Do You Need an EPC for Commercial Sites and Warehouses?
With Environmental, Social, and Governance (ESG) strategies now firmly atop business and shareholder priorities, supply chain professionals face mounting pressure to ensure their facilities meet increasingly stringent energy efficiency standards. Central to the discussions and challenges afoot lies the Energy Performance Certificate (EPC), a document that seems innocuous and straightforward on the surface, but one that has become an influential factor in determining warehouse quality to discerning players in supply chains. At the risk of triggering alarm bells, EPC ratings affect warehouse operations, value, and wider supply chain resilience.
Understanding Commercial EPCs and Their Role
An EPC assesses a building’s energy efficiency on a scale from A (most efficient) to G (least efficient). EPCs are classified into two main categories: domestic and non-domestic, and since this piece focuses on warehouses and commercial facilities, the latter EPC type is most prudent to discuss.
Since their inception in 2008, EPCs have been mandatory for most commercial properties when sold or leased in the UK, providing a top-level overview of how much energy a building consumes in order to preserve its indoor climate. However some sites are exempt.
Industrial and logistics facilities, understandably, are larger and require more energy than the average domestic dwelling. Commercial EPCs will invariably evaluate key elements ranging from insulation and heating and cooling system quality to lighting efficiency and structural building fabric. Each EPC certificate remains valid for ten years unless substantial alterations are made to the building, but as standards and regulations have evolved in recent years, warehouses and other facilities may be wondering where this leaves them.
The MEES Framework
The Minimum Energy Efficiency Standards (MEES) regulations, introduced under the Energy Act 2011, establish the legal requirements for commercial property energy performance. Since April 2023, all commercial properties must maintain a minimum EPC rating of E to be legally lettable, a requirement that now applies to new and existing tenancies.
According to EPC building survey experts Bradley Mason LLP, “The government estimates that 18% of commercial properties across the UK hold EPC ratings of F or G and as such the new minimum energy standards aims to improve the EPC ratings of England and Wales commercial building stock, to tackle Greenhouse Gas emissions.“
However, the current E rating is simply a stepping stone to more ambitious long-term environmental goals. By April 2027, commercial properties must achieve a minimum EPC rating of C, and by April 2030, this minimum requirement increases to B.
These progressively tightening standards reflect the UK government’s commitment to achieving net-zero carbon emissions by 2050, while establishing intermediate milestone targets to drive meaningful improvements in the built environment’s energy output and performance.
Are Warehouses Exempt from EPC Certificates?
Interestingly, at present, not all warehouses and industrial sites require an EPC. According to government regulations, facilities classified as “industrial sites, workshops, or non-residential agricultural buildings with low energy consumption”, in relation to the heating and cooling of the space, may be exempt.
Practically speaking, this could apply to warehouses without any integrated heating systems or office spaces, or those where heating is used purely for frost protection.
Exemptions also apply to buildings that fall under the following categories:
- Listed or officially protected buildings where minimum standards would unacceptably alter the structure
- Temporary buildings intended for use of two years or less
- Buildings with a total floor area under 50 square metres
- Properties on leases of less than six months or more than 99 years
- Buildings scheduled for demolition with appropriate approval and consent
Nonetheless, most warehouses, particularly those with smart climate control systems, office facilities, or refrigeration units, fall well within MEES criteria and thus require up-to-date EPCs.
What Does This Mean for Industrial and Logistics Facilities?
Research from Savills indicates that approximately 78% of current UK industrial and logistics supply holds an EPC rating of C or below. This suggests that over 1.16 billion square feet of warehouse space in the UK is below the proposed minimum B rating required by 2030, which only illustrates the challenges afoot for the sector.
An article by MotorTransport (in collaboration with Midland Pallet Trucks) described the UK warehousing sector as facing an imminent “energy efficiency crisis”, and how 18% of current storage space could be deemed unusable by 2027 when the new requirements kick in. What’s worse, by 2030, if trends continue, 60% of warehouses risk being operationally non-viable if substantial upgrades aren’t made. Given that 82% of warehouses were built before the 2000s, most lack the insulation, heating and modern design features to meet modern energy standards, and coupled with the interconnectivity of supply chains, the damage from facilities being taken offline suddenly can be catastrophic.
Pathways to Warehouse EPC Compliance
While the outlook may appear bleak from some angles, there remain opportunities to improve energy efficiency in warehouses, which could translate into better EPC ratings.
- Transitioning from traditional lighting systems to LED systems across the board
- Utilising available roof space for solar photovoltaic (PV) panels (research from the aforementioned Savills report suggested that 40% of roof space can deliver 97% of the energy needs for the estimated 250 million square feet of warehouse space)
- Improving wall, roof, and cavity insulation to reduce heat loss and maintain consistent internal temperatures with lower overall input
- Replacing inefficient boilers and air conditioning systems with high-efficiency modern alternatives (leveraging whatever grants are available to offset upfront costs)
- Sealing persistent gaps around doors, loading bays and windows to minimise heat loss
“The market for compliant facilities is growing”
Properties failing to meet MEES standards risk not being able to be let legally, and as such, the market for compliant facilities is growing. As energy costs continue to rise, and tenants increasingly tighten their belts, the more efficient you can make your building now, the better it will be in the long run. Properties already in the B or C rating band may not require as much capital to remain compliant as standards tighten, while those rated F and G currently must invest heavily into retrofitting and renovating premises to meet evolving new criteria.
Doing so has wider implications across the supply chain. Facilities with more modern systems risk fewer breakdowns and operational disruption, and more supply chain partners will be inclined to work with them having assessed ESG criteria ahead of time. Research examining ESG factors in warehouse operations illustrates that consideration of ESG elements in storage can improve environmental and economic performance by up to 33%, which is difficult to overlook in challenging economic times like today.
For supply chain professionals managing warehouses, the first step is to engage accredited assessors to comprehensively evaluate facilities, particularly those falling below ratings of D or E. Even facilities currently with EPC ratings of C should begin evaluating their route towards a B rating sooner rather than later, to avoid any last-minute surprises. Where improvements are prohibitively expensive or unfeasible, consider consulting the PRS Exemptions Register for guidance.
Next Steps
It’s no secret that energy efficiency requirements for properties, both residential and commercial, will only intensify in the coming years. The progression from E to C to B will also not be linear or straightforward, and is indicative of how the built environment will be viewed and scrutinised in the near future.
Supply chain professionals must adapt and rethink their energy performance management strategies, and those who recognise this profound shift and take proactive action will find themselves in an advantageous position in a marketplace so heavily governed by sustainability initiatives.
