Occupiers unwilling to pay for energy saving

Copyright: David Lawson - first published Financial Times October 1994

Two groups of experts will sit down today at opposite ends of the UK to try and solve a conundrum. Why do we place so much store in cutting costs and saving the environment but fight against more efficient, "greener" buildings?  In Brighton more than 50 construction professionals will hive off from the annual Chartered Institution of Building Services Engineers annual conference  to explore why low-energy buildings are so rare. Meanwhile builders will be meeting in  Lancashire, for  an update on the fortunes of the National Home Energy Rating Scheme.

  One   common factor  is almost bound to emerge. Consumers are reluctant to pay the price for future savings. It costs more to install efficient systems for handling heating, lighting, ventilation  and the myriad other functions that keep commercial buildings ticking over. Occupiers rile against service charges but refuse to accept the higher rents or construction costs necessary to cut them. Homebuyers are little different, opting for cheaper houses rather than those with better insulation and materials.

  But the tide may be turning.  The government is committed to a 20 per cent reduction in carbon dioxide emissions by the year 2005. Buildings in the UK produce half that pollution, and will be  more toughly regulated when new construction regulations come into force next April.

  VAT charges on fuel will make homebuyers more sensitive to running costs. But commercial users are already aware of an energy bill which has soared past £20bn a year for UK buildings and threatens to go further if the expected  carbon tax emerges later this decade.

  Other worries are also crowding in. Modern buildings have  begun to  demonstrate frightening side-effects. Electronics adopted to save costs appear to require expensive servicing. Staff fall sick for no apparent reason, and even passers-by can be struck down by invisible bugs.

  Security takes on a new dimension, not just from bomb threats in the City but burglars hungry for desktop computers.  Even hospitals now have to consider elaborate alarms to protect babies. Fire safety is another problem in sealed office blocks fed by enormous electrical power and shopping malls holding hundreds of people in huge halls.

  Overlaying all this is a drive to cut costs as businesses drag themselves out of recession. While energy-saving is the main driving force, this combination of factors has brought the whole range of building services into prominence.

  This is a major industry worth more than £8.9bn in 1992 - 20 per cent of the total construction contractors' output, according to the Building Services Research and Information Association. Mechanical and electrical engineering alone was estimated at almost £7.5bn last year.

 Many occupiers facing the task of trimming spending will be bemused to discover the number of the activities quietly going on in the background to keep their building working.  An average 10,000 sq ft office block costs more than £60,000 a year to maintain, according to  property consultants Jones Lang Wootton's annual Office Service Charge Analysis (Oscar). That includes energy, security, heating, air-conditioning maintenance, management, cleaning, repairs, wages, lifts, insurance and water.

  This does not include insurance and  applies only to common parts covered by landlords. Tenants pay extra for their own cleaning, lighting and other services.  The lion's share goes on energy (£1.20 a sq ft) and  heating/air-conditioning (£1.05), one reason why a fierce debate now rages over the  this particular service. A non-air-conditioned block costs 30 per cent less to run (£4.16 a sq ft), according to JLW.

  Much of the debate in Brighton will centre on why air-conditioning has become almost universal over the last decade. Engineers  blame this on developers, who pass the buck to estate agents, who in turn insist this is what occupiers demand.   The same chain of blame applies to electrical services. Designers vastly overestimated the needs of modern technology during the Eighties, producing over-expensive buildings equipped with air systems capable of extracting vast amounts of heat from electronics and heavyweight electrical systems to power them.

  Many occupiers are paying a premium for ventilation systems that run below capacity - and therefore inefficiently - plus extra charges to electricity suppliers for not using up their contracted loads.  Service engineers say this is partly because of their  lack of status. "We should be brought in earlier to advise on what is really required in  buildings," says David Lush, a consultant with Ove Arup and past president of the Chartered Institution of Building Services Engineers (CIBSE).

  Air-conditioning is now on the cusp, however. Manufacturers insist that it is still necessary in town centres, where noise and dirt preclude opening windows. They are producing  systems which are both "greener" and more efficient. CFCs will soon disappear, and blanket use of full-blown variable air volume (VAV) systems is giving way to partial air-conditioning.

  They have one eye over their shoulder on the government. Air-conditioning only escaped rigorous controls  in next year's reforms of building regulations because ministers were persuaded this would be unworkable. It had been suggested that  builders  justify every system with evidence from occupiers that such technology was essential. They argued that buildings are usually constructed long before anyone knows who will uses it.

 But the pressure for reform remains intense. The government expects a more practicable solution and the British Property Federation and CIBSE are trying to create either an energy scoring system or an environmental "shopping list" that can be applied to commercial buildings.  Other pressures are coming from Brussels, where the EU is pouring out a stream of directives.  "The problem is that we are not being consulted," says Kenneth Dale, president of REHVA, the Federation of European Heating and Air Conditioning Associations. One rule demanding that every electrical item had to be checked every year had to be revoked after service engineers showed the crippling cost of such a task.

   Little hard evidence has emerged that changes are taking place on the ground - mainly  because so few buildings have gone up during the recession. But some promising signs are  looming on the horizon. Shell-and core techniques are creeping in, where developers wait for a tenant before putting in all the services. This gives engineers a better chance of influencing decisions.

 Developers have always claimed that occupiers demand to see finished buildings - even if that means expensive replacement of unsuitable services later. But Coca-Cola has made an  early  claim on  an unfinished 80,000 sq ft block in Hammersmith because it saved having to throw out the developers' fittings and gave better control over the end product, said the company's property services manager Stephen Watkins.  This technique, common in other parts of the world, will become more common, says Chris Hiatt of JLW, particularly as computer advances allow agents to take potential occupiers around "virtual" buildings rather than waiting for a finished one.

  The most significant pressures for change over the next few years may come from occupiers themselves rather than conferences and regulations. Soaring energy bills, concern over the impact of "sick" buildings on productivity and potential legal responsibility for legionnaires disease bugs in water systems are all making tenants more aware of the services hidden in their buildings.

  Developers like Norwich Union have taken up the challenge, offering to produce blocks which are both greener and cheaper to run. If occupiers take up the challenge, engineers will welcome it with open arms. In the meantime, they have a long campaign to adjust the vast bulk of existing services either upwards to modern demands for efficiency, or downwards from the inflated ideas of the Eighties.