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Summary report of the UK-GBC/DECC workshop: Green Deal for Non Domestic Buildings

BACKGROUND

The Government’s ‘Green Deal’ finance mechanism will help fund the upfront cost of

refurbishing buildings by spreading the repayments over time, and attaching a repayment

charge to the energy meter in a property, rather than the owner or occupier. The

Department for Energy and Climate Change (DECC) is currently drawing up proposals for the

scheme, in consultation with industry and consumer representatives.

The Energy Bill, which contains the enabling legislation for the Green Deal was introduced

to the House of Lords on Thursday 9th

December. It is intended that secondary legislation

will be introduced in autumn 2011 which will contain the detailed structure for the Green

Deal.

The purpose of this workshop was to consult with UK-GBC members on the design of the

proposed Green Deal for non domestic buildings policy. It was acknowledged that this short

workshop would not resolve all issues, but instead begin to identify challenges and

opportunities, and offer potential solutions.

FORMAT

The workshop was attended by 48 people from across the industry (see appendix 1 for full

list of attendees).

The attendees were split into 8 tables to consider a wide range of issues relating to the

Green Deal. Attendees were advised of their table allocation, and the questions they would

be asked in advance of the session. They were also provided with a DECC background

briefing.

KEY FINDINGS

1. To maximise business confidence in the Green Deal framework, Government must

ensure, as much as possible, policy certainty while ensuring a market-led solution

can be developed.

2. It was felt strongly that the assessment needs to be independent and credible.

Different assessors will be needed for homes/non-domestic buildings.

3. For measures to be eligible for the Green Deal, they must attach to a building i.e be

left when the tenant changes. However, it was recommended that the GD should not

be too prescriptive as professional assessment will determine which measures are

appropriate for a specific building.

4. It was felt that the GD would have generally positive rental impacts. Benefits

include improved building, improved ‘lettability’ and cheaper running costs.

5. Delegates suggested they would need clarification of how the costs of the GD would

be passed on to existing and new tenants, and what would happen in a multi-let

tenancy.

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SUMMARY OF TABLE DISCUSSIONS

1. Maximising confidence in the Green Deal

Delegates commented that one of the key issues to maximise business confidence in the Green Deal (GD) scheme is to ensure, as much as possible, policy certainty. Industry must not be worried that this policy will be dropped in a few months/years’ time otherwise they will not invest. It was recommended that the GD should use tools that the industry knows (such as SBEM) but improve them, rather than reinventing the wheel, and that existing assessors (e.g. EPC/DEC assessors) should be given ‘top up’ training to improve their skills.

2. Pre- Green Deal Assessment

It was felt strongly that the assessment needs to be independent and credible. Regarding

who should be accredited, many felt that the entire chain of supply (manufacturers,

installers, assessment, maintenance) should be certified.

There was consensus that different assessors will be needed for homes/non-domestic buildings, since non-domestic buildings are much more complicated and variable. Also, within non domestic buildings, it was further suggested that two levels of assessment will be needed for large and small buildings as different levels of expertise are required, and different levels of detail.

In terms of what the assessment should cover, numerous points were raised (see workshop

notes in Appendix 2 for full transcript). Key points include:

It should look at the whole building – the more of a ‘one stop shop’ the better

There could be two tiers of assessment – short term (tenant focused) and long

term (landlord focused)

The assessment could cover a broader range of issues than those covered by the

Green Deal. In theory the assessment should cover everything and the market

will decide what additional value it can add to the process.

The question of whether the GD should force recipients to implement a range of measures

to qualify was raised. Otherwise, if the GD is given for single element replacement this

might result in perverse consequences, e.g. over-sized boilers.

3. Green Deal Delivery Models

It was felt that in order to incentivise business to participate in the non-dom GD the

following conditions need to be in place:

The businesses involved need to be able to make profit

Policy certainty

Performance needs to be maintained for the next tenant/owner by the current

tenant/owner.

The ability to do a bundle deal on multiple properties?

Need someone to sign off the work (both pre and post) installation.

In terms of allowing businesses of different sizes (ie SMEs to large organisation) to

participate in delivery, concerns were raised that larger organisations may offer better rates

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than the smaller organisations causing distortion in the market, as smaller companies

(providers) cannot compete with larger organisations for finance. There should be a level

playing field of access to finance for all organisations to open up the market place for all

providers.

The market will determine who is competent to assess and install the energy saving

installations. This will divide the work between the smaller providers being capable to

service smaller (less complex) installations and larger organisations having the capabilities

to work with larger organisations.

The question was raised of who pays for assessments when organisations decide not to take

up the Green Deal scheme post-assessment.

4. Eligible Measures

For measures to be ‘eligible’ for the Green Deal, they must attach to a building – i.e. be left

when the tenant changes. However, it was recommended that the GD should not be too

prescriptive as professional advice is key to this working. Professional assessment will

determine which measures are appropriate for a specific building.

Delegates felt that there needs to be a margin of saving rather than a cost neutral outcome

for GD measures ie there needs to be a good chance that savings will be achieved. Delegates

noted that performance can fail at many stages and the process of installation/performance

must be subject to scrutiny and assessment, potentially requiring third party certification

against performance-based technical standards.

If products have to demonstrate performance against a standard then there will have to be

a list of third party certified products, but it was felt that any requirements must not stifle

innovation. Delegates felt that independent third party certification bodies should be used.

UKAS is already in place for independent scrutiny of certification bodies – but current

arrangements may need to be strengthened. Again there must be mechanisms to allow

innovative products to be eligible for GD.

It was also suggested that embodied energy should form part of the eligibility criteria.

5. Landlord and Tenant issues

The tables discussed whether a building having an existing GD scheme in place would impact

on rental/purchase decisions. It was felt that the GD would have generally positive rental

impacts unless improvements were specific to previous tenant. Benefits include improved

building, improved lettability and cheaper running costs. It was felt that the issue of voids

was important – who would pay the GD charge? Delegates wanted clarification of how the

costs of the GD would be passed on to new tenants – because it may be difficult to get them

to agree.

In terms of whether landlords would be interested in taking out a Green Deal that lasted

longer than the outstanding period on a lease, it was felt that landlords want to improve the

performance of their buildings, if it would add value. If coupled with mandatory roll out of

Display Energy Certificates (DECs) the GD could drive increased value being associated with

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higher performing buildings, which is crucial for mainstreaming refurbishment in the non-

domestic sector.

There is an issue to be further explored around a landlord’s ability to pass on the charge in a multi-let building. The GD needs to make clear if this can be done and how it would work with issues of sub-tenancy - there should be a provision to include sub metering installation. Also, landlords need to consider disruption to other tenants. If improvements in common parts can be passed through service charge it would help.

The question was raised of how do you demonstrate savings – what calculation methodology

should be used? The International Performance Measurement Verification Protocol (IPMVP)

already exists – is this something DECC should include? For purchase, the GD might be impacted by changes in a management company e.g. a change in management company may result in different results in terms of energy efficiency.

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Appendix 1 – Workshop Delegates

Name Company Group Issue Table No.

Alan Hilton Savills Landlord/tenant Issues 8

Alex Hill Upstream, JLL Landlord/tenant Issues 7

Alexa Driver UK-GBC

Amy Ruffle DCLG Pre- GD assessment 3

Anand Punja Timber Trade Federation Eligble measures 6

Aneysha Minocha Carillion Planned Maintenance Green Deal Delivery Models 5

Anna Walton WSP Energy and Environment Maximising confidence in the Green Deal 1

Ayi Baidya Johnson Controls Maximising confidence in the Green Deal 2

Chris Botten Better Buildings Partnership Landlord/tenant Issues 7

Chris Trott Arup Maximasing confidence in the Green Deal 1

Chris Whetstone GVA Grimley Green Deal Delivery Models 5

Dale Sharpe DECC Maximasing confidence in the Green Deal 2

Daniel Bura DECC Green Deal Delivery Models 5

David Craven Woods Bagot Pre- GD assessment 4

David Oeppen Burges Salmon Landlord/tenant Issues 7

David Warriner BRE Eligble measures 6

Dieter Gockmann EPR Architects Limited Pre- GD assessment 4

Duncan Price Camco Maximising confidence in the Green Deal 2

Gavin Pike Bennetts Associated Pre- GD assessment 3

Ian Goddard EP&T Global Pre- GD assessment 3

Ian Orme Rickaby Thompson Associates Ltd

Maximising confidence in the Green Deal 2

Ian Trim DECC Landlord/tenant Issues 8

Indra Thillainathan Committee on Climate Change Pre- GD assessment 4

James Low Arup Transaction Advice Pre- GD assessment 4

Jo Wheeler UK-GBC Maximising confidence in the Green Deal 1

John Alker UK-GBC Landlord/tenant Issues 7

John Ashford Sainsbury's Green Deal Delivery Models 5

Julie Alexander Halcrow Green Deal Delivery Models 5

Julie Godefroy Hoare IEA Pre- GD assessment 3

Keith Irwin Johnson Controls Green Deal Delivery Models 5

Laura Gardiner E.ON UK Green Deal Delivery Models 5

Mads Jensen Sefaira Maximising confidence in the Green Deal 1

Mairi Brookes DECC Pre- GD assessment 3

Malcolm Hull Drivers Jonas Deloitte Landlord/tenant Issues 8

Matthew Still DTZ Pre- GD assessment 3

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Michael Pillow Savills Maximising confidence in the Green Deal 1

Natasha Friend Aviva Investors Landlord/tenant Issues 8

NIcholas Katz Colliers Landlord/tenant Issues 8

Paul King UK-GBC

Paul Toyne WSP Group plc Pre- GD assessment 4

Peter Evans Adams Kara taylor Eligble measures 6

Peter Matthew DCLG Landlord/tenant Issues 7

Sarah Royse Inbuilt Maximising confidence in the Green Deal 2

Simon McWhirter Great British Refurb/Consultant Pre- GD assessment 3

Thomas Briault Arup Pre- GD assessment 4

Tim Brooks PRP Architects Pre- GD assessment 4

Tim Lord DECC

Tom Younespour British Property Federation Landlord/tenant Issues 7

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Appendix 2 – Full transcript of

notes from table discussions

TABLES 1&2

Table 1

Session 1 – Maximising confidence in the Green Deal

1) How can confidence be maximised?

High standards around Green Deal Assessors

Need a Green Deal Regulator

Need to build business confidence in policy longevity

Work hard to ensure savings

Shorten payback

Time with essential building upgrades

Public register of firms that have ‘taken the green deal – eg like a league table.

Table 2

Need Energy Conservation Measures to incur hidden/additional costs

Policy Certainty – policy must be clear for everybody – must apply to all. Long term

incentives must remain

Payback periods must be achievable

If baseline is dependent on building usage, what happens if building usage/energy

profile changes?

Baseline is just a snapshot in time. List of energy conservation measures might

change during the building’s life.

Business needs confidence that risk of green deal is underwritten (by government?)

Gov’t needs to ensure supply chain infrastructure is in place

Assessment vehicle/credibility is critical

What priority will be given to different types of energy conservation measures?

2) What is the role of Government?

Setting a clear framework and being a regulator

Session 2 – Accrediting the Green Deal

Table 1

3) Which elements require certification??

The assessors themselves – domestic and commercial

Individuals should be able to qualify not companies

Need for separate qualifications for commercial assessors as non-domestic buildings

are much more complicated.

Individual products? There was some debate about the need or not for products to

also be certified.

Table 2

Assessment needs to be independent and credible

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Entire chain of supply (manufacturers, installers, assessment, maintenance) must be

certified?

TABLES 3&4

Session 1 – Delivering the assessment

Table 3

1) Who is best suited to deliver the assessment?

Professional from various backgrounds, engineers, architects etc with training

Additional training will be required – ‘top up’ expertise/qualifications

Two levels of assessment – large and small buildings – different levels of expertise

are required, and different levels of detail.

Identify risks such as planning consent

Table 4

Assessor needs to be impartial, there needs to be transparency, not representing

vested interests.

Need a cost effective, simple process – self assessment based initially with some

level of third party auditing.

2) How can we make best use of the existing supply chain?

Consider how users of the building can be involved in the assessment – ‘eyes in the

building’

A set of technologies/measures with proven cost-benefit with a deemed saving

3) Is the EPC suitable/adequate as a GD assessment?

EPC model (SBEM) is the right basic tool that should be built upon – industry

understands it.

EPC assessment/assessors will have many of the skills required but may require ‘top

up’ training

Whilst we want to see a real operational outcome, use of DEC would be problematic

as DEC can be influenced by many factors.

Session 2 Coverage of the assessment

Table 3

4) What should the assessment cover ?

Should cover the cost box and the fixed equipment in it, not trade equipment.

Maybe the assessment should go beyond GD financed items – eg ‘quick wins’

Should the assessment/GD force recipients to implement a range of measures to

qualify? If given for single element replacement this might result in perverse

consequences, eg over-sized boilers. Need to consider the overall benefit of

measures together.

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Table 4

It should look at the whole building – the more of a ‘one stop shop’ the better.

The greater the comprehensiveness of the assessment, the greater the potential for

disruption!

Dependent on the trigger point – eg when tenants are changing over, whether there

are floors to decant the tenants to.

Could be two tiers of assessment – short term (tenant focused) and long term

(landlord focused)

The assessment could cover a broader range of issues than those covered by the

Green Deal. In theory the assessment should cover everything and the market will

decide what additional value it can add to the process.

We can’t just focus on fabric as there is a danger there won’t be a satisfactory

payback – so how far do we go with covering technology?

There is the potential to lease equipment to the owner/tenant, particularly for short

lifespan pieces of equipment.

5) What margin of error is acceptable in the assessment’s recommendation of GD

measures?

Table 3

Models such as SBEM require a great deal of data to give an accurate result – will this

be affordable? But if it is not accurate then the recipient will not potentially save

anything.

How will GD look at the ‘ideal world’ model used to assess savings and how usage

turns out in practice?

6) Is it possible to remotely assess a commercial building to a reasonable standard?

(small energy spend/particular types of business/building?)

Table 3

No!

Table 4

A degree of remote assessment is possible for a basic level of assessment:

o Self-assessment at no cost

o Then more detail – cost – may be absorbed, may not.

TABLE 5

Session 1 Green Deal Delivery Models

1. What is required to incentivise business to participate in the non-dom Green Deal

supply chain – e.g. by acting as a Green Deal provider?

The business involved in being a GD provider needs to be able to make profit

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Need stability – can’t change the rules half way through

Need a reasonable period of time to repay

Ensuring that there is something to make sure the owner is kept honest –

performance needs to be maintained for the next tenant/owner – should there

be a measure to keep maintained?

Ability to do a bundle deal on multiple properties? What happens if you sell one

of your properties in your portfolio?

Want GD to be easily transferable and not a way in which the owner can make

money when selling.

Discussed that someone would need to have the authority to sign off the work

(both pre and post) installation, in terms of quality standards. This is to ensure

that the work undertaken by both the assessor and installer ‘matches up’.

2. What is Government’s role in enabling the supply chain to function effectively?

Accreditation trust is an issue. Government needs to aid with trust in taking up

the scheme.

What can you get accredited for ie if you only can do one energy efficiency

measure should you be then have to be accredited again if you add another to

your portfolio as a GD provider?

3. How can we ensure businesses of all size can access the supply chain?

Accredited installer? CORGI? Pay per individual?

Discussed whether a larger organisation would offer better rates than the

smaller organisations causing distortion in the market.

Smaller companies (providers) can’t compete with larger organisations for

finance. There should be a level playing field of access to finance for all

organisations to open up the market place for all providers.

Session 2

1. How do you see the assessment requirements affecting the delivery model?

Should there be a separation between the provider and the assessor or can this

role be combined – specialist providers would struggle to provide a full

assessment for the entire building beyond their specialism.

Some organisations will want to pay for quality and for high standards regardless

of whether they pay this directly or not.

They will expect extended warranty to be available to ensure the quality of the

work.

2. How do you see the financing requirements affecting the business model?

The market will determine who is competent to assess and install the energy

saving installations.

This will divide the work between the smaller providers being capable to service

smaller (less complex) installations and larger organisations having the

capabilities to work with larger organisations.

Question of who pays for assessments when organisations decide not to take up

the Green Deal scheme post assessment.

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TABLE 6

Session 1 Eligible Measures

1. What should the criteria for ‘eligible measures’ be?

Must attach to building – ie be left when tenant changes.

Keep general – don’t be prescriptive – professional advice is key to this working

Be able to break down by end use ie space heating/ventilators/etc and set %

improvements

2. How can ‘fabric measures’ best be defined?

Tenant v landlord fit out would be important – landlord items more likely to stay?

3. Beyond a measure meeting the Golden Rule, what other performance conditions

could/should we require of measures? (e.g. to be in the top 25% of their class)?

Needs to be a margin of saving over cost neutral – needs to be a good chance that

savings will be achieved.

Embodied energy should be part of the equation.

Session 2

4. How should measures be accredited?

Professional assessment will determine which measures are appropriate for a

specific building.

Performance can fail at many stages – the work process must be subject to scrutiny

and performance assessment. Third party certification against performance based

technical standards.

5. How should the list of accredited measures be communicated to the market e.g.

through a product list?

If products have to demonstrate performance against a standard then there will have

to be a list of third party certified products – but requirements must not stifle

innovation.

6. Who is best placed to fill this role?

Independent third party certification bodies – market can expand to meet demand if

necessary.

Independent scrutiny of certification bodies – UKAS is already in place to do this –

but current arrangements may need to be strengthened. Again there must be

mechanisms to allow innovative products to be eligible for GD.

TABLES 7&8

Landlord Tenant issues

Session 1: GD decision making process

1. How would a building having an existing Green Deal impact a decision to rent or

purchase the property?

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Table 7 (answered questions together)

Owner occupier, single tenant, multi-tenant

Maintenance and repair – doesn’t get covered

Costs/or tenants

Increased liability for landlords

Cash flow – needs to be guaranteed

Transaction – potential impact on value

Disruption to tenants

Voids – who pays

How can costs be passed on?

Table 8

Could be a big push back:

problems perceived around sale of properties

change in management may impact the improvements in efficiency

if technology is tenant specific it might not benefit an incoming tenant

Rent – positive impacts unless improvements were specific to previous tenant

Purchase – might have onerous provisions – different management company = different results

2. What would encourage (or discourage) a landlord taking up a Green Deal or allowing

a tenant to do so?

Table 8

Landlord might be reluctant to agree to tenant taking out green deal longer

than lease length.

Disruption to other tenants?

Fabric of the building might be limited

3. Is it practical to split a GD between different tenants, particularly for ‘whole

building’ measures?

Table 8

Landlord’s ability to pass on charge in multi-let building – legislature needs

to make clear if this can be done.

What would ‘fabric’ include?

Session 2: Leasing issues

4. Would landlords be interested in taking out a Green Deal that lasted longer than

the outstanding period on a lease?

Landlords want to improve performance

Voids – who pays

If it would add value, landlords would carry out

Consent – difficulty to get tenants to agree

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Tenants won’t want to add capital to the building

Sub-tenancy?

Is a level of legislation needed to allow owners to pass on costs without

occupier permission?

Incorporation into leases/MOUs

How you demonstrate savings calculation methodology – International

Performance Measurement Verification Protocol (IPMVP) – is this something

DECC should include?

Key issues – risk and guaranteed revenue stream

Who pays for assessments?

Benefits include improve building, improve lettability and cheaper running

costs.

5. How can complexities around varying lease lengths within one building be

overcome?

Table 8

There should be a provision to include sub metering installation

Increased need for green leases and MOUs

If improvements in common parts can be passed through service charge it

would help.

Can Green Deal be phased?

Obligation to pay on voids, needs clarity.

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Appendix 3 – notes from plenary

discussion

Session 1

Session 2

Table 1 Trusted standard and accreditation

Business confidence

Clear framework

EPC/DEC training useful but needs to be topped up to be applicable for GD

Need more training than domestic assessors as non-dom buildings are more complex

Pick & mix options for training

Need a GD compliant product list but need to make use of existing products lists

Table 2 Policy certainty

Assessment building specific

Hidden costs for operation and maintenance

Every key stage of the GD process needs certification

Re-use certification that is already in place

Certification of individuals and not organisations

Table 3 Professionals should be able to get top up training on already existing accreditation.

Difference level of assessment – 1. Simple 2. Complex

EPC training will be very useful

Assess all elements that will receive the GD

Assessment should also identify quick wins

Data systems need to be accurate to ensure that savings are being made – but these systems are expensive

Can 1 measure be acceptable or do you need a range of measures

Can’t do a remote assessment of the building.

Table 4 Need to be cost effective – self assessment with a follow up

EPC most reliable model

Assessment should be broader than just the GD

2 levels of assessment – short term (tenants)/long term (core building)

Need to define what fabric improvements

Possible to do onsite auditing but self assessment would be useful to ensure that there aren’t lots of assessment but no GD take up

Table 5 Needs to be sustainable and stable

Small providers need to be getting involved

Needs to be profitable

Assessment should assess all areas for GD – specialists will have to assess outside their area

Different levels of assessments

Who should pay for the GD assessment if organisation doesn’t go ahead with GD

Larger providers will likely access better

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rates – dividing the market

Table 6 Needs to be general – shouldn’t be restrictive

Margin of saving needs to be sufficient – if the savings are only neutral then it might not be enough

Measures need to be performance bases

Likely to need a list of eligible measures

Independent 3rd body certification is already available – is a new GD list needed

Can not restrict new products to the market

Table 7 Need clear legislation on how tenant/landlords are affected

Understanding of the risks involved

Are drivers for GD take up sufficient

Build on reputation of EPC

Ideas on how landlords will be driven to take up the GD – if value of GD is demonstrated, buildings more attractive to tenants, GD can be delivered as a package

Do landlords or larger property have access to capital that could make these improvements

Table 8 GD will be positive for the tenant

Unsure if a GD will encourage property purchase/rent

Can the GD be phased

Need to understand how GD costs can be split between tenants

Need transparency for the tenant

Further comments

Cost of repair & maintenance needs to be taken into consideration

What happens if there is an assessment but no GD (how are the costs of assessment recovered)

Does the golden rule apply to each technology or as a bundle

Golden rule is dependent on cost of capital

Smaller maintenance and installers are best placed to do the assessment.

Implications of the word ‘fabric improvements’ may have negative connotations.

Can offshore companies by GD finance providers

Equipment needs performance maintenance

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Appendix 4 – additional notes

from delegates

Table 1 Notes from Consulting Engineer Session One: Maximising confidence in the Green Deal

Q1. How can consumer (business) confidence in the Green Deal be maximised?

Need for a regulator

Unlikely to attract people to engage unless business disruption is avoided. ‘Fabric’ sounds expensive; is it not better to aim at low hanging fruit?

The incentives will be best aimed at buildings when they are in need of modifications, not before.

Q2. What is the respective role of Government and the private sector in enabling confidence?

Keep an accessible register of loans.

The most customer facing party should be accredited to offer the service. Session Two: Accrediting the Green Deal

Q3. Which specific elements of the Green Deal process require certification? How should they be certified? How can we make use of existing certification models?

Each step needs certification. Individuals should be certified and could potentially certify each step unless they have a conflict of interests e.g. cannot certify what you do.

Existing industry bodies could offer a certification scheme overseen by a government regulator.

Table 2 Consultant Session One: Maximising confidence in the Green Deal

To ensure the business sees value in the energy.

Savings measures o There are no hidden costs

The ‘Golden Rule’ – Who bears the cost if assumed payback doesn’t stack up? o Is it the organisation? - No benefit

What has the calculation been based upon? o How does it relate to different occupancy patterns? o Will the customer have to sign up to and agreed/assumed operational profile?

Need policy certainty about every part of the system otherwise people won’t but into it.

Will a snap-shot in time be sufficient to allow the organisation to implement effective measures? o How long is the assessment? o What is the cost of assessment?

To instil confidence, someone will have to underwrite risk. o What are they underwriting?

Who is going to pay for surveys? o To add value to energy efficiency, need to ensure time to understand building

complexity.

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o Otherwise, keep the surveys and recommendations to a select list of simple measures.

Businesses are likely to have confidence in the scheme if they can see risks are underwritten.

Review success of similar schemes such as Carbon Trust Standard and Display Energy Certificates.

How successful have they been in achieving real savings? o Also Salix/HEFCE scheme.

Session Two: Accrediting the Green Deal Q3. Which specific elements of the Green Deal process require certification? How should they be certified? How can we make use of existing certification models?

Conundrum over EPC/DEC

Seems sensible to use the assessors already established and have two levels of accreditation. o Industry associations already set up to certify products etc. - Already exist and should be used:

1. Assessor 2. Manufacturers / Product Suppliers 3. Installers

All elements at each stage will require accreditation. o Maybe improve the existing certification components.

It appears burdensome on occupier to manage the input of the assessor, product suppliers and installers, and then manage/monitor improvement. o How could this be better managed? o Delivery model? o Contract Energy Management?

Table 4 Architect

1. Who is best suited to deliver the assessment? a. Anyone with a demonstrable possibly certified or accredited expertise in construction and sustainable technologies (which I include to mean simple technology such as insulation and draft proofing) who is independent and is able to communicate clearly with a market which is not well versed in the sustainable agenda. b. The assessor needs to understand the commercial imperatives faced by businesses considering taking up the Green Deal i.e. the knock on costs associated with carrying out building work on a commercial premises, including relocating staff and equipment, possible production down time and disruption (something that appears to be overlooked by many that specialise in the sustainable construction sector). c. Whoever delivers the assessment there needs to a credible form of recourse if the assessor underperforms or fails to act in the best interests of the person benefiting from their services. 2. How can we make best use of the existing supply chain? a. There are already a large number of sustainable construction bodies/federations/groups who could offer up suitable candidates to become GD assessors. These would benefit from coming together to form a single umbrella organisation to develop a single system of GD assessor accreditation. This would enable strong simple branding to keep things simple for

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the commercial market whilst providing flexibility behind the scenes to develop accreditation for a diverse range of assessors to reflect the needs of our existing diverse sub-prime property market. 3. Is the EPC suitable/adequate as a GD assessment? a. In principle yes, it is something which is simple and recognisable that hopefully decision makers at board level will recognise. b. The EPC provides an outcome which can easily be benchmarked across property portfolios or business premises. 4. What should the assessment cover – e.g. should it include the whole property; should it go wider than Green Deal energy efficiency measures only? a. Ideally everything required to maximise the energy efficiency and sustainability of a building, including the energy efficiency and performance of the building fabric; energy efficiency & performance of the installed technologies; maximising opportunities for renewable energy and heating; and addressing recommendations to facilitate behavioural change to improve the building’s operation and performance. Essentially a one stop shop assessment to tell the building occupier everything that needs to be done to a building to achieve an A-rating. b. The assessment should include a series of recommendations and identify the potential cost savings/implications of implementing the measures either as a consequential exercise or in a single hit, together with the potential cost implications of not implementing the recommendations and identifying works which are not suitable or would not provide significant benefits e.g. wind turbines in urban areas. c. A two-tier assessment would be useful for the leasehold market identifying works to the building fabric under freeholder control and other works under leaseholder control, subject to the lease arrangements for individual buildings. 5. What margin of error is acceptable in the assessment’s recommendation of GD measures? a. Any perceived errors or miss-selling (whether real or not) will undermine the GD. The commercial market is already very sceptical and resistance to the disruption associated with carrying out work under the GD is likely be high. Therefore assessments need to be simple, thorough and reliable and must include clear statements regarding any potential errors or assumptions that are explained to businesses before they commit to undertaking work under the GD. 6. Is it possible to remotely assess a commercial building to a reasonable standard? a. For certain buildings possibly yes. On-line self-assessments, if kept clear and simple, could provide a cost effective way to assess less complex buildings, particularly for the owner/occupier and/or SME business premises. This would require some form of on-site verification by the assessor to ensure the system is not undermined. Table 7 Typical Multi-Tenant Scenario:

- Works in owner occupied and long term single tenant leases Key issues:

Transaction o Will it have a negative impact on value?

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o Will it make a building harder to sell?

How savings are calculated and determined? Is there a guarantee? o Who does the assessment calculation? o How will the methodology be determined? – IPMUP? o Baseline – change in use over time.

Repayment o How is repayment calculated? - As a set rate or actually on savings? - Liability? o What happens when something doesn’t work? o Interest on loan? o How are costs passed onto the occupiers? o Tenant goes bankrupt / change of tenancy? o Requires Occupier buy-in. o Void space? o Sub-tenancy?

Disruptions

Lease o Impact on obligations o Dilapidations etc.

Asset: - Ownership of asset? Utility or owner - Whose responsibility is maintenance?

- Who will carry out works?

Administration burden? o Resources o Disuse - Energy cost not huge concern

Warranty for new buildings o 12 year contract under deal

Ownership structure o JU o Foreign ownership o Debt financed

Solutions:

Legislation to pass on costs o For works specifically to reduce carbon o Value and repayment threshold? o Meet carbon conditions?

Needs to be an incentive for all parties, particularly landlord if there is additional risk.

Table 7 Solicitor Session One: Green Deal Decision making process

Protection against maintenance/repair costs of installed equipment? o How does that relate to the ‘Golden Rule’?

a

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If a tenant was able to access the Green Deal, presumably the loan would need to be repaid within the contracted term of the lease? o What about breaks or forfeiture? o Would that give rise to mortgage protection type clauses in shorter leases? o Do tenants need to have a lease of a specified minimum period in order to access

the Green Deal?

What security (if any) would lenders expect in return for a Green Deal loan? o Presumably a charge against the property is a non-starter?

Table 8 Property company Session One: Green Deal Decision making process

Depends on the transparency the landlord can provide to incoming tenants

Tenants’ interest in total occupancy costs

If CSR policy would benefit from a more efficient space. Strongly suggest speaking with the gentleman credited with the creation of PACE financing in the US which was scrapped by our government. I’m happy to facilitate that conversation, he told me he would be happy to work with me and look into the UK market.

Table 8 Session One: Green Deal Decision making process

Q1. How would a building having an existing Green Deal impact a decision to rent or purchase the property?

Increased costs from tenant perspective.

New lease - Why should I pay for something installed 2 years ago? o Negotiating point

Landlord o Will it impact value? o Will it increase length of sale complexity? o Who owns asset?

Q2. What would encourage (or discourage) a landlord taking up a Green Deal or allowing a tenant to do so? Encourage:

Needs to be beneficial

Minimal risk

No negative impact on liquidity

Administrative burden

Guaranteed revenue stream Discourage:

Words

Change of occupants

Change of baseline

Who makes calculations?

Warranty

How costs are passed on

a

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Q3. Is it practical to split a Green Deal between different tenants, particularly for ‘whole building’ measures?

Needs to be split to be fair o If in tenants’ use

Probably best to keep how currently dealt with in building on other issues o Keep to norm

If need sub-meters, who pays? Session Two: Leasing issues

Q4. Would landlords be interested in taking out a Green Deal that lasted longer than the outstanding period on a lease?

No?

Depends on risk and liability o Cash Flow

Q5. How can complexities around varying lease lengths within one building be overcome?

Legislation

Incentives for all