£200billion Needed to Solve London’s Energy & Power Crisis
Experts have revealed that London is suffering from a power and energy crisis that will need a Government investment of £200billion to solve.
18% of all commercial business centres in the UK face closure as a new government initiative is set to hit in April 2018. The protocol is to ban the leasing of energy-inefficient properties across the capital if they do not comply with sufficient Energy Performance Certificates (EPC).
Worrying statistics reveal that there is only 2.5% of surplus power available in London at any given time. In fact, Central London’s power network is so stretched that future redevelopment schemes may be cancelled, and the Capital’s lights could go out completely within the decade.
Even developments that have an BREEAM rating of ‘excellent’, or a EPC Class A rating may not be as ‘green’ as property owners first thought. It all depends on the occupiers and tenants, especially those within shared offices and the technology sectors, who consume large amounts of energy and power every day.
Property owners may be forced to spend hundreds of millions of pounds on ‘green’ refurbishments across 600,000 business centres across the UK. 681,000 privately rented residential homes are also falling short of EPC standards which should be between A and E on the scale. This means commercial and private properties that have an F or G rating will be outlawed.
Power demand has been steadily growing by 80% every 5-7 years, and in some areas including the Docklands, this statistic is even higher, at 90%. The area of London that consumes the most power, however, is the City of London, which is predicted to be 300Mw per square kilometre by 2015.
Singular buildings, including the new ‘Cheesegrater’ skyscraper in the Square Mile demands 15Mw annually, which is enough to supply 15,000 homes.
Even more alarmingly, 30% of UK power stations are set to close by 2020. At the same time, the power forecast is set to drop by 19% in 2016, with demand increasing by 15% - meaning there is a 4% demand and supply imbalance. This is where the £200billion is needed to support the infrastructure and cope with the new demand.
In 2010, energy rates saw an increase in 19.9% which was certainly felt by most of property owners in the UK. Now, with the future looking even more bleak, these rates are set to rise even higher, meaning some tenants simply wont be able to afford office space in the capital. Many operators are already relocating from the UK in search of more eco-friendly space and cheaper energy costs.
However, there is some light at the end of the tunnel. Ofgem are putting together a proposal to be outlined in 2012. The notion is to split business tariffs from consumer tariffs, which will prevent residents forking out rates to cover power hungry buildings such as the ‘Cheesegrater’ and ‘The Shard’.
Furthermore, David Goatman, head of sustainability at Knight Frank said the crisis is “on the horizon, but far enough away to do something about it. I can see people trying to sell a large number of properties before 2018 at a discount”.
It’s hoped that government will take heed of this new research and invest the full amount to help save London’s lights from going out. There is time, but is there enough in the budget?
To find out more about office space in the City of London, talk to Search Office Space now on 0800740 80 80 to discuss your requirements.