MEES Regulations: Commercial EPC Ratings and Solar

What MEES requires of commercial landlords

GOV.UK says: "Since 1 April 2018, landlords of non-domestic rented properties have only been permitted to grant a new tenancy, or to extend or renew an existing tenancy, if their property has at least an Energy Performance Certificate (EPC) E rating, unless they have registered a valid exemption." From 1 April 2023 the requirement applies to all privately rented non-domestic properties, even where the tenancy has not changed (GOV.UK landlord guidance).

• Who it covers. Non-domestic rented property legally required to have an EPC, let for a term certain between 6 months and 99 years
• Who it doesn't. Terms of 6 months or less (with exceptions) and of 99 years or more, and property not required to have an EPC
• Empty property. No action is needed until you decide to let it again
• Enforcement. The enforcement authority can serve a compliance notice, and a confirmed breach can bring a financial penalty

You can look up a building's current certificate on the government register (find an energy certificate).

Current and proposed EPC thresholds

The interim response says existing flexibility, including the 7 year payback test and the exemptions, will remain, "ensuring that only improvements that are practical, affordable and cost-effective will be required" (GOV.UK interim response). It follows consultations in 2019 and 2021; the 2020 Energy White Paper had set EPC B by 2030 as the target (consultation page). The changes still need legislation, so watch for the full response.

Can solar improve a commercial EPC?

A commercial EPC grades a building from A to G and is produced by an accredited commercial energy assessor; it is valid for 10 years (GOV.UK). Rooftop solar becomes part of the building's own energy supply, so it is one of the measures worth testing on the way to E now or B later, alongside lighting, heating, controls and insulation. We don't promise it lifts a rating: that is the assessor's calculation.

How far a given array moves the rating, if at all, depends on the building, its other services and the size of the system. So the order that works is:

• Get the current EPC and its recommendations. They show where the rating is lost
• Ask an accredited assessor to model the options. Including solar of the size your roof can take, before you commit
• Get a solar survey. So the assessor models a real design, and you know what it does to the tenant's bills too
• Check the 7 year payback test. A measure that fails it can be registered as an exemption instead

Exemptions

An exemption must be registered on the PRS Exemptions Register before it can be relied on, and most last 5 years (GOV.UK). The ones a landlord considering solar is most likely to meet:

• 7 year payback. A measure fails where the expected bill savings over 7 years are less than its cost; lasts 5 years
• All improvements made. Every relevant cost-effective improvement is done and the property is still below E; lasts 5 years
• Third-party consent. An improvement needs consent from a tenant, superior landlord, mortgagee, freeholder or the planning department, and it can't be obtained
• Property devaluation. Lasts 5 years
• New landlord. A temporary 6-month exemption in certain circumstances

An exemption does not pass to a new owner when the property is sold.

Solar and your tenants

On a let building, the landlord usually owns the roof and the tenant pays the electricity bill. That split decides who pays for solar and who benefits: the landlord can fund it and sell the power to the tenant, the tenant can install with consent, or a third party can fund it under a PPA. Our guide to solar on leased property goes through green lease clauses and who owns the panels. For the wider picture on renewables for an occupier, see renewable energy for business.