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Label C? Or still label A+++? The renovation standard helps

This blog was written by Bart Oosterhuis, ESG-Advisor at Savills in the Netherlands

Since 1 January 2023, all office buildings in the Netherlands must have an energy label C or a primary fossil fuel energy consumption of less than 225 kilowatt hours per square metre per year. Many office owners felt caught off guard by this rule; in October 2022 only 50% had complied with the obligation, even though it was announced back in 2018. This is why we are already putting a new measure on our clients’ radar: in 2030, a mandatory final standard will be set that buildings must meet by 2050. The renovation standard was developed to ensure that people can already prepare for this now.

A building that meets the renovation standard is energy efficient enough until 2050." This ensures that you do not have to renovate several times and thus can save on costs.

Bart Oosterhuis, ESG-Advisor at Savills in the Netherlands.

It is a voluntary guideline to make buildings more sustainable and is intended to give certainty to owners and property managers. The Netherlands Enterprise Agency states: "A building that meets the renovation standard is energy efficient enough until 2050." This ensures that you do not have to renovate several times and thus can save on costs.

Currently, the renovation standard is energy label A+++ for offices and retail. For hotels it is one label lower, A++. These are relatively high targets. To illustrate, when looking at all Dutch office stock, only about 4% have label A+++ or higher and 19% still have no label. However, according to Savills analysis, over 73% of office space now meets the label C requirement. So, there is a relatively large proportion of stock with a label between C and A++.

To ensure continuous improvement, the energy saving obligation has also been extended since 1 January 2023. It requires companies to implement all energy-saving measures with a payback period of less than five years. It applies to sites with an annual energy consumption of 50,000 kWh of electricity or 25,000 m3 of natural gas (equivalent) or more. What is new is that the savings requirement also applies to measures that do not save energy but do reduce CO2 emissions. For example, the installation of solar panels (provided they have an ROI of less than five years) is now mandatory.

The Netherlands Environmental Assessment Agency expects that enforcement of the label C and the energy savings requirement will lead to the greatest energy savings. To facilitate enforcement, an information obligation applies to companies since 1 July 2019 and extra budget will be made available to environmental services between 2022 and 2026. While this will improve the office stock, the renovation standard is a lot higher.

So, for major renovations, it pays to look beyond these regulations and to meet the renovation standard. Although the costs for a renovation to label A+++ are much higher and cannot be recovered within five years, in the long run it offers more certainty. It guarantees that, as things stand, no further renovation will be needed at least until 2050.

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