary energy is as follows: As the exact meaning of these terms is often mixed up, we briefly cite their definitions as given in EN ISO 52000-1, yet focusing on heating and cooling (rather than also including ventilation, lighting, …) to restrict the length of the list. Energy (building) service Energy need Energy use Delivered energy Primary energy
  16. 16. UENDE18068 13 • building service:14 service provided by technical building systems and by appliances to provide acceptable indoor environment conditions, domestic hot water, illumination levels and other services related to the use of the building15 • other building service: service supplied by energy-consuming appliances • EPB service: building service included in the assessment of the energy performance • energy need for heating or cooling: heat to be delivered to or extracted from a thermally conditioned space to maintain the intended space temperature conditions during a given period of time • energy use for space heating or cooling: energy input to the heating or cooling system to satisfy the energy need for heating or cooling (including dehumidification) respectively; on this assessment level to be found is also the auxiliary energy, i.e. electrical energy used by technical building systems to support energy transformation to satisfy energy needs • delivered energy: energy, expressed per energy carrier, supplied to the technical building systems through the assessment boundary, to satisfy the uses taken into account or to produce the exported energy • primary energy: energy that has not been subjected to any conversion or transformation process. Note: Primary energy includes non-renewable energy and renewable energy. A concrete example is to illustrate these terms.16 A person wants to have very high thermal comfort in a heated room in winter – this is the energy service. Translated to a former draft of EN ISO 7730 this means comfort class A, which again is reached within a bandwidth of the so-called operative temperature of 22.45°C to 24.05°C. The operative temperature is mainly composed of air-velocity, air temperature and inner temperature of all room surfaces (floor, wall, ceiling, windows, heating devices). Therefore the energy need, i.e. the energy the heating system actually needs to emit to a room for meeting the energy service “very high thermal comfort” depends on the type of heating system (floor heating, air heating, radiator heating …), the way the room is ventilated and the quality of the thermal envelope, as e.g. the surface temperature of walls and windows depends on their U-value.17 Let’s assume a wall-heating is used. It receives its heat through pipes coming from a condensing gas boiler. The pipes have heat losses on their way to the room, i.e. not all heat sent into the pipes by the boiler reaches the room. 14 EN ISO 52000-1 takes up the context of building energy efficiency by renaming the “energy service” to “building service”. 15 Note: we disagree with the focus on technical building systems in this definition, as obviously also the characteristics of the building envelope determine the service level. 16 Further explanations can be found in Hermelink (2008) – Ein systemtheoretisch orientierter Beitrag zur Entwicklung einer nachhaltigkeitsgerechten Technikbewertung angewandt auf den mehrgeschossigen Wohnungsbau im Niedrigstenergie-Standard. Dissertation, University of Kassel (Germany). 17 A sub-optimal thermal quality of the building envelope makes it impossible to achieve comfort class A at all.
  17. 17. UENDE18068 14 The heat sent out by the boiler (or in general the “heat generator”) into subsequent systems (pipes, storage …) is the energy use. The condensing gas boiler again does not convert all of its energy inputs into energy use; for example a part of the heat content of the burnt gas is sent through the chimney. All energy inputs into the condensing gas boiler (gas, electric power for circulation pumps and control systems) are called delivered energy. When all losses and energy consumption which occur between the original energy source (gas bore hole, coal mining for power) and the building are added to the delivered energy the sum is called primary energy. The example illustrates that total efficiency between the building service and primary energy is largely determined by human behaviour (user or investor respectively), which can be split up in user behaviour and investment behaviour.18 • The user decides about the energy service level. • The investor decides about the technology, that uses the energy emitted by TBS, i.e. the building envelope. • The investor decides how the building envelope is maintained and repaired, i.e. about the persistence of the building envelopes quality. • The user decides how the components of the envelope which can be controlled (e.g. windows, shutters) are operated. • The investor decides about the technical building systems. • The investor decides how the TBS are maintained and repaired. • The user decides how the TBS which can be controlled (e.g. thermostats) are operated. Energy performance calculations (asset rating) are based on assumptions for all items mentioned above for the whole calculation period. The “performance” gap is a consequence of deviations between these assumptions and reality. • If the SRI is to decrease the energy performance gap, it needs to help mitigate the gap between these assumptions and reality during the calculation period. • As reality is a consequence of investment behaviour and user behaviour (from building service through primary energy), the question is, to what extent the SRI can signal an adaptation and/or replacement of behaviour (investment and actual use) towards the behaviour assumed for energy performance calculations. • This means that while in EPC calculations human behaviour is just considered as a set of standard physical parameters the SRI is about influencing that behaviour and its outcomes. 18 Hermelink, A. (1996): Kosten-Nutzen-Analysen von DSM-Programmen im Sektor der privaten Haushalte unter besonderer Berücksichtigung des Anwenderverhaltens – Ergebnisse aus der Evaluierung des EU-PHARE-Fernwärmepilotprojektes in Eger (Ungarn)
  18. 18. UENDE18068 15 Smart Readiness Indicator (current status) According to the European Commission, the following advantages are expected from smart buildings:19 1. Optimised energy use as a function of (local) production 2. Optimised local (green) energy storage 3. Automatic diagnosis and maintenance prediction 4. Improved comfort for residents via automation. Consequently the smart readiness indicator is to measure the technological readiness of a building; • The readiness to adapt in response to the needs of the occupants => (4). This is about the needs of the occupants. 20 • The readiness to facilitate maintenance and efficient operation => (3). This is about the needs of the building. • The Readiness to adapt in response to the situation of the energy grid. (1 and 2). This is about the needs of the grid. All these needs need to be fulfilled in a way to maximise energy efficiency and the use of renewable energy as well as to minimise GHG emissions. Linking this back to above mentioned energy cascade which splits up the places of action for reducing the energy performance gap, • the needs of the occupants correspond to the building services. Is the needed service actually delivered? • the needs of the building correspond to energy needs, energy use and delivered energy (efficiency of the systems in the building) because they are all about the efficiency of systems for the use and conversion of energy within the building; • the needs of the grid deal with delivered energy (shape of the load curve) and primary energy. 19 Cf. Slide 25, SRI project presentation from 21 December 2018 20 We intentionally simplify a little, to achieve a better fit with the energy cascade. It also turns out that this approach is very close to the newly added Annex Ia within the latest version of the proposed EPBD revision.
  19. 19. UENDE18068 16 In the SRI project these needs have been split up further into “impact categories”, which can be assigned to the previous three categories as follows: • needs of occupants o comfort o convenience o health o information to occupants (feedback) • needs of the building o energy savings on site o maintenance and fault prediction o (information to occupants, e.g. in terms of feedback highlighting the need for maintenance or wasteful energy consumption not necessary to meet the needs). • Needs of the grid o Self generation o Flexibility for the grid and storage o (information to occupants, e.g. highlighting ideal times of operation for an appliance and incentivising tariffs). The 10 domains identified in the SRI project, i.e. where SR technologies and services may be applied, in the end tackle possibilities, where building systems’ operation, maintenance, management and their interaction with the energy grid (including EV) can be automatized to a certain degree in order to achieve a higher degree of fulfilment of the needs of occupants, the building and the grid with least possible energy consumption. • Heating • Domestic hot water • Cooling • Mechanical ventilation • Lighting • Dynamic building envelope • Energy generation • Demand side management • Electric vehicle charging • Monitoring and control. Later we’ll highlight those domains which seem to be most relevant for occupants’, buildings’ and energy grid’s needs.
  20. 20. UENDE18068 17 Elements of an EPC According to EPBD Article 11, an EPC needs to at least feature the following elements: • The energy performance of the building => according to EPBD Annex I it can be “determined on the basis of the calculated or actual annual energy that is consumed in order to meet the different needs associated with its typical use”. This translates to EPC with “asset rating” or “operational rating”. Furthermore the energy performance “shall include an energy performance indicator and a numeric indicator of primary energy use.” Member States are free to also include information like the annual energy consumption or the share of renewable energy. • Reference values (to allow the recipient judge the relative position of a building’s energy performance compared to its peers). • Recommendations for the cost-optimal or cost-effective improvement of the energy performance (“unless there is no reasonable potential for such improvement compared to the energy performance requirements in force.”) Interestingly, there is no general difference made between new and existing buildings, although by intuition recommendations for cost-optimal improvements would not be expected for new buildings. This probably is to cover the cases where energy performance requirements in force do not (yet) meet the obligation to be in line with cost-optimal requirements. So there can be recommendations for new and existing buildings. After having elaborated on these basic principles, characteristics or determinants of energy consumption, SRI or EPC respectively, we merge these aspects in order to discuss the complementary function the SRI could have with EPCs and its potential to reduce the energy performance gap. Merging the overall smart readiness aspects with the elements of an EPC provides a grid for assessing how SRI could complement EPC with regard to reducing the energy performance gap. In the following we will go through this grid by addressing the overall smart readiness aspects (users’, buildings’, energy grids’ needs) one by one.
  21. 21. UENDE18068 18 4.1 Smart Readiness Aspect 1: “Occupants’ needs” – or to adapt in response to the needs of the occupant As pointed out above, for the purpose of a proper analysis we strictly assign the occupants’ needs only to the energy service or building service respectively as this corresponds closest to how the term “need” is used in social sciences. When doing an asset rating for an EPC, each EU Member State provides a set of boundary conditions for the energy performance calculation which also explicitly or implicitly includes assumptions about occupants’ needs “associated with [the buildings] typical use” (EPBD Annex I), like indoor air temperatures, air quality or ventilation rates or lighting levels respectively. Sometimes even usage profiles for such parameters are provided and used in the calculation. It is known that higher average indoor air temperatures and ventilation rates – compared to the assumptions used for EP calculations - are top reasons for the energy performance gap, i.e. higher consumption during operation than calculated upfront. There may be two reasons for that with specific regard to the occupants’ needs: • The assumptions about the building service needed by the occupant and used in the EP calculation may not represent reality. • Even if the assumptions about the needs would match reality, the ability or capability of the user to let the building systems exactly follow his or her needs may be insufficient. This may be e.g. because a typical daily schedule does not allow for the assumed (manual) operation of the systems, the TBS does not provide feedback about the currently achieved building service level, or the TBS is not able to exactly operate itself according to the users’ needs: missing settings (like schedules), imprecise measurement of indoor temperatures, too slow reaction time. … The most relevant domains when it is about meeting occupants’ needs are (bold): • Heating • Domestic hot water • Cooling • Mechanical ventilation • Lighting • Dynamic building envelope • Energy generation • Demand side management • Electric vehicle charging • Monitoring and control.
  22. 22. UENDE18068 19 Relative to the three requirements for EPC according to the EPBD amongst others the following links can be detected: EPC requirement: Presentation of the energy performance • A smart TBS (in combination with an appropriate building envelope) will allow the occupant to exactly meet the level of building services assumed in EP calculations. • A smart TBS will provide the occupant with clear feedback, when a drift (upwards) in the energy service level is detected. This phenomenon is also called the rebound effect. Thus the smart TBS supports the user to stick to his or her original energy service level. • Ideally smart TBS will collect information about actual building service levels to inform regulation. It is neither the mistake of the occupant nor the building with its TBS when e.g. unrealistically low indoor air temperatures keep on being assumed in the regulation or codes for EP calculations. Above we referred to comfort class A with operative temperatures between 22.45°C and 24.05°C; we assume that most building codes assume lower levels for their EP calculations for very low energy buildings.21 • With regards to EPC, regardless if it is about new buildings or existing buildings, a high SRI (for meeting the occupants’ needs) would o Increase the probability that actual energy performance meets the performance stated on the EPC, because of being close to the assumed building energy service (both because the system is able to follow needs and because information from smart buildings, having a high SRI rating, will gradually improve the assumptions taken in EP calculations). o Increase the persistence of the stated EP, as the actual energy service achieved is part of the systems’ feedback. o With a view to cost-optimality calculations, which are based on a prediction of EP for the next 20-30 years - increase the reliability or the confidence level of the cost- benefit analysis and the assumed life-cycle performance increases. o It needs to be stressed, that the SRI first of all states the readiness, i.e. the theoretical potential, to provide different building services in a smart way. The actual exploitation of that readiness or potential still depends on the occupant in the case of occupants’ needs. 21 Even the range for comfort class B just goes down to 21.4°C – and not further. For energy performance calculations in Germany e.g. 19°C as an average indoor air temperature is applied, which is clearly below real values from monitoring of low energy buildings, even when taking into considerations times of absence with thermostat setback. We would like to stress that such unrealistic assumptions about building service levels have nothing to do with rebound effects, as rebound effects should be determined relative to realistic assumptions.
  23. 23. UENDE18068 20 EPC requirement: Presentation of reference value • Like with the EPC it may be an option to provide reference values for the SRI. As pointed out above, in principle only a level of building services should be assumed in EP calculations which accurately reflects reality and which can be realized by the typical setup of the building which e.g. is assumed in cost-optimality calculations for new or existing buildings. • Having this context, we feel it would make sense to: o In the long-run state the average SRI of peer buildings (be it on the EPC or elsewhere) o Assign a rating like “0” SRI : +/0/ - or high/medium/low, where ▪ + / high SRI means the TBS/BACS installed to the building are advanced and overall the building is equipped with high level of control system that will provide a high possibility to exceed the standard (calculated) energy performance ▪ 0 / medium SRI means the building is equipped with a standard level of available BAC technology which enables the building to perform along the energy performance, which is expected for (realistic) standard conditions. ▪ - / low SRI means the building is equipped with TBS/BACS to a low degree, e.g. largely based on manual control and user action, leading to an EP which is worse than the one resulting under realistic standard conditions. o As for occupant behaviour, a high SRI should also alert about leaving of healthy service levels which are acknowledged as good practice reference (like bad air quality, too high temperature or air humidity levels, too low lighting levels in office buildings etc.) EPC requirement: Recommendations for improvement of the energy performance • Like stated in Article 11 EPBD as for SRI there could be recommendations for TBS including BACS which further increase the probability that occupants’ needs are met and thus would lead to a higher SRI rating. • As this is about concrete technical systems, the EPC recommendations could be structured along the 10 dimensions and those 4 impact categories which deal with occupants’ needs.
  24. 24. UENDE18068 21 4.2 Smart Readiness Aspect 2: “Buildings’ needs” – or to facilitate maintenance and efficient operation of the building With the “buildings’ needs” we address the energy needs, energy use and delivered energy and what information a SRI can provide or what actions stimulate respectively relative to these steps in the energy cascade. For making things more concrete, we focus on heating. When doing an asset rating for an EPC, each EU Member State provides a set of boundary conditions for the energy performance calculation. This also includes assumptions about: • the thermal quality of the building envelope, which together with internal loads and solar gains determines the energy need of the building, • the kind and quality of systems to emit, distribute and store heat, which including the losses determines the energy use, and • the kind and quality of heat generator, which determines the delivered energy (for ease of understanding including from solar devices) needed for heating. Each of these steps may contribute to the energy performance gap for the following reasons: • One or several assumptions about the efficiency of the building envelope, or the TBS including BACS may not match reality because o a sub-standard investment behaviour (including maintenance), i.e. components with less than standard efficiency may have been chosen, o or in a sub-standard commissioning and operational settings which deviate from the design; depending on the type of building this belongs to investment behaviour (as external parties deal with commissioning and operation) or user behaviour, when the occupant operates the systems himself or herself. The most relevant domains when it is about meeting the buildings’ needs are (bold): • Heating • Domestic hot water • Cooling • Mechanical ventilation • Lighting • Dynamic building envelope • Energy generation • Demand side management • Electric vehicle charging • Monitoring and control.
  25. 25. UENDE18068 22 Relative to the three requirements for EPC according to the EPBD amongst others the following links can be detected: EPC requirement: Presentation of the energy performance • A smart TBS may allow the occupant to detect failures in the building envelope resulting from an internal building model, that processes real operation and occupancy data from TBS and uses the data to infer to the quality of the envelope. • A smart TBS will have the capacity to inform the occupant whether the TBS is set up and running according to the design values, ideally distinguishing between heat emission, distribution, storage and generation and inform about the performance losses. • A smart TBS will be able to diagnose needed maintenance and repair and to inform the occupant or the party responsible for maintenance and repair about the need for action. This is also one of the main advantages stressed around smart buildings. • systems have a shorter life time, especially compared to building structure and envelope. At the point when significant BACS system upgrades takes place this can be reflected in SRI as well as EPCs. • Advanced smart TBS will be able to “self-maintain”, i.e. adjust settings within some bandwidth. Yet, self-maintenance only will be possible within certain limits as systems degrade during their lifetime. Rapid upgrading is possible when they no longer perform optimally; to provide them with increased functionality; to comply with new operating (energy) performance standard or goal; or because they are obsolete, not supported by the manufacturer. Newer systems can introduce additional capabilities which in turn increase building’s “smartness “. Although mostly TBS are only replaced after breaking down, tackling problems before they escalate is more cost effective, allows for better planning and creates better outcomes for occupants. Research results show that an average annual increase of 6% in time spent on preventive maintenance operations, over a period of 5 years, resulted in a 20% decrease in the demand for corrective maintenance and an average annual saving of 500 MWh in energy consumption22 . Therefore a smart TBS will signal the need for replacement. • If a building has part or all of above mentioned capabilities and thus a high SRI rating for these aspects, this will increase the confidence level for an EPC asset rating to meet the on- paper performance throughout its whole life-cycle. This is a major point, as energy efficiency improvements need to persist over their lifetime, in order to contribute their expected share for reducing GHG emissions. Buildings having a high SRI rating will have a higher probability that savings persist. 22 J. García-Sanz-Calcedo, M. Gómez-Chaparro, Quantitative analysis of the impact of maintenance management on the energy consumption of a hospital in Extremadura (Spain), In Sustainable Cities and Society, Volume 30, 2017, Pages 217-222, ISSN 2210-6707, https://doi.org/10.1016/j.scs.2017.01.019.
  26. 26. UENDE18068 23 • In case of EPC based on operational rating (normalised measured consumption) the reasons for a certain performance usually remain a black box (except from e.g. weather). Information from TBS like just mentioned would allow for much more transparency about the reasons for a certain performance as in the end they all result from physical parameters that could be measured or monitored by a TBS. Having this transparency will have a direct impact on detecting cost-effective measures in existing buildings. • We hope that the discussion around SRI will also boost the discussion around persistence of energy performance during the building’s life-cycle. Looking e.g. at cost-optimality calculations, typically the initial (perfect) performance is assumed to persist for 20-30 years without adequate discussion how this will be achieved and whether the systems installed in the building allow for such assumption. The topic is just covered by replacement of components after their typical lifetimes and default values (percentages) for maintenance and repair which appears to be over-simplified considering the importance of persistence. This would be a way to consider the SRI rating in cost-optimality calculations => the higher the SRI rating in the relevant domains the lower the degradation that has to be assumed by default. EPC requirement: Presentation of reference value • Also for the “buildings’ needs” part it may be an option to provide reference values for the SRI. Like with occupants’ needs, kind and quality (efficiency) of building envelope and TBS could be assumed for the life-cycle EP calculation that corresponds to reality and which can be realized by a typical setup of the building and its systems, from energy need (i.e. heat emission in the case of heating systems) through delivered energy. • Reference values could also provide hints whether the building already has the potential for future innovations of TBS/BACS that improve energy efficiency and the responsiveness of the building, e.g. a floor-heating system is a better option for moving to a smart ready heat- pump than a high temperature radiator heating. • Like with occupants’ needs, we feel it would make sense to o In the long-run state the average SRI of peer buildings (be it on the EPC or elsewhere), maybe even divided by occupants’, buildings’ and grid’s needs and o assign a rating like “0” SRI : +/0/ - or high/medium/low, for details see chapter on “occupants’ needs”. o Like for occupant behaviour, a high SRI rating come along with alerts about entering “unhealthy” operational conditions for the building or the systems, ▪ e.g. frequent switch on/switch off of heat pumps. ▪ analysing temperature and humidity data can help identify properties with condensation and mould growth. This enables landlords to act to prevent damp worsening and combat mould in afflicted properties. ▪ Connected heating controls can be used to remotely test and diagnose faulty boilers. This not only saves landlords money before the cost of remedying
  27. 27. UENDE18068 24 escalates, it also allows them to take a proactive approach to compliance with gas safety EPC requirement: Recommendations to improve the energy performance As for EPC recommendations we see the following aspects: • Depending on the SRI rating there will be more or less room for cost-effective upgrading with “smart” features. Specific technologies or opportunities could be part of recommendations (be it on the EPC or elsewhere). • A smart system will be able to auto-generate recommendations about cost-effective upgrades of the building envelope or TBS/BACS (like “smart” heat generator) respectively. • As the buildings’ needs from our point of view belong to the major reasons for energy performance gaps, in a digitised world recommendations from a smart system could be dynamically updated on a digital EPC. The SRI rating in the category “buildings’ needs” will have a major impact on the probability that a building will meet the designed energy performance during its whole life cycle, be it for the case of new buildings or for energetic renovations. It not only can help to meet the “on paper” performance when operation starts but also to make that performance persist during the life-cycle. This is of utmost importance for increasing the confidence level about the success of energy efficiency renovations and very low energy buildings. Therefore, in our opinion a high SRI rating could contribute to de-risking energy efficiency investments.
  28. 28. UENDE18068 25 4.3 Smart Readiness Aspect 3: “Energy grid’s needs” – or to adapt in response to the situation of the energy grid With the “energy grid’s needs” we address the shape of the load curve (delivered energy), and the impact the building operation has on the overall conversion efficiency in the energy grid, GHG emissions and use of renewable energy. The question is, to what extent an SRI rating covering those aspects may complement a building EPC, what information a SRI can provide or what actions stimulate respectively relative to these steps in the energy cascade. For making things more concrete, we focus again on heating. In contrast to “occupants’ needs” and “buildings’ needs”, when doing an asset rating for an EPC, benefits of increasing the energy efficiency of a building exceeding the boundaries of the building, i.e. energy grid’s needs, have not been accounted in EPC until recently. The relation between grid and building is modelled as a one-way interaction by characterising the grid by means of Primary Energy Factors (PEF) in the calculation of energy performance.23 Operating schedules etc. are usually not included in EP calculations, as they ideally require hourly resolution which is not the typical level of detail. Only recently with the advent of nearly zero energy buildings and its potential inclusion of onsite or nearby renewable energy production the topic gained broader awareness and has led to updates of several international/European or national EPB standards to capture local production and feed-in, which apparently has an impact on both the operation of the energy grid and depending on how a Member States handles local renewable production, also on the energy performance of a building. Of course again certain assumptions are made for EPC calculations, considering a certain smartness of handling local production. Like before an energy performance gap may occur, when these assumptions do not meet reality. The most relevant SRI domains when it is about meeting the energy grid’s needs are (bold): • Heating24 • Domestic hot water • Cooling • Mechanical ventilation • Lighting 23 cf. EPBD (2010; currently valid version) Annex I: “The energy performance of a building shall be expressed in a transparent manner and shall include an energy performance indicator and a numeric indicator of primary energy use, based on primary energy factors per energy carrier, which may be based on national or regional annual weighted averages or a specific value for on- site production.” 24 Storage capacity (for heating, domestic hot water, cooling, or through thermal mass within the building envelope) also potentially adds flexibility to the grid. We consider this tob e part of „demand side management“.
  29. 29. UENDE18068 26 • Dynamic building envelope • Energy generation • Demand side management – including the flexibility of the building offered e.g. by high thermal mass, or other heat or cold storages, batteries etc. • Electric vehicle charging • Monitoring and control. Relative to the three requirements for EPC according to the EPBD amongst others the following links can be detected: EPC requirement: Presentation of the energy performance In our opinion, the interoperability of the building with the grid is not so much about saving kWh of delivered energy or total primary energy but clearly about: • using kWh at the right time from the point of view of energy system efficiency and GHG emissions and • operating a building in a way that increases the use of renewable energy in the energy system, • without detrimental effects on “occupants’ needs” and “buildings’ needs”, • so eventually it is about the ratio between renewable and non-renewable primary energy, GHG emissions and probably even more than with occupants’ and buildings’ needs about an efficient allocation of money in a complex system. Flexible operation is the key to achieve this as the building may add additional potentials for load shifting and peak clipping. The interaction between the grid and buildings “can involve storage and generation facilities in the home, but even households without microgeneration, batteries, storage heaters or hot water tanks have a potential resource in their demand, something which can be reduced or shifted when this will assist network or grid management“25 and add to the efficiency of the overall energy system. In principle by this, the building delivers an “energy system efficiency contribution“. We’ll briefly discuss if credits on EPCs should be attributed depending on the SRI rating in this category. • A smart TBS will allow the occupant to optimise purchase of energy from the grid depending on time variable tariffs. • A smart TBS will have the capacity to inform the occupant whether the interaction with the grid is running according to the design values. 25 Sarah J. Darby (2018) Smart technology in the home: time for more clarity, Building Research & Information, 46:1, 140-147, DOI: 10.1080/09613218.2017.1301707. Available at: https://doi.org/10.1080/09613218.2017.1301707
  30. 30. UENDE18068 27 • A smart TBS will even automatically adapt operation when system parameters like energy prices change. • A smart TBS will be open to future extended features, as e.g. Internet of Things still promises much more interaction than what is standard today. • A smart TBS may collect data that eventually helps to better understand further flexibility potentials, like switching the heating system off for a certain period or patterns for charging EV. • A smart TBS will be able to maximise self-usage of self-generated power. • If a building has part or all of above mentioned capabilities and thus a high SRI rating for these aspects, this will above all increase the confidence level that the financial performance which has been assumed for renovation measures or a new building will persist throughout its whole life-cycle. It can be assumed, that buildings which lack abilities like this will gradually be forced to rely on more expensive tariffs without offering these kinds of system benefits. • Taking this aspect on top of the ones discussed before we hope that the discussion around SRI will also boost the discussion around persistence of the financial performance during life-cycle. Looking e.g. at cost-optimality calculations, typically the initial (perfect) performance is assumed to persist for 20-30 years without adequate discussion on how the assumed energy prices may be affected in buildings that do not offer flexibility to the system during that period. EPC requirement: Presentation of the reference value • For the “energy grid’s needs” it may be an option to provide reference values for the SRI, too. More than with the other values it doesn’t appear to make sense to have this like a static value, as the energy system is changing very quickly, and thus what can be called “reference” is also moving quickly. Therefore, a reference, e.g. in the sense “What is the current expectation about the minimum interoperability of a building” may be given. • Reference values could also provide hints whether the building already has the potential for future innovations of TBS/BACS that improve interoperability with the grid. • Like with occupants’ and buildings needs, we feel it would make sense to o In the long-run state the average SRI of peer buildings (be it on the EPC or elsewhere), o assign a rating like “0” SRI : +/0/ - or high/medium/low, for details see chapter on “occupants’ needs”. o Yet, as mentioned before this probably would need provided by a dynamic database as a digital value rather than a fixed number on paper.
  31. 31. UENDE18068 28 EPC requirement; Recommendations to improve the energy performance As for recommendations we see these aspects: • Recommendations may clearly state whether a buildings’ interoperability appears to meet current standards or expectations for a “future proof” building. • Recommendations could point out the aspects that make a building future proof in this respect. In the future, office buildings that do not offer EC charging points might have a negative impact on the attractiveness for potential employees. • Like before as the smart system should know about its status, it should be able to auto- generate recommendations about cost-effective upgrades of the buildings’ capabilities for interoperation. In our opinion, the SRI rating in the category “energy grid’s needs” will have a major impact on the probability that a building will meet the designed financial performance, be it for the case of new buildings or for energetic renovations. This is of utmost importance for increasing the confidence level about the financial success of energy efficiency renovations and very low energy buildings. Therefore a high SRI rating for this aspect could contribute to de-risking energy efficiency investments. As we think, that the readiness to operate with the grid will provide financial incentives anyway, there should rather be no additional bonus for the EPC rating.
  32. 32. UENDE18068 29 5 Concluding remarks Energy labelling schemes and certification are among the primary tools that stimulate market demand for environmentally friendly and energy efficient products and systems. These, together with related control mechanisms such as national regulations and standards, are regarded as “market-pull instruments” to promote environmental consumption and innovation. In the building sector such concept and its impact on the market directly translates to the application of Energy Performance Certificates (EPCs) that are the tool that transfers the information on the performance of the end product, in this case the building, to the user/owner of the building. In some Member States, where the EPC schemes have a long tradition, a positive impact on the real estate market has been recorded. Access to EPC data repositories has shown a positive impact on the market value of energy efficiency improvements, contributing to the market transformation the EPBD aims at. However, challenges still exist to exploit the untapped potential that can be achieved by more effective use of EPC schemes and data. The market requires incentives for EPCs to be regarded as a useful instrument, that needs to accurately estimate a building’s characteristics, and not as an additional administrative burden. Perceived value of EPCs, their reliability in terms of reflecting the actual building performance and up to date status are highly questioned. The recently approved revision of the EPBD includes emphasis on the emerging importance of digital solutions, and promotes a potentially higher rate of EPC update and the implementation of the SRI. We see there is significant potential interaction between EPC and SRI which we explored in this discussion paper based on the overall smart readiness aspects: users’, buildings’, energy grids’ needs. SRI rating in the category “occupants’ needs” will have a major role in decreasing the diversion between asset based and actual energy performance of the building by e.g. qualifying the impact different user needs may have on the energy performance of the building, thus finding ways to better include this element of occupant behaviour in EPC. The SRI rating in the category “buildings’ needs” will have a major impact on the probability that a building will meet the designed energy performance, be it for the case of new buildings or for energetic renovations. This is of utmost importance for increasing the confidence level about the success of energy efficiency renovations and very low energy buildings. Therefore, in our opinion a high SRI rating could contribute to de-risking energy efficiency investments. SRI rating in the category “energy grid’s needs” will have a major impact on increasing the probability of making the building able to fit into a future energy system and thus to continue having favourable conditions to access it.
  33. 33. UENDE18068 30 All three aspects of smart readiness, namely users’, buildings’, energy grids’ needs, are combined in an overall SRI rating. As we have been talking about “probabilities”, it is clear, that the focus of SRI is the future energy performance and specifically about confidence in future energy performance. In contrast EPC are much more focused on past performance, which we find is a major reason for the lack of trust the market has in EPC with regards to how well they capture buildings’ future energy performance. This means, if well designed and established in the market the SRI can be a very welcome complement to EPC that helps increase market players’ trust in EPC.
  34. 34. UENDE18068 31 6 Further thoughts While EPC and SRI tend to be discussed in a rather “technical” context, finally we’d like to stress their relevance for building finance and building value. One of the major challenges of making the European building stock climate neutral is the financing of this process. With regards to this challenge in the context of the EC/EIB initiative “Smart Finance for Smart Buildings” the SRI’s potential gets clear: • A smart building with a high SRI should have a higher probability to meet the predicted energy performance, i.e. on average the energy performance gap should be low(er). • In our opinion the SRI is the first systematic approach to capture the “unknown animal” called “occupant” better in energy performance predictions. • Buildings with a high SRI rating (stressing the smartness potential) may be a signal for utilities in DSM to include these buildings in their measure portfolio and offer attractive prices. • For banks this makes investments in energy efficiency “bankable”, as – taking all SRI aspects summarized above - the financial performance of a building during its life-cycle gets more predictable. This is also called de-risking of energy efficiency investments. The real estate prices – like publicly traded shares – largely depend on expectations about future performance. Thus a high SRI rating together with a good EPC rating, should have a positive impact on real estate value. As the actual interaction between EPC and SRI is not at all clear at this point, because we explored possibilities for this interaction, we would like to point out that adding the SRI to sustainability labels like LEED, BREEAM, HQE or DGNB may also be worthwhile thinking about to boost the market pull effect of the SRI rating. Finally, we would like to raise the point whether SRI rating and EPC rating could or should be totally decoupled from each other, i.e. “Can a building with a very poor EPC rating at the same time have a very high SRI rating?”. We think there should be limits to decoupling these aspects as the overarching target is to meet the climate target for the European building stock. We assume that once in place, a high SRI rating will have and is to have the notion of “high (energy) performance”. This means we recommend an adequate lower limit to for the corresponding EPC of a building with a high SRI rating should be considered.
  35. 35. ECOFYS Germany GmbH | Am Wassermann 36 | 50829 Cologne | T +49 (0)221 27070-100 | F +49 (0)221 27070-011 | E info@ecofys.com | I www.ecofys.com
  36. 36. ECOFYS Germany GmbH Am Wassermann 36 50829 Cologne T: +49 (0) 221 27070-100 F: +49 (0) 221 27070-011 E: info@ecofys.com I: www.ecofys.com

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