Deadline looms for energy performance compliance for building owners

As more homeowners withdraw from the grid and install alternative or renewable energy systems in their homes such as solar panels, there is a bit of confusion about electrical certificates and whether they are required for these systems when buying or selling property.

According to the Conveyancing and Property Law team at Abrahams & Gross, electrical certificates are regulated by the Electrical Installation Regulations. The Regulations provide that every user or lessor of an electrical installation must have a valid certificate. When a property is sold, the owner must provide the buyer with an electrical certificate that is not older than two years.

These certificates are always required before lodgement in the Deeds Office. "Some of the banks have experts who will scrutinise Certificate of Compliance before they allow bank guarantees to be issued," says Conveyancing Attorney Denoon Sampson, Denoon Sampson Ndlovu Inc . "

"It is therefore vitally important to avoid invalid certificates because inevitably, the purchaser and/or his prospective home loan bank will detect an invalid or bogus certificate. In such instances, costly delays will be incurred, because the buyer will request a second electrician to query and dispute the first certificate."

As published in the Government Gazette on 8 December 2020, Energy Performance Certificates are now mandatory for the private sector, non-residential buildings with a total net floor area of over 2 000sqm and, come 7 December 2022, these must be displayed at the building's main entrance or risk a fine of R5 million, five years imprisonment or both, says Brent Townes, Commercial Property Chief Operating Officer 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 assemblies - such as bars, clubs, restaurants, and gyms.
• 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 or office park.

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 the 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 to provide energy on sunny days and according to battery storage capability."

"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 5 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 some 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 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 EPCs 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."