Why EPCs should be redesigned

Article written by Stuart Fairlie, Managing Director, Elmhurst for the AT Journal 2023.

[edit] The EPC, from misunderstood to meaningful

Across 2023, the Government continued to turn up the intensity in net zero-related policy, placing greater emphasis on the need to quickly reduce UK carbon emissions and improve energy efficiency across our buildings. February saw the creation of the Department for Energy Security and Net Zero (DESNZ), with its Powering Up Britain report released in March and the Future Homes Standards consultation published at the end of the year closing only in March of 2024.

As part of the goal to reach net zero by 2050, it also looks increasingly likely that Minimum Energy Efficiency Standards (MEES) Regulations will require all newly rented properties to have a minimum EPC band C rating by 2025, and all existing by 2028. Non-domestic MEES already call for band C by 2027, and band B by 2023. To meet these dates the pace of improvement will need to be swift.

The cost-of-living crisis adds context here. The energy crisis in 2022, permeating into 2023, has shown homeowners the importance of energy efficient retrofit of their property to both reduce carbon emissions and cut fuel bills. However, in their current format, EPCs only show how cheap or expensive a home is to run. They do not currently measure the right things to help us truly reduce carbon emissions in housing and properly tackle climate change.

As the UK’s largest energy performance certificate (EPC) accreditation scheme provider for energy professionals, Elmhurst Energy is ideally placed to understand the challenges with the current system. It has long been calling for a reform of EPCs to improve the scope of what they measure to include the three Cs: energy consumption, energy cost, and carbon emissions.

[edit] The history of EPCs

The EPC is a legal requirement for all buildings in the UK that are constructed, sold, or leased. They were first introduced for homes in England and Wales in 2007 as a cost metric, simply informing how cheap or expensive a home might be to run – and have not changed since.

Over time, the EPC has evolved to include additional requirements such as Display Energy Certificates (DECs) for public buildings and the Minimum Energy Efficiency Standards (MEES) Regulations. A lot has happened in the 15 years since EPCs were introduced and priorities have inevitably changed for house builders, homeowners, and the government.

However, the 2050 net zero targets and the cost-of-living crisis have developed a powerful argument for both government and the public as to why the argument for decarbonising our buildings goes much further than fuel costs. As such, the current design of EPCs is no longer fit for purpose.

They need to be redesigned so that building owners’ have a better understanding on how to reduce their energy bills, lower their carbon emissions, and make informed decisions about their energy consumption.

[edit] Current EPC problems

Energy assessments and EPCs are based on an ‘asset rating’. This measures standard occupancies, such as a family living in the property operating the home on set temperatures and running times. It predicts utility bills based on average use patterns and average weather conditions, but using a one-size-fits-all approach has led to misunderstanding.

For example, as fuel costs have continued to rise, occupants are likely to have significantly changed their energy consumption habits. They may have reduced heating usage, adjusted heating timers, or used alternative heat sources such as wood-burning stoves that are not metered. Metered data also includes non-regulated energy such as cooking and running appliances, which the EPC does not account for.

Recent data released from CarbonLaces also shows that properties with EPC rating F and G consume less energy than standard occupancy expectations, highlighting the importance of accurately measuring and understanding occupant behaviour in all properties. At the same time these more inefficient homes are the most expensive to run, meaning the financial impact on residents becomes complex. Thankfully, current flaws in the EPC are now gaining broader recognition. In February this year, Lord Deben, Chair of the Climate Change Committee wrote to Parliamentary Undersecretary of State, Lee Rowley MP, outlining recommendations for improvements to the metrics of EPCs.

The letter emphasised the following:

• EPC ratings are an important policy tool but are poorly suited to this at present.
• Current EPC metrics do not accurately incentivise the energy efficiency and heating solutions required to deliver net zero homes.
• EPC metrics should be improved so they are easier to understand and can be compared with actual performance – enabling policies to be better targeted.
• Domestic EPCs should include four primary metrics, using real-world units, and clear simple names:
  • ‘Energy’: total energy use intensity (kWh/m2/yr)
  • ‘Fabric’: space heating demand intensity (kWh/m2/yr)
  • ‘Heating’: heating system type (categories of heating system, ranked 1 to 6)
  • ‘Cost’: energy cost intensity (£/m2/yr).
• Reforms to EPCs should be applied alongside wider improvements to the EPC system to improve the quality of assessments and use of data.

[edit] EPC redesign

Elmhurst would like to see a more comprehensive and informative EPC, rather like food nutrition labelling, to include the ‘three Cs’: energy consumption (kWh), energy cost (£) and carbon emissions (CO2). Elmhurst also want to see ‘The Golden Triangle’ of information being used in building assessment:

• Asset rating: the predicted energy cost and consumption of the building, based upon nominal or average occupancy patterns.
• Occupancy rating: the predicted energy consumption of the building, based on the people using it.
• Energy consumption: what energy the building actually uses to run, ideally based on data from smart meters.

All three pieces of information will inform the property owner where to focus the improvements, based on their priorities and how the occupier uses the home. They would support homeowners’ understanding around their energy consumption, enabling better decisions about energy consumption and which energy efficiency measures to introduce.

Fortunately, the national calculation methodology – SAP (standard assessment procedure) for homes – can present all three metrics. Elmhurst believes all three can and should be neatly illustrated in the EPC. Every environmental policy and regulatory campaign can then align to one or more of those metrics, and we can measure progress more easily. As a further improvement, EPCs should also reflect the current state of a property.

Typically updated every 10 years, many are now outdated and require reassessments and reissue. Any EPC should never be older than three years to maintain the relevance of estimates and recommendations.

[edit] The magic number

Elmhurst has long-advocated for the EPC to give equal prominence to cost, carbon and consumption. The good news is that the change to the EPC format is in the pipeline, which would deliver the right data to ground government policy on energy efficiency of buildings.

It would also enable our homes and non-domestic buildings to contribute to net zero by telling the full energy efficiency story of a building and encourage long-term energy efficient retrofit. Including the three sources of data would also give homeowners more accurate information about how to improve their homes to lower carbon emissions and reduce bills in the long-term.

This article appears in the AT Journal issue 148 from Winter 2023 and was written by Stuart Fairlie, Managing Director, Elmhurst.

--CIAT

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