The UK’s Clean Growth strategy published by the Department for Business, Energy and Industrial Strategy (BEIS) in October 2017 set the ambition to improve UK productivity by helping businesses to be more energy efficient.
The aim is to improve energy efficiency by 20% by 2030.
To succeed, energy use needs to fall by 20% and energy intensity by 45% by 2030, compared to 2015 levels. As well as saving carbon, the plan aims to help UK businesses save around £6 billion in energy costs.
The elephant in the room
Whilst the initiative is bold and welcoming, there’s one unspoken obstacle.
According to the British Property Federation, 55% of commercial property is rented which is in complete contrast to the domestic housing ownership at 62%. Internal energy-saving measures such as lighting and heating are usually the responsibility of the tenant, whereas more substantial changes to the fabric of the building may require landlord’s consent. These improvements could include entrance lobbies, wall insulation or investments in on-site renewables.
For energy managers, this creates some distinct challenges.
- Lease lengths: Economic uncertainty has placed increased pressure on lease length getting shorter, the outcome being large investments made by tenants may not achieve the ROI within the lease period. This could be the case for insulation or renewables.
- Incentives – Energy Performance Certificates, albeit welcome, have a weak influence on the rental value. As a result, there’s no compelling reason for landlords to act, they actually need to be persuaded by the tenant.
- Relationships: Whilst cordial between businesses, many energy professionals do not have a direct relationship with landlords. Relationships are typically managed via property colleagues. As a result, it’s unlikely for frequent communications around energy efficiency to occur.
Saving energy and improving assets is a win-win for both tenant and a landlord. Yet making it happen can be difficult.
Project Horizon is a collective project to overcome this log jam. By bringing together tenants, landlords and infrastructure funders, we are trying to overcome barriers to investments (initially for solar PV) on leasehold assets.