2022 Energy Crisis Report: Key Insights for Businesses, Building Managers, and Commercial Landlords
As a result, for many organisations and industries, business as usual is over.
2022 Energy Crisis Impact Report
Key Insights for Businesses, Building Managers, and Commercial Landlords
The commercial real estate industry in the UK faces a difficult winter. War in Europe, stubborn supply chain issues, and lingering legacies of the pandemic are all contributing to soaring energy prices.
As a result, for many organisations and industries, business as usual is over.
While the net increase in energy prices is the fundamental driver of these challenging business conditions, it won’t be the only concern for the commercial real estate sector. With everyone’s finances expected to tighten, the sector will be hit from every angle. Consumers and workers are demanding more from their employers, who will demand more in turn from their building managers and landlords.
Although conditions are currently challenging for building managers, you’re far from powerless. There’s still much you can do to ease the strain, but now’s the time to adapt and prepare for the months ahead.
At Infogrid, we recently spoke to 2,000 UK consumers and employees about their attitudes to energy efficiency and their priorities in the workplace.
In this report, we share key insights from that research alongside industry data to reveal what you can expect from the coming months—as well as solutions to help you tackle the crisis head on.
What’s the reality of rising energy prices for commercial buildings?
The “cost of doing business” Crisis
Nearly three years after the start of the pandemic, a new challenge is facing commercial real estate. Rising wholesale energy prices—increasing tenfold over the last 18 months—are affecting households and businesses alike. In addition to the general “cost of living” crisis, experts are now talking of a “cost of doing business” crisis too.
Back in August, Cornwall Insight forecast that, without government intervention, businesses would have to pay as much as £634 per megawatt hour (MWh) of electricity this autumn, four times what they paid in 2020 and double what they paid in 2021.
There is some support available for businesses. At the end of September, the new UK government unveiled the Energy Bill Relief Scheme, to support businesses, charities, and public-sector organisations in paying their bills.
This will fix wholesale electricity prices at £211 per MWh and wholesale gas prices at £75 per MWh for six months.
Yet there’s a limit to the support the government will provide—currently set at £345 per MWh for electricity and £91 per MWh for gas.
That means energy bills are still set to be very high for many organisations, even with government support.
Experts estimate that the support should amount to roughly a 45% discount on expected energy costs over the winter, however even with that discount the amount to pay will be higher than in previous years.
For businesses serious about long-term growth, there’s a more substantial challenge:
How will rising energy prices impact the commercial property sector?
New regulation, increased occupancy, and continuing concerns about hygiene will increase costs for the commercial real estate industry
To survive this crisis businesses, landlords, and facility managers need to adapt—and fast.
Firstly, governments are tightening building regulations. For example, in England and Wales, requirements for letting property have been tightened, meaning that all new leases will need to meet Energy Performance Certificate Band B by 2030. Existing leases will have until 2028 to meet the upgraded requirements.
It is estimated that just 12% of commercial premises currently have an EPC at Band B, meaning commercial landlords will have to act fast to improve the energy efficiency of their buildings.
Costs will no doubt be higher, but it’s not just the direct impact of rising costs that will have an effect. Our own research shows that increased prices will affect building managers’ obligations and employee behaviour too.
For facility managers, pressure for better building performance is coming from tenants and landlords alike. It’s not just governments that are likely to put pressure on building managers. Business tenants and their employees are more focused on sustainability than ever before—and are likely to make their feelings heard. Meanwhile, some FMs are receiving requests from landlords for as much as 10% efficiency savings year on year.
The drive for efficiency needs to be balanced by a commitment to comfort. Companies from across the world are implementing measures, such as lowering office temperatures, to achieve greater efficiencies across their workplaces and estates.
However, FMs and employees will find that this can’t come at the cost of user comfort. We found in research earlier this year:
Changing employee behaviour increases challenges for building managers
It’s not all about commercial costs—domestic energy prices are rising too. Building managers need to manage the knock-on effects of changing consumer behaviour. And these shouldn’t be underestimated.
said they felt concerned about the impact of the energy crisis on the costs of working from home.
Our research shows that employees are more likely to return to the office due to increased energy prices—leading to greater building occupancy. Seven in ten employees in the UK said they were worried about how the energy crisis will affect the costs of working from home.
In addition, concerns about catching COVID and other illnesses have not diminished, even during the energy crisis. This concern will grow as occupancy increases.
Higher costs are even more likely as a result. With greater occupancy comes a need for deeper cleans, better ventilation, and improved hygiene. In this respect, increased energy costs cause a greater need to spend on cleaning and hygiene.
Employees want businesses to do more
The evidence is clear that, for landlords and building managers, the challenge of the energy crisis is not just one of cost. Employees want their employers and workplace managers to do better. They want to work in a place that is healthy, sustainable, and efficient—and they need their managers to help them achieve that.
In our recent research, we discovered that employees are highly concerned about the energy efficiency of their workplace. In the UK, over half of employees (55%) said they were worried—and only 11% could say they were not concerned about the issue at all.
Employees want their employers and building managers to help ease their concerns. Something that stood out clearly from the research was that employees expect landlords and facility managers to act on building efficiency. While only 20% felt that it was the responsibility of governments to improve buildings,
Further, when we spoke to employees, they gave some specifics as to what they would like to see.
agreed with the statement: “My company should invest in more digital tools and technology to help make my workplace more energy efficient”.
Employees clearly trust in technology to help meet the challenges of the energy crisis.
What building managers can do
Employees are clear in their support for the use of smarter tools to improve efficiency in the workplace—to keep energy bills as low as possible while keeping building users comfortable and safe.
There are lots of energy saving strategies you can implement in the workplace. And all of them can be improved with smart technology.
Collect data on energy consumption across your estates.
Smart meters, for example, can help businesses track how much energy their buildings use, but they don’t always provide information in sufficient detail.
Sensor technology can help here, by telling you how much energy individual rooms, appliances, or building systems use. For example, laundry brands can save as much as 2 kilos of carbon for every wash by installing machine energy monitoring sensors.
Automate your facility management processes to help improve energy efficiency.
It’s impressive just how much in a building can be automated —from HVAC systems to pipe monitoring. And, with the right technologies, you can save as much as 90% on labour costs, travel, and more.
Monitor your workplace occupancy to help inform your energy usage data.
We know that higher occupancy increases your energy costs by putting increased demand on your ventilation systems. So ensuring that building occupancy is optimised through continual tracking can help you ensure you’re creating the ideal working climate while achieving all the efficiencies you can.
Be transparent about your efforts into improving energy efficiency and workplace health.
Our study earlier this year revealed just how much employees care about building optimisation. For example, 60% of respondents said they want to see data on cleaning and 56% said they’d like to see information on air quality.
By collecting data and sharing it, you’ll reassure employees and building users that you have their best interests at heart—while demonstrating the impact your efficiencies are having.
Start by investing in smart technology. For example, an AI platform powered by IoT sensors can be a quick, scalable and cost-effective solution to help you monitor energy and resource usage across all your buildings.