CLIENT

SITE

CONSULTANCY TYPE

THE TASK

The asset manager wished to better understand the costs of ensuring the building achieved a ‘B’ rated energy performance certificate to meet likely new government requirements on minimum energy efficiency standards on commercially rented buildings (MEES).

After a demonstration of the EDGE APM software the asset manager asked Resero to transfer the building’s existing 5-10 year cost plan (prepared by other consultants) into APM software updating it as necessary based on current costs. We were asked to produce both a PMR and an APMR to enable a comparison between a business-as-usual scenario.

Sovereign House had an EPC rating of E (104) which was due to expire in 2024. The building possessed a Variable Air Volume (VAV) system with substantially sized air handling units (AHUs). These AHUs are older than much of the VAV infrastructure - such as ductwork and terminal units and had been scheduled for replacement in the planned maintenance report (PMR) as they were at the end of their economic life and in very poor condition.

OUR APPROACH

Through dynamic simulation modelling and the production of the PMR in EDGE APM software, Resero consultants quickly realised the AHUs had been scheduled for replacement without understanding that a VAV system would perform poorly against the government’s minimum energy efficiency standards. There had been no consideration of whether it was possible to transition to an alternative system within the engineering constraints of the building.

We ran various scenarios to conclude that the VAV system could be replaced with a variable refrigerant flow (VRF) variable refrigerant volume (VRV) or hybrid VRF (HVRF) systems and this would secure the building a ‘B’ EPC rating.

The PMR identified that the cost of maintaining, repairing and replacing the VAV system was in the region of £3.3m. However, this would lead to a potentially unlettable asset as it would not be able to meet a ‘C’ or ‘B’ rating with this system.

Conversely the APMR identified that the cost of transitioning to an alternative (VRF or VRF informed solution) coupled with other non-recoverable Category A costs would be in the region of £5.4m. This would secure an EPC rating of a ‘B’ and reduce energy costs.

Therefore, the true cost of transition was identified as circa £2.1m and some of this was able to be offset by capitalised energy savings over circa 10 years. With rising energy costs these savings could in fact be accrued much sooner.

If the AHU’s had been replaced as planned, it would have become difficult to let the property from 2024 onwards meaning the system would have had to have been replaced again in the near future at substantial cost.

OUTCOMES

This is a classic example of what the APMR was designed to do - improve decision making by joining up existing processes.

If the AHU’s had been replaced as planned, it would have been difficult to let the property from 2024 onwards meaning the system would have been replaced again within a few years at substantial cost. At least £3.3m of expenditure has therefore been saved.

On completion of the proposed APMR works the building will be more resilient to energy price fluctuations as the VRV systems are far more efficient in producing energy only when needed in a building.

The level of financial risk can now be accurately portrayed in financial reporting and climate-related risk reports.

The fund manager can meet their fiduciary duty to maintain and grow asset value and avoid a situation of asset stranding' due to reduced sale value or inability to let the building.