Is It Time To Consider Renewable Energy?

Posted by The Landsite on 14th October 2022 -

If not now, when? With the cost of energy soaring, is it simply too late, or is it time for the government to support landlords and homeowners with assistance in installing renewable sources in residential and commercial property? 

With households and businesses facing colossal hikes in energy prices, the switch to clean, affordable, renewable energy has never been more urgent. Soaring energy prices are already causing significant issues for businesses and pushing more households into fuel poverty this autumn. 

Landlords are concerned that increased living costs could mean the difference between tenants paying their rent or falling into arrears. And those with tenants on a 'bills included' agreement may find it difficult to increase rents to cover spiralling energy costs.  

Improving energy efficiency

Energy efficiency is already on the agenda for property owners. The government is planning to introduce new rules requiring all new tenancies to have a rating of C by 2025. Existing tenancies would follow suit by 2028. This expectation means landlords were already planning to invest in energy efficiency improvements before the energy crisis, but with the prospect of lower revenues, just how achievable will this be? 

Improving a property's energy efficiency is an investment in an asset and the future yield of a property. Climate change has been changing the way some people view properties for some time. The energy crisis will heighten this further as prospective tenants consider and compare property energy costs. The value of an energy-efficient home will increase exponentially for tenants as fuel bills become a significant percentage of a household income. 

Landlords will need to weigh the cost of investment against its effect on revenue but also consider the disadvantage they may face if their properties don't move with the times. The government’s Heat and Buildings strategy makes clear that a gas boiler ban will apply only to new-build properties from 2025, as part of the Future Homes Standard. New homes completed from 2025 onwards are expected to use low-carbon heating systems, instead of traditional gas boilers. 

In the next few years, a large proportion of the UK's housing stock will either be carbon-neutral new builds or properties that have been retrofitted for renewables.

Net Zero target

With the government's target for energy providers for all electricity to come from 100% zero-carbon generation by 2035, and the UK aiming to reach net zero by 2050, there is already an increasing demand for commercial-scale renewable energy developments. 2020 was the first year in the UK's history that electricity came predominantly from renewable energy – 43% of our energy came from a mix of wind, solar, bioenergy and hydroelectric sources. 

According to property and auction specialists Greenslade Taylor Hunt, this is a significant opportunity for landowners. Renewable energy firms will seek to tie up land for large-scale solar PV and commercial battery storage schemes, offering landowners attractive and steady income streams. 

While landowners could benefit from the move to renewable energy, it's a significant expense for property owners already dealing with the impact of the spiralling cost of living. But, it's indisputable that energy efficiency is set to become a prime selling point for residential and commercial rental properties, so what, if any, support is available? 

The Boiler Upgrade Scheme is a government grant encouraging property owners to install low-carbon heating systems such as heat pumps. Grants of up to £5,000 towards the cost of an air source heat pump and £6,000 for a ground source heat pump are available, and £5,000 towards biomass boilers for properties in rural areas or not connected to the gas grid. 

Landlords might also be able to access the Green Deal, a finance plan that can be used to replace windows and doors, install secondary glazing, use energy-efficient lighting and upgrade heating.

Alternative energy technologies 

But at present, it seems that the onus and the cost will be down to individual landlords and businesses. And it's more than just choosing renewable energy sources; ISO Energy highlight that "for anything to be efficient, it needs to be in an efficient environment. If a poorly insulated home is equipped with a heat pump or mechanical ventilation and heat recovery system, the unit will run less efficiently as the heat will escape easier and more often. If a building is more efficient, the renewable technology will require less power and run time to achieve the same outcome".

Insulating, replacing doors and installing double glazing will help create a more energy-efficient home, but they don't solve the problem of carbon emissions or the escalating cost of fossil fuel heating. If anything is certain, it's that, sooner rather than later, we will be using fewer fossil fuels and more electricity to heat our homes. Landlords need to be planning for installing renewable energy technologies. 

Most, if not all, future heating technologies will be powered by electricity. According to Survey Design Consult, popular technologies include Solar PV, Air Source Heat Pumps, Ground Source Heat Pumps and MVHR (Mechanical Ventilation with Heat Recovery).  

Installing solar panels will reduce a property's reliance on the grid and can be paired with battery storage to help manage and store renewable energy for later use, like electric car charges. Air source and ground source heat pumps enable you to generate your renewable heat, but property owners will need to investigate what technologies best suit their needs.

Environmental concerns and energy efficiency will soon become distinct selling points for properties. Reducing energy consumption and minimising wastage will be high on the desirability list when choosing a property. Property owners that fail to meet these needs may find it more difficult to attract tenants and ultimately see it reflect negatively on the resale value of their properties.  

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