Keeping the lights on: Energy and commercial property/Summer 2013
Aug 8 2013
- Coal, gas and an ageing nuclear network account for over 90% of the UK’s energy capacity. EU emissions legislation means that the majority of coal stations will be closed by 2015, whilst the nuclear network is either in the process of being decommissioned or has a decade of operational life left.
- Ofgem reports that there are serious question marks over the UK’s capacity to meet demand by 2015 while energy costs are also going to continue to rise. Ensuring energy supply will have major implications for the businesses and the commercial property sector.
- The future of energy supply in the UK requires a mix of cleaner coal, gas and nuclear, with a government mandate to support all forms of renewable energy. There are no shortage of renewable resources in the UK, whether wind, tidal or reserves of unconventional gas. Whatever the mix, it needs to be embraced and decisive action is required soon, with the credibility of UK plc at stake if not.
- Demand for energy from commercial property is expected to increase by as much as 50% by 2030, depending on levels of economic growth. This is despite all new build required to be zero carbon and minimum EPC requirements for private rentals from 2019.
- Microgeneration, the small scale production of energy by individuals or occupiers for their own needs, has the potential to alleviate the pressure on the national grid, as well as providing other noticeable benefits for the occupier. Dependent upon technological advances and costs, take up of this source of energy is expected to increase by as much as 3,600% by 2030 and could well provide up to 24% of UK energy capacity.
- In terms of microgeneration schemes registered to receive payments via the Feed in Tariff (FIT) for energy generated, there are 310,000 residential installations but only 7,257 for commercial property. The residential sector outweighs commercial by four to one, with 150 installations per million sq m compared to 36 per million sqm for commercial.
- In order to avoid an energy gap, renewable energy has a greater role to play. The commercial property market has the potential to play a significant role in meeting this challenge, as well as providing energy security for businesses who otherwise may suffer if no action is taken.