Reform in the real estate sector is crucial to achieving the EU’s decarbonisation targets. Real estate is the largest energy consuming sector in Europe, reportedly consuming 40% of total energy. It is estimated that 75% of buildings in the EU are energy inefficient, particularly older stock.
The Energy Performance of Buildings Directive (EPBD), which originated 15 years ago, was intended to set new benchmarks to improve the energy efficiency of buildings, thus driving the adoption of smart technologies and reducing the impact of climate change. A revised EPBD came into effect on 9 July 2018 and member states will bring into force the laws necessary to comply by 10 March 2020. It remains to be seen whether and how the requirements will be implemented into UK domestic law in the light of Brexit.
One of the focal points of the revised EPBD is to advance the realisation of Smart Ready Technologies (SRT) in the building sector. A requirement of the directive is the development of a voluntary European scheme for rating the smart readiness of buildings called the Smart Readiness Indicator (SRI). The SRI aims to deliver greater clarity and certainty about the benefits of smarter buildings in order to motivate investment and adoption amongst owners, tenants, managers and users. The indicator is also intended to support linkages between buildings and other key policy segments, particularly energy, transport and information communication technology (ICT), thereby integrating buildings into future energy markets, transport systems and the broader digital infrastructure of cities.
The methodology for calculating the SRI will take into account the use of interconnected and intelligent technologies such as smart meters, building automation and control systems, self-regulating devices for indoor air temperature and humidity, recharging points for electric vehicles and on-site energy storage capabilities. What is key is the interoperability of all of these features.
In addition to what is set out by EPBD, landlords in the UK also need to ensure that their buildings are compliant with Minimum Energy Efficiency Standards (MEES). Since 1 April 2018, it is prohibited to grant a new lease or to renew an existing lease for a commercial building where the Energy Performance Certificate (EPC) has a rating of less than ‘E’. These rules extend to all existing leases from 1 April 2023. Furthermore, the Government’s Clean Growth Strategy published in October 2017 indicated that in the future an EPC rating of ‘C’ may be required, as is already the case in the Netherlands. The incorporation of smart technologies and AI into buildings could be pivotal in achieving compliance with these stricter energy efficiency standards.