“Clean Energy for All Europeans” – how and why the new EPBD will affect your developments

In the race to go green, developers and funders alike should see the new EPBD as an opportunity to establish themselves as market leaders in sustainability, on the ‘Road to Zero’.

27 July 2018

By Jen Glinos and Oliver Lowson

The new Energy Performance of Buildings Directive (EPBD) seeks to ensure that new and existing building stock is "cleaner and more sustainable" and "fit for the 21st century”, with a key focus on electro-mobility. Consequently, the EPBD will be of relevance to stakeholders in the development, investment, funding and utilities sectors.

Regardless of the agreement on Brexit, the ethos of the EPBD has arguably been reflected by the government’s newly announced measures to facilitate a shift towards sustainable development, low carbon transport and “green” energy consumption.

What is the EPBD?

Directive 2018/844/EU amending Directive 2010/31/EU on the Energy Performance of Buildings Directive 2012/27/EU on Energy Efficiency was published in the Official Journal on 19 June 2018 and came into force on 9 July 2018.

The EPBD forms the first part of the “Clean Energy for All Europeans” initiative and seeks to encourage energy efficiency and building renovation in an attempt to decarbonise existing European building stock and a transition towards energy efficiency throughout the EU.

The EPBD maintains the key features of the existing Directive, but in addition:

  • generally promotes cost-effective renovation work
  • introduces a ‘smartness indicator’ for assessing the energy efficiency of building stock within the EU
  • simplifies the inspections of heating and air conditioning systems
  • introduces binding electro-mobility obligations by setting up a framework for EV parking spaces
  • obliges all new buildings to be close to zero-energy by 31 December 2020.

Member states are required to transpose the EPBD into national law by 19 February 2020 (within 20 months of publication).

Smart readiness indicators

The EPBD introduces the concept of rating the “smart readiness” of a building.

“Smart readiness indicators” include features for enhanced energy savings, benchmarking and flexibility, and enhanced functionality/capability due to interconnected/intelligent “smart” devices, such as:

  • building automation and control systems
  • self-regulating indoor air temperature systems
  • built-in appliances
  • EV charging points
  • energy storage.

The methodology for determining smart readiness must rely on three key principles:

  1. Performance: the ability to maintain energy performance through adapting consumption e.g. through the use of renewable energy sources.
  2. Occupier use: the ability to adapt in response to the occupiers needs in a user friendly manner e.g. through the maintenance of healthy indoor climate.
  3. Overall demand: flexibility in relation to the building’s overall electricity demand from the grid e.g. what impact would the use of energy storage systems have on overall demand?

In order to digitalise the building sector, the EPBD requires incentives to promote smart-ready systems to provide consumers with more accurate information about their energy consumption.

EVs and parking spaces

New non-residential buildings or non-residential buildings undergoing major renovations (with more than ten parking spaces), must ensure that at least one recharging point is installed and available for use.

In addition, new buildings or buildings undergoing major renovations (both residential and non-residential with more than ten parking spaces) must be equipped with dedicated infrastructure to facilitate subsequent installation of a recharging point in:

  • every parking space for residential buildings
  • one in five parking spaces for non-residential buildings (subject to allowable exemptions for small or medium-sized enterprises).

Both of the above requirements may also be subject to further exemptions including for example where the cost of installing recharging and ducting installations exceeds 7% of the total cost of the renovation of a building.

Member states must lay down requirements for the installation of a minimum number of charging points for all non-residential buildings with more than 20 parking spaces, by 1 January 2025.

When technical building systems (e.g. EV charging facilities or infrastructure) are upgraded, replaced or installed, the completed system must be assessed/re-assessed. The results of those tests will form part of the required energy performance certificates that must be maintained by the owner of the building. Failure to meet minimum requirements may affect the value of the building.

Heating and conditioning systems

All heating systems must be regularly inspected and assessed in relation to the efficiency and sizing of the heat generators against the heating requirements of the building with a view to optimising performance.

Member states must lay down requirements for buildings to be equipped with the following systems:

  • Non-residential buildings with an effective rated output for conditioning, heating or combined heating or conditioning and ventilation systems of over 290 kW: building automation and control systems which allow energy use to be logged, analysed and adjusted, and which also detect losses in efficiency and inform responsible persons of opportunities for improved efficiency by 2025.
  • Residential buildings: continuous electronic monitoring and effective control functionalities to ensure optimum generation, distribution, storage and use of energy.

Nearly zero-energy buildings

A ‘nearly zero-energy building’ is a building that has a very high energy performance (determined in accordance with Annex 1 of the EPBD). The nearly zero or very low amount of energy required should be largely covered by energy from renewable sources (e.g. on site or nearby).

All new buildings must be ‘zero-energy’ by 31 December 2020, save for public buildings, which must be ‘zero-energy' by 31 December 2018.

What if I fail to comply with the EPBD?

The EPBD does not stipulate precise penalties but instead allows member states to exercise their discretion when determining appropriate penalty levels. Current UK regulations will need to be amended prior to the end of the transposition period, so watch this space.

Comment

The EPBD illustrates a clear drive towards sustainability across the EU. The European Commission will be playing a more proactive role in encouraging sustainable and "green" investments through the use of the Capital Markets Union to support and promote the Sustainable and Responsible Market.

If the UK proceeds with Brexit, although some of the deadlines specified by the EPBD fall long after the UK is likely to have left the EU, the deadline for transposition into domestic legislation is likely to fall within the Brexit transition window. However, irrespective of Brexit, the government has now published its long-awaited report, The Road to Zero (PDF), setting out its strategy for the transition to low carbon transport in the UK and confirming its intention to introduce mandatory recharging points as an integral part of the shift to low carbon transport.

The government has further sought to encourage increased investment in EV infrastructure by offering a £400 million fund to those companies producing and installing charging points. The report clearly demonstrates the UK’s willingness to lead the way in the race to go green and not fall behind the rest of the EU. Read our further commentary on the “Road to Zero”.

On 23 July 2018, Ofgem published a set of proposals to boost the EV market, including offering incentives for EV owners to charge their vehicles at off-peak or peak renewable energy production times. The move was welcomed by the National Infrastructure Commission. However, on considering Ofgem’s proposals, NIC Chairman, Sir John Armitt, stressed that there must also be “…investment in a truly national, visible charging network, so that infrastructure can give drivers the confidence to make the switch from petrol and diesel, and not be the barrier”.

The move towards sustainable investments is increasingly felt by investors and funders carrying out financial due diligence on potential development projects. A key concern will be whether a development has been “future proofed”, for example, to provide electro-mobility in the design and construction phase of a build, or whether more costly retrofits will be required to meet these standards at a later date.

Further, this is likely to be a concern regardless of the outcome of Brexit if the appetite of investors and funders for (and consumers/users of) sustainable buildings continues to increase, such that recharging infrastructure and other green credentials become the new norm. In that sense, the demand for sustainable development may eventually be driven by commercial, as well as environmental and political motivations. Developers should not see the EPBD as yet another example of European bureaucracy but as an opportunity to increase value in its built assets and distinguish its offerings from those already provided for in the market.

Key contact

Lloyd James

Lloyd James Partner

  • Energy, Power and Utilities
  • Infrastructure
  • Construction and Engineering

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