Comment by Fay Holland, Senior Energy Policy Advisor, at Energy Systems Catapult.

Most people who have bought or rented a house will have seen an Energy Performance Certificate (EPC) at some point – the brightly coloured letter ratings are a familiar sight on house hunting websites, even if they’re rarely used to make decisions.

Those in the energy and buildings sector will be even more familiar. EPCs are often used to measure the success of home energy interventions through government grants and schemes, meaning they play a key role in shaping the market.

The shortcomings of the current EPC system are widely recognised: the focus on energy costs means that EPCs recommend new gas boilers for 25% of homes, hindering progress towards low carbon heating. There are also problems with the accuracy and consistency of EPCs, undermining the public’s trust in them.

Last week, the government published a consultation on reforming EPCs which will have far-reaching implications for the path to decarbonising the UK’s homes. This blog looks at the proposals and how they measure up to the recommendations we made last year.

Metrics

Our report recommended moving from the current single headline metric, based on the cost of energy, to three outcome-focused metrics:

• Energy Use: total modelled energy use of the building, used to incentivise improvements to the fabric and heating system efficiency.
• Energy Cost: costs of the energy used by the property, used in fuel poverty policy.
• Climate Impact: greenhouse gas emissions attributable to the property’s energy use, used in Net Zero policy to incentivise the shift to low carbon heating.

We have also been working with the Centre for Net Zero to develop proposals for a Smart Building Rating, which would reflect the property’s capacity to provide flexibility to the electricity system through low-carbon technologies.

The government’s consultation also proposes moving to a suite of multiple headline metrics. They suggest the following four:

• Energy Cost: illustrating the financial implications of a building’s energy efficiency.
• Fabric Performance: assessing the thermal performance of a building’s envelope.
• Heating System: providing information on the efficiency and environmental impacts of a building’s heating source.
• Smart Readiness: assessing a building’s potential to integrate smart technologies that can optimise energy consumption and the ability of consumers to benefit from cheaper smart tariffs.

We agree that retaining Energy Cost as a metric is important to keeping consumers informed and enabling policy to reduce fuel poverty. The inclusion of a Smart Readiness rating is also welcome and builds on the Smart Building Rating concept. We plan to publish a draft methodology for this early in 2025 and look forward to working with government on putting this into practice.

However, the Catapult is concerned that having separate performance metrics for Fabric Performance and Heating System will make it harder for the government to set technology neutral, outcome-focused targets and regulation. The Climate Impact metric we proposed is designed to focus attention on carbon reduction and allow scope for this to be achieved in different ways for different properties, rather than promoting either ‘fabric first’ or ‘heating system first’ approaches.

The consultation does not set out how the proposed metrics will be used in policy and regulation, and we look forward to seeing more detail on this, particularly in the upcoming consultation on raising the Minimum Energy Efficiency Standards in the private rental sector. How the metrics are used and implemented will be crucial to their effectiveness.

Other changes

The consultation also considers wider changes to EPCs, aimed at making EPCs more effective in bringing about improvements in buildings’ energy performance.

Those changes include:

• Reducing the validity period of EPCs, which is currently 10 years.
• Requiring a valid EPC throughout a tenancy in the private rental sector.
• Requiring all heritage buildings to have an EPC, with accompanying changes to the EPC calculation methodology to enable tailoring of recommendations to these buildings, avoiding any unsuitable measures being recommended.
• Introducing methods for measuring the thermal performance of homes using smart meter data, weather data and internal temperature data.

The Catapult is pleased to see that the consultation considers introducing methods for measuring the thermal performance of buildings. This was one of the key asks in our report, because we believe it will help to increase accuracy and boost confidence in EPCs. We believe that there is significant scope for innovation in this area and enabling reliable methods to be used in EPCs will grow the market for new methods that can accurately measure buildings’ thermal performance.

We would like to see greater ambition in improving the accuracy and reliability of EPCs. For example, we proposed moving to a system of digital building passports (also sometimes referred to as building logbooks), which would improve the reliability of EPCs by creating a single source of truth about a property and the measures that have been installed.

Reform of EPCs is vital, so while there are both positives and negatives to take from the government’s proposals, we are glad to see this process under way. The consultation is open until 26 February 2025. We’ll be developing our response over the next few months and would welcome conversations with innovators and others in the sector – please get in touch.