Will the Green Deal improve energy efficiency in commercial buildings?
Around 25 per cent of work places are poorly insulated and consume too much energy. Through innovation there is an enormous range of technology and simple management techniques that can improve the energy consumption within a building.
The Green Deal aims to improve the energy efficiency of our buildings. It works on a ‘payback as you save’ basis. – i.e. you pay for a loan from the savings achieved through the energy efficient technology investment. While a large part of the Green Deal focuses on homes, it also applies to commercial businesses.
The scheme looks relatively simple for homeowners. They take out a loan for the improvements. They pay for the investment out of the savings they make. If they move home, the loan stays with the property, and the new owners take over the loan. Again, with the savings in energy paying for the loan.
But what happens with commercial properties?
The vast majority of buildings that I visit have a large array of improvements that could be undertaken to benefit the overall efficiency of the building. The problem lies with the fact that, in many cases, the building is owned by a different company to the businesses paying the energy bills. The landlord may not be interested in investing, as he or she does not pay the bills. The tenants may not be interested in the investment as ultimately it is not their property, and one day they are likely to move on.
I am concerned that we have a classic landlord/tenant battle. Neither is prepared to make improvements to a building because the other will benefit in the long term.
What does the Green Deal propose to do about it?
The Green Deal states that it does apply to landlord tenant agreements. One good point is that before landlords can rent out a property it has to reach certain standards.
But how will the landlord benefit if the tenant is paying for the energy bills?
The Green Deal also states that for existing agreements landlords must “honour requests” from tenants to improve the energy efficiency of the premises.
This is all very well in theory, but in practice there is going to have to be a lot more joined-up thinking. Relationships between landlord and tenant are often not based on co-operation, but are more confrontational. Therefore, the Green Deal must lay down clear principles and rules that ensure the energy improvements benefit both the tenant and landlord.
I welcome the Green Deal, as it goes a long way to improve the state of our existing commercial buildings. However, the Government still has a great deal of homework to ensure it reaps the benefits it expects from these measures.