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Understanding EPCs

On December 8, 2020, the Department of Mineral Resources and Energy (DMRE) in South Africa gazetted ‘Regulations for the Mandatory Display and Submission of Energy Performance Certificates for Buildings’. This legislation signifies that by December 2022, certain buildings in South Africa must have and display an Energy Performance Certificate (EPC).

To which buildings does the law apply?

The current regulations do not apply to all types of buildings. For now, only office buildings, places of entertainment (e.g., restaurants), places of instruction (e.g., schools, colleges, and universities) and places where theatrical or indoor sports activities take place need an EPC. Another condition is that the building net floor area must be more than 2 000m2 in the private sector and 1 000m2 for buildings owned, occupied, or operated by an ‘organ of state’. Shopping centres, shops, and hospitals do not need to have an EPC by 2022.

What is an EPC?

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At its most basic, an EPC is a measure of the energy performance of a building that is expressed on a certificate as a rating. This rating uses letters from A to G, with A being the best, denoting very low energy consumption per square meter and G the worst possible rating associated with very high energy consumption per square meter.

To determine the energy performance rating of a building, all sources of energy consumed in the building must be considered. These energy sources include all forms of electricity, whether from the national grid or from a solar PV plant, as well as fuel consumed by on-site generators, gas, or even solid fuel like coal used in the building.

For example, if there are two buildings with the same net floor area, and both buildings consume 1 200 000 kWh per year, but one building acquires 800 000 kWh from the grid and 400 000 kWh from a solar PV plant, while the other building acquires all its energy from the grid, they will both have the same EPC rating. Given that the one building obtains one-third of its energy from a renewable source does not affect the rating. However, the certificate will display the ‘energy mix’ of a building, so the fact that the building with the solar PV plant is less dependent on the grid will be clearly stated on the certificate. The EPC, therefore, provides transparency and visibility to tenants with regards to property owners’ investments in solar PV upgrades to their buildings.

An EPC is valid for up to five years and must be displayed in the building where it is visible to the public.

How to obtain an EPC

Only SANAS accredited EPC Inspection Bodies can issue EPCs. SANAS accredits an inspection body based on the fulfilment of certain criteria such as quality control procedures, equipment, personnel qualifications, experience, training, skills, and practical application of the EPC standard (SANS 1544).

The inspection body applies information and data received from property owners to determine a building’s rating. This includes consumption data for all sources of energy used in the building, occupancy data, and building plans to confirm the building net floor area. An effective inspection body can advise and assist a client with the data required for the EPC assessment.

The value of an EPC

An EPC may be regarded by some as a grudge compliance measure. On the flip side, it is an invaluable decision-making tool for improving the energy performance of buildings and property portfolios. For example, if a portfolio of 10 buildings comprises eight buildings with reasonably good ratings and two buildings with bad ratings, it is more likely that improvements that reduce the energy consumption of the two ‘bad’ buildings will yield better returns on investment than spending money on the buildings that are already performing well.

Although the impact of the display of an EPC on tenants and prospective buyers is difficult to ascertain, it is fair to anticipate that it could play a significant role, as has been demonstrated in countries where EPCs are more established; for example, it is not difficult to imagine that a building with a poor energy performance, as expressed on the EPC, could be more challenging to sell than a building with a good rating.

Consequences of noncompliance with legislation

Presently there are no fines or penalties published for qualifying buildings that do not display an EPC by the December 2022 due date. As a reference, other countries that adopted EPCs or similar measures introduced penalties and fines into legislation. It is not implausible that South Africa will follow suit.

It is therefore imperative to start the certification process sooner rather than later to mitigate against the potential risk to reputation because of noncompliance.

The way forward

If you own buildings that meet the qualifying criteria, you need to take immediate steps to have them certified. Since becoming mandatory in December 2020, few EPCs have been issued and the December 2022 deadline is fast approaching. The demand for EPCs is sure to increase dramatically as the capacity in the market (the number of accredited EPC inspection bodies), will most likely not be able to meet the demand. It is therefore imperative to act now.

By Frikkie Malan, Sustainability Lead at Remote Metering Solutions

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