In a fast-evolving landscape of compliance, soaring energy costs and climate goals, optimising energy performance in commercial properties is a critical strategic move.
For London Climate Action Week Jack Allen, Managing Director of Building Energy Experts, hosted this practical webinar to explore how strategic energy efficiency can deliver substantial business value and drive critical decarbonisation – from reducing energy bills and future-proofing against regulation, to meeting ESG targets and improving asset value.
In this webinar, you’ll learn:
- Why the built environment is one of the easiest sectors to decarbonise, and why the UK’s current retrofit rate falls well short of what’s needed
- How MEES, ESOS and upcoming reporting rules will reshape what “compliant” means for commercial property
- The real financial case for retrofit – energy cost volatility, ESG-driven leasing decisions, and the Green Premium vs. Brown Discount
- The difference between building optimisation, light retrofit and deep retrofit, with the actual savings each one can deliver
- Why overheating is a retrofit risk almost no one plans for, and what building regulations do (and don’t) require
- How a real Bristol health centre used phased fabric-first retrofit to make an unaffordable heat pump upgrade viable within 15 years
📺 Watch the webinar:
Why Commercial Retrofit Is Urgent
The built environment accounts for 40% of the UK’s overall emissions – 23% from operational carbon (heating, cooling, ventilating buildings) and 12% from the embodied carbon of fit-outs and new build. It’s also one of the easier sectors to decarbonise, since the technology already exists, unlike transport or heavy industry. The problem is pace: the UK is currently retrofitting only 1–1.5% of its commercial stock per year, and that rate needs to reach roughly 5% to hit the 2050 net zero target. 70% of the commercial buildings still in use in 2050 have already been built, and at least 80% of those will need retrofit to get anywhere near target.
There’s also a genuine limit to how far electrification alone can go: renewable generation doesn’t track heating demand, and without cost-prohibitive amounts of battery storage, meeting peak heat demand on a cold January morning still leans heavily on gas. Improving energy efficiency is what closes that gap, not electrification on its own. A 2024 Forbes report estimated the global financial cost of climate change that year at $38 trillion – a figure worth remembering whenever the conversation turns to whether net zero is affordable.
The Regulatory Drivers: MEES, ESOS and Beyond
The Minimum Energy Efficiency Standards currently require commercial properties to sit above an F, effectively a minimum of E – but government consultation is underway on raising that to a C by 2027 and a B by 2030. That’s a serious gap to close: up to 70% of commercial properties currently sit below a B. Alongside MEES, ESOS reporting already applies to larger organisations (over 250 employees or £42m+ turnover), and government consultation is also underway on a performance-based reporting policy for buildings over 1,000 m², which would require them to report actual energy use rather than a static certificate.
The Business Case: Costs, ESG and the Green Premium
Since 2021, energy costs for businesses have risen by an average of 90%, translating to an overall average cost increase of 11% for energy-intensive businesses already operating on thin margins – and commercial property doesn’t benefit from the price caps that protect domestic customers, leaving unhedged businesses exposed to the kind of volatility that’s followed COVID and the war in Ukraine.
Retrofit is also increasingly an ESG and leasing issue: large corporations with strict ESG policies are declining to sign leases on buildings that don’t meet certain EPC, BREEAM In-Use or NABERS ratings, and are paying more for the ones that do. That’s the basis of what’s being called the “Green Premium” – a reported 15–20% increase in value for retrofitted, energy-efficient buildings – set against the “Brown Discount,” where inefficient buildings risk becoming stranded assets that can’t be let or sold once they fall below the regulatory minimum. On top of the asset value case, better air quality and thermal comfort in a well-retrofitted building also reduce absenteeism and improve productivity.
Building Optimisation, Light Retrofit and Deep Retrofit
Not every improvement requires disruptive works. Building optimisation – correcting wrong set points, faulty sensors and poorly tuned systems, without any physical changes – can deliver savings of up to 26% on its own, and is almost always the right place to start. Light retrofit (new building management systems and controls, pipework insulation, lighting upgrades, efficient equipment replacements and non-disruptive fabric measures) can be carried out without disrupting normal building operation, and combined with optimisation can deliver up to 37% in savings – with a strong enough return on investment that it’s worth doing as soon as possible.
Deep retrofit – new façades, windows and doors, roof and floor insulation – is usually necessary for older buildings with uninsulated fabric, but is best planned around your existing repairs and maintenance cycle rather than treated as a separate project: if a leaking roof needs replacing anyway, that’s the moment to specify insulation and a PV array, not a future retrofit programme.
A Practical Framework: UKGBC’s 10 Key Considerations
The UK Green Building Council’s net zero commercial guide sets out ten considerations worth following in roughly this order: understand how the building currently uses energy; identify what’s actually needed through a proper condition check; build the business case around regulation, cost and rentability; understand the roadblocks and opportunities – including the split incentive, where landlords pay for upgrades but tenants get the benefit, relevant to the 85% of UK commercial stock that’s let rather than owner-occupied; set clear, trackable goals; standardise your approach across a portfolio rather than treating each building separately; optimise existing systems before upgrading anything; upgrade heating, cooling, lighting and fabric; choose lower-embodied-carbon materials and reuse what you can; and monitor continuously after the works to prove the benefits actually landed.
Case Study: Sequencing Fabric and Heating at a Bristol Health Centre
This approach played out directly on our Horfield Health Centre project in Bristol. The health centre’s boiler was reaching end of life, and a straight swap to an air source heat pump had been quoted at around £500,000 – financially unfeasible against new gas boilers at roughly £30,000.
With very little existing data on the building – part built in the late 1950s, part extended later, with no plans available – we started with a PAS 2038 condition report and a commercial EPC, then commissioned further testing: thermal imaging, an air tightness test and a cavity wall inspection. One of the more striking findings was that the property’s government-lodged EPC was registered as a C-54, when it should have been an E(106) – a significant gap, likely down to incorrect floor area and assumptions in the original assessment. What the testing did confirm: air permeability so poor the team initially couldn’t get the building up to test pressure at all; an uninsulated but clear cavity; loft insulation that had been disturbed during electrical works and never replaced, leaving large gaps; and overheating risk in the south- and west-facing rooms, corroborated by occupant feedback about those rooms being too hot in summer.
The resulting plan sequenced fabric first, heating second: insulation and airtightness improvements now, positioning the building so that when the (already-failing) gas boilers eventually need replacing, a heat pump becomes viable without having to replace the entire heat emitter system throughout the building – avoiding a large part of the original unaffordable quote. Modelled together, the full package is projected to take the building to an EPC A with an 81% reduction in operational carbon, phased over roughly 15 years to fit the client’s actual budget rather than an unrealistic all-at-once fix.
Overheating: The Risk Almost No One Plans For
As buildings get more airtight and better insulated, overheating risk rises alongside it – and cooling demand is projected to increase 50% by 2030 against a 2004 baseline. Once cooling is installed, it tends to get used for around 10 months of the year even though it’s typically only needed for a handful of them, simply because a constant, comfortable temperature is convenient and controls are rarely set to reflect actual need. That has a real cost: the 2022 heatwave caused an estimated 4,500 excess deaths, on top of the lost productivity from people working in conditions that are too warm.
Building regulations on overheating currently only apply to buildings where people sleep overnight (multi-residential and healthcare settings) and only for new build – there’s no regulatory requirement forcing an overheating check on a typical office retrofit. That doesn’t make it any less important: any retrofit involving façade, shading or ventilation changes is a natural point to model overheating risk properly, following the cooling hierarchy in order – eliminating solar gain through shading first, minimising internal heat gains, then passive and mechanical ventilation, with active cooling only as a last resort. Retrofitting shading at the same time as other façade works is significantly cheaper than adding it – or mechanical cooling – as an afterthought later.
Q&A Highlights
- How should retrofit-focused companies split their offering between light retrofit and deep retrofit? Plan for all stages at the initial assessment, regardless of which one a building needs first. Optimisation and light retrofit can usually be justified financially in most cases; deep retrofit causes more disruption and needs to be planned against the building’s long-term maintenance schedule and tenancy situation.
- How do you encourage landlords in secondary markets – outside prime central London – to invest, when the upfront capex puts them off and reputational gain isn’t a priority for them? Most of the retrofit success stories people hear about are central London properties, which isn’t representative of the wider market. Change in this part of the market is more likely to come from legislation than voluntary uptake – on one project, a forklift truck company’s lease requirement that a small industrial estate building reach a B rating forced a fast upgrade, but that’s a “stick,” not a “carrot.” Financial incentives that could help – lower business rates for efficient buildings, 0% borrowing – don’t really exist yet.
- How can I access the PAS 2038 framework? It has to be purchased from the British Standards Institution directly – there’s no free version. If you’d like a copy free of charge, get in touch.
- How do you calculate the insulation value of a product – is it just the declared lambda value, or is there more to it? Beyond the declared value, we also carry out smart U-value testing – placing sensors either side of a wall or buildup to measure its real-world U-value directly. This is particularly useful in heritage buildings, where a thick stone wall might be assumed to have a U-value of 2 in modelling software but could actually be closer to 1 depending on the specific microclimate – and equally useful in new build, to confirm a specified buildup is actually performing as designed.
- If someone has a restricted budget and isn’t sure where to start, what’s the first step? Start with an initial energy audit, or even just a short paid consultation with someone who understands the whole process – enough to get an overarching strategy that accounts for your budget constraints over the next 15–25 years, so future costs can be planned for and afforded in stages rather than all at once.
What’s Next?
Whether it’s closing the gap to MEES’s tightening thresholds, sequencing fabric and heating measures to make a heat pump affordable, or catching overheating risk before it’s designed in by accident, the right diagnostic evidence up front is what turns retrofit from a cost into a genuinely sound investment.
We carry out commercial energy assessments and retrofit strategy for portfolios of any size.
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