Tuesday 22 May 2018

The right moves: Developers embracing renewable energy will have sustainable future

Paul McNeive
Paul McNeive

Paul McNeive

We are being weaned off our addiction to oil and gas heating systems by a combination of building control regulations and incentives, but there is a low level of awareness about the recent amendments to Part L of the Building Regulations.

The legislation introduces higher performance standards for non-residential properties built after January 1, 2019 and affects new buildings, major renovations, and also properties where there is a material change of use. Developers must keep abreast of this move to renewable energy or risk missing opportunities.

The new scheme also provides supports for retro-fitting of older buildings. For biomass or biogas systems, the building occupier will receive an annual payment for up to 15 years. Mike Teahan, founder of Renewable Building Systems Ireland (RBSI), told me that a medium-sized commercial building might use 100,000kw hours per annum of energy and that this could attract a grant of €5,000 per annum for 15 years. With an installation cost of €75,000, that sees the cost of your heating plant fully repaid.

The grants payable reduce as buildings get bigger, and are eventually capped, to prevent any repeat of the 'cash-for-ash' debacle in Northern Ireland. For renewable heating systems such as heat-pumps, a grant of up to 30pc of the installation cost is payable.

We are still some distance from the type of district-sized heating systems common in northern Europe, where blocks of commercial and residential buildings are heated by a central, renewable-energy, heating system. However, we are steadily getting there and several apartment blocks have recently been built in Ireland where individual apartments are fitted with exhaust-air heat pumps which provide heating, hot water and ventilation.

Mike Teahan explained that this type of development is cost-effective in apartment blocks as all of the pipework is internal and one large boiler in the basement can be utilised. Conversely, he told me, district-sized schemes remain unviable for housing estates, largely due to the extensive runs of pipework to each house.

Another milestone will be reached in January 2021 when all new residential buildings will have to reach the Near Zero Energy Building Standard (NZEB), which is an even higher level than that required under existing building control regulations, and Mike Teahan suggests that this will mean an acceleration in the shift to heat pumps.

RBSI is an interesting innovation in the market. It comprises a panel of expert consultants in the renewable energy sector who have come together to provide independent advice to the renewable building construction industry, to include design, engineering, training and compliance. The panel advises on the viability of alternative systems and can also arrange the financing of renewable energy schemes.

On a domestic level, the combination of grants now available appear to make it a 'no-brainer' to convert from an oil or gas boiler to a heat pump system, for any medium to large-size house, built before 2006. A carbon credit of approximately €800 per annum is paid to you by your energy provider, upgrading your heating controls attracts a payment of €700, and you can get a €3,500 grant for a heat pump. That equates to a value of approximately €5,000, off a system costing between €8,000 and 10,000.

The shift to green energy will continue and developers and occupiers should take expert advice.

• Dublin office market boom

Dublin's office agents are enjoying what are certainly the best market conditions ever seen. After a slew of huge deals last year, market concerns about the large amount of upcoming space are being reconsidered. Demand in Dublin is driven by the IT sector but developers will be keeping an eye on developments in Europe, as the Brexit fiasco continues to add to demand.

Not surprisingly, rents have risen strongly. Last February, I predicted that we would break the €70 per sq ft level, and we're on the verge of that in D2. That said, I think that will be the top of the rents in this cycle.

In Dublin's suburbs, demand has been less spectacular, but steady, and relatively-low supply has seen rents continue to rise.

With new construction restricted to buildings at Dublin Airport, Sandyford, Leopardstown, Carrickmines and CityWest, I predict that the best buildings will break €30 per sq ft next year (buildings in the suburbs are measured on a gross internal floor area, which is bigger than the net floor areas used in the city centre; hence the exaggerated disparity in values).

info@paulmcneive.com

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