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Big fines, even jail time, planned for commercial property owners who don’t have energy performance certificates

Certain commercial property sectors need to be have energy compliance certificates by December or face huge fines and even jail time. Picture by Leohoho/Unsplash

Certain commercial property sectors need to be have energy compliance certificates by December or face huge fines and even jail time. Picture by Leohoho/Unsplash

Published Apr 13, 2022

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Only eight months remain until private owners of commercial properties in specified sectors must have obtained their Energy Performance Certificates (EPC), or risk a fine of R5 million, five years imprisonment or both.

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“As published in the Government Gazette on 8 December 2020, Energy Performance Certificates are now mandatory for private sector, non-residential buildings with a total net floor area of over 2000m² and, come 7 December 2022, these must be displayed at the building’s main entrance,” says Brent Townes, commercial property chief operating oficer for Lew Geffen Sotheby’s International Realty in Cape Town.

Townes says buildings in the following categories are required to be compliant:

• Entertainment and public assembly – such as bars, clubs, restaurants, gyms;

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• Theatre and indoor sports – movie and live theatres and indoor sports;

• Places of instruction or worship – schools, colleges, churches;

• Offices – stand alone as well as those which are part of a campus of office park;

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He adds that notable omissions are industrial, warehousing, logistics and retail categories.

“Large scale industrial sites and parks are already reviewing their capability to get off the National grid as reliability of supply impacts production and creates additional consequences for their businesses.

“And retail malls and centres are also seeking to use their roof space to create solar arrays in order to provide energy on sunny days and according to battery storage capability.”

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“These certificates must be obtained from an accredited body at the owner’s own cost and, typically, this cost will not have been provided for by the landlord in most lease agreements, so tenants will only have to allow the owner reasonable rights of inspection to ascertain the energy efficiency and performance of their leased space.”

“A building’s energy performance refers to the net energy consumed in kilowatt hours per square meter per annum (kWh/m2/year),” explains Townes.

“An Energy Performance Certificate (EPC) accounts for all major energy consuming systems including ventilation, heating, cooling, lighting and hot water and lighting and, once it has been obtained and submitted to the South African National Energy Development Institute (SANEDI), it’s valid for a period of five years.”

He adds that ultimately this new requirement could be a win-win as reducing energy bills are now a must, considering the recent NERSA-approved price hikes for Eskom.

“Buildings account for between 30% and 40% of carbon emissions worldwide, so the primary objective in obliging building owners to obtain EPCs is to make them aware of their energy consumption and encourage them to be more energy efficient.

“On a macro level, the gathering of sufficient data over a period of time will also allow for the energy performance of buildings in this country to be compared to how buildings perform internationally and improvements in energy efficiency systems can be made accordingly.”

Townes says that although building owners will incur additional costs initially, they are very likely to earn the outlay – and more - back over time.

“Energy-efficient buildings generally offer a better environment and are notably less expensive to run, so owners could potentially justify a higher sale or rental price.

“It’s also very likely that EPC’s will be used when properties are sold, with potential buyers easily comparing the energy usage of different properties which will not only assist in the choice of building to purchase, but will also give them a good idea of operational costs before they sign on the dotted line.”

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