Energy Performance Certificate (EPC) reform: consultation

2. Current EPC System in Scotland

An EPC provides basic information about the energy efficiency of a building. The Scottish EPC register website^[14] can be used to find the EPC for a building if a valid EPC exists. Once lodged on the Scottish EPC Register an EPC is valid for ten years or until it is replaced by a new certificate.

Domestic and non-domestic EPCs display different metrics and also use different methodologies. The most prominent metric displayed on the current format for domestic EPCs is the Energy Efficiency Rating. This is based on the modelled cost to run the dwelling, normalised to floor area (meaning larger properties do not perform worse than smaller dwellings purely due to their size). Non-domestic EPCs display the Energy Performance Rating, which is based on modelled carbon dioxide emissions from the building^[15], also normalised to floor area.

The assessment used to produce an EPC collects basic information about the building. This includes the floor area and construction type, and details about the heating, lighting, and ventilation systems. The assessments are based on a non-intrusive survey using visual observations. This means that for some parameters the methodology uses assumptions based on the age of the building (for example for the thickness of flat roof insulation, which usually cannot be seen). Where documentary evidence is available to the EPC assessor, this can support the use of specific values instead of default values.

Both domestic and non-domestic assessments are intended to reflect, and allow comparison, of the building assessed, rather than its occupants. For this reason, the calculations are based on standard patterns of occupancy and use. For example, this means that the cost figures in a domestic EPC are not bespoke to the current occupants. Instead, they allow comparisons to be made between dwellings regardless of the occupant’s behaviour (and even whether the dwelling is occupied or not).

The EPC also presents a set of advisory improvement measures and displays the ratings that could be achieved if the recommended measures are installed. The improvement measures are based on logic set out in the methodology and do not account for site-specific issues, such as permissions required to install the measure. EPC assessors may suppress recommendations if there is evidence to justify doing so. They cannot add additional recommendations.

The methodologies used to calculate the information displayed on EPCs are owned and developed by the UK Government^[16]. They are approved for use in Scottish EPCs by Scottish Ministers. The Scottish Government works with the UK Government and other devolved administrations to ensure the methodologies are developed appropriately for Scotland. The changes we propose would add additional information to Scottish EPCs alongside the metrics used across the UK, but would continue to be underpinned by the same methodologies.

2.1 Domestic EPC Methodology

The Standard Assessment Procedure (SAP) is the methodology used to calculate the information displayed on domestic EPCs. SAP is used for new dwellings. For existing domestic buildings, the assessor usually does not have access to the full dataset required to undertake a full SAP calculation (such as technical details about the windows, or the individual layers that make up the walls). For this reason, a modified version of SAP is usually used for existing dwellings. This is called Reduced Data SAP (RdSAP). RdSAP sets out procedures to collect and infer data (including use of default values) to allow a SAP calculation to be performed. The use of RdSAP is often necessary because obtaining a full SAP dataset through on-site measurement would often be impractical and would significantly increase the cost of an EPC.

SAP assessments for new dwellings are performed by accredited On Construction Domestic Energy Assessors. RdSAP assessments are carried out by accredited Domestic Energy Assessors. These professionals are accredited by Approved Organisations^[17] and require specific qualifications and experience in order to be accredited.

Some stakeholders have called for SAP and RdSAP to be substantially amended, or replaced entirely, and an alternative assessment methodology used. This is within the power of Scottish Ministers, as set out in The Energy Performance of Buildings (Scotland) Regulations 2008. However, we do not propose to amend or replace the methodology at this time. This is for three reasons:

• Firstly, a major update to the SAP and RdSAP methodologies is under development by the UK Government. We are working with the UK Government and other devolved administrations to ensure SAP 11 meets the needs for use in Scotland and have received assurance from the UK Government that SAP 11 will address many of the concerns stakeholders have raised about the accuracy of SAP;
• Secondly, development of a new methodology (and associated ongoing management work) would need to be undertaken in parallel to the current methodology. This is because schemes and services that operate across the UK using EPCs would require the existing methodology to be maintained;
• Finally, we intend to make clear both on the EPC and in its usage, that the EPC (and its recommendations) is based on a relatively basic assessment of the building, and uses standardised values, and so is not a substitute for in-depth professional retrofit advice.

2.2 Current Domestic Metrics - Energy Efficiency Rating

Currently, domestic EPCs display the Energy Efficiency Rating (EER) for the dwelling. This is the most prominent metric on the EPC. The EER provides an A-G band and numerical 1-100 rating based on the cost to run the dwelling normalised to the floor area. This means that, for two dwellings of the same size, the dwelling with the better rating is calculated to have a lower annual modelled running cost.

As this metric is based on modelled running costs, it is not necessarily appropriate to use it as an indication of the dwelling’s fuel use or insulation level. This is because many fossil fuels, such as gas, currently have a much lower cost per kWh than electricity^[18]. This means that, for example, a dwelling heated by a gas boiler would achieve a better rating than the same dwelling heated by electric radiators. This does not align with our net zero ambitions. Similarly, insulating a dwelling heated by gas would achieve a smaller improvement in EER than insulating one heated by electricity, due to the difference in fuel price.

2.3 Current Domestic Metrics - Environmental Impact Rating

The Environmental Impact Rating (EIR) is based on the global warming impact of the emissions associated with the dwelling. This is based on carbon dioxide equivalent emissions (CO₂e). This combines the impact of carbon dioxide (CO₂) alongside methane (CH₄) and nitrous oxide (N₂O) emissions. The EIR considers both direct emissions from within the dwelling (e.g., through combustion of gas) and indirect emissions (e.g., from generation of electricity at a power station). The better the rating, the lower the modelled emissions. This rating is not widely used in policy and was removed as a headline metric from EPCs in England and Wales in 2020.

The EIR offers a means to compare the impact of dwellings on the environment in terms of their carbon dioxide equivalent emissions. It uses fixed carbon factors to ensure ratings are consistent across the lifetime of the methodology. This means its use as a tool to regulate for net zero is limited. This is because the carbon factor for grid electricity is currently roughly equivalent to natural gas but is forecast to reduce to near zero by 2045^[19]. Regulating using a rating based on current carbon factors could allow for further installation of gas heating systems, which is incompatible with net zero by 2045.

Instead, our Heat in Buildings Strategy sets out clearly that to meet our net zero targets by 2045, we need to focus on eliminating direct emissions from heating buildings. It would therefore be inappropriate to continue to focus on indirect emissions, which risks confusion about the measures necessary to move to zero direct emissions heating systems.

2.4 Non-Domestic EPC Methodology

Non-domestic EPCs are produced using the National Calculation Methodology (NCM). The NCM is defined by UK’s Department for Levelling Up, Housing and Communities (DLUHC) in consultation with devolved administrations, and is used in Scotland. Like SAP, the NCM sets out a standardised procedure for the calculation of asset ratings used on EPCs. The NCM contains a database of activity types and associated variables (e.g. occupancy and heat gains) that can be assigned to zones in the model to reflect the diversity of activities undertaken in non-domestic buildings.

The NCM calculation can either be implemented through the Simplified Building Energy Model (SBEM) or an approved Dynamic Simulation Model (DSM). SBEM is a simplified tool developed by BRE. DSM modelling uses a more complex simulation. DSM software is audited to ensure that it correctly implements the relevant standards. The route used is determined by the complexity of the building.

Non-domestic EPCs are produced by accredited Non-Domestic Energy Assessors. There are different qualification levels for NDEAs. NDEAs require higher qualification levels to assess more complex buildings.

2.5 Non-Domestic EPC Metrics

The Energy Performance Rating displays an A-G rating and 1-100 value based on the calculated emissions for the building in kg CO₂ / m² / year. Unlike the Asset Rating used on non-domestic EPCs in England and Wales, the Energy Performance rating is absolute. This means the rating is not based on comparison to a reference building in Scotland, as is the case in England and Wales. As a result the Energy Performance Rating on Scottish EPCs cannot be compared to Asset Ratings on EPCs in England and Wales.

To address this, Scottish non-domestic EPCs provide information about the rating that would be obtained if the methodology used in England and Wales was applied (with Scottish climate data). This is presented in the 'Comparative assessment - Feed-in Tariff' section of the EPC. However it is clear from stakeholder engagement that this difference in rating methodology is often not recognised.

The absolute rating used on Scottish EPCs has drawbacks. While it allows the performance of different types of non-domestic building to be compared, it is less useful for conveying the relative performance of a particular type of building. This is because there are many diverse non-domestic uses for buildings, and the use has a significant impact on the emissions. For example, a restaurant is likely to produce more emissions, and so have a worse Energy Performance Rating, than a shop. However this information is not particularly useful to the owners of the restaurant, for whom it is likely to be more important to know how their restaurant compares to restaurants with similar characteristics. We therefore need to reform non-domestic EPCs to ensure that they display more appropriate and useful information for building owners.