The Smart Readiness Indicator: A potential, forward-looking EPC complement?

The Smart Readiness Indicator:
A potential, forward-looking Energy
Performance Certificate complement?
Discussion Paper

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The Smart Readiness Indicator:
A potential, forward-looking Energy
Performance Certificate complement?
Discussion paper
By: Dr. Nesen Sürmeli-Anac, Dr. Andreas H. Hermelink
Date: 28th
May 2018
Project number: UENDE18068
© Ecofys 2018 by order of: ECI

Managing Director C. Petersdorff | Register Court: Local Court Cologne | Chamber of commerce Cologne HRB 28527 | VAT ID DE 187378615
Table of contents
1 Introduction 1
2 Brief overview: the EPBD update and the Smart Readiness Indicator (SRI) 2
3 Step 1 – Lessons learned from EPCs 8
4 Step 2 - Potential interaction between SRI and EPC over smartness aspects 12
4.1 Smart Readiness Aspect 1: “Occupants’ needs” – or to adapt in response to the needs of
the occupant 18
4.2 Smart Readiness Aspect 2: “Buildings’ needs” – or to facilitate maintenance and efficient
operation of the building 21
4.3 Smart Readiness Aspect 3: “Energy grid’s needs” – or to adapt in response to the
situation of the energy grid 25
5 Concluding remarks 29
6 Further thoughts 31

UENDE18068 1
1 Introduction
Buildings are a key sector in reaching the EU energy and climate targets as well as long-term
sustainability goals by 2050. Significant untapped cost-effective energy saving potentials in buildings
remain in all Member States. Therefore, the building sector is at the heart of EU policies and
strategies aiming to increase the efficient use of energy, to further promote renewable energy use.
A major concern is, that strategies and resulting measures do not yield the expected savings. It is
well-known that too often energy efficiency renovations fail to achieve predicted savings in practice
and also very low energy buildings seem to be vulnerable to have higher real than calculated
consumption. This gap becomes obvious in a world where both asset based (i.e. calculated) energy
performance certificates (EPC) and consumption based EPC are allowed.
The major question that we want to address in this discussion paper is, to what extent the just
updated energy performance of buildings legislation and specifically the Smart Readiness Indicator
(SRI), which is under development, may have on reducing that gap and what secondary benefits this
may have. This comes with a closer look at the complementary function the SRI may have in relation
to EPC.

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2 Brief overview: the EPBD update and the Smart
Readiness Indicator (SRI)
During the preparation of this paper, the EU legislative framework has been undergoing amendment
where new requirements and updates were entering into force for enhancing the energy performance
of building in order to deliver on the energy efficiency ambition for 2030.
EPBD impact assessment
The Energy Performance of Buildings Directive (EPBD) impact assessment 1
acknowledges that 95%
of the cost-effective energy saving potential that goes beyond the the current legislative framework,
sits in the existing buildings. EPBD impact assessment formulates four main measures to tackle the
current shortcomings of the legislation;
• Measure 1: Accelerate the decarbonisation of buildings by significantly increasing renovation
rates
• Measure 2: Fine-tune the implementation of minimum energy performance requirements
• Measure 3: Modernisation using smart technologies and simplification of outdated provisions
for the benefit of citizens (that includes “modernising provisions (of EPBD) on technical
building systems to progress on smart technologies by introducing a smartness
indicator for all buildings at the moment of transaction (sale or rent)”
• Measure 4: Enhance financial support and information to users through reinforced energy
performance certificates
As mentioned above, this paper focuses particularly on Measure 3 - an indicator for smart readiness -
and its implications, emphasising technological progress towards ‘smarter’ building systems.
1
COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European
Parliament and of the Council amending Directive 2010/31/EU on the energy performance of buildings, Brussels, 30.11.2016 SWD (2016)
414 final

UENDE18068 3
EPBD revision
Based on the input provided by the EPBD impact assessment, the Commission provided its proposal
for a revised EPBD2
. On 14 May 2018 the Council of the European Union formally endorsed the
political agreement on the proposed revision of the Energy Performance of Buildings Directive.
Through recitals the proposal for the revised EPBD emphasises the importance of:
• Adopting the Directive, thus its implementation to the technical progress by promoting
digital solutions in buildings;
• Coupling the energy performance improvement options, smart readiness indicator (SRI)
and building automation and control systems (BACS) with energy performance
certificates (EPCs);
• Reinforcing the use of building electronic monitoring, automation and control in
order to streamline inspections.
Within particular relevance for this paper, in the revision of the EPBD, Article 8 is amended to take
into account a revised definition of technical building systems (TBS) and new paragraphs. Additional
paragraphs are as follows;
Article 8 new paragraph 1 third sub-paragraph: “Member States shall require new buildings, where
technically and economically feasible, to be equipped with self-regulating devices that regulate room
temperature levels in each individual room or where justified, in a designated heated zone of the
building unit. In existing buildings, the installation of self-regulating devices to individually regulate
the room temperature shall be required when heat generators are replaced, where technically and
economically feasible.“
Article 8 new paragraph 5: “Member States shall ensure that, when a technical building system is
installed, replaced or upgraded, the overall energy performance of the altered part, and where
relevant, of the complete altered system is assessed. The results shall be documented and passed on
to the building owner, so that they remain available and can be used for the verification of
compliance with the minimum requirements set pursuant to paragraph 1 and the issue of energy
performance certificates. Without prejudice to Article 12, Member States shall decide whether to
require the issue of a new energy performance certificate.”
Article 8 new paragraph 6: “The Commission shall, by 31 December 2019, adopt a delegated act in
accordance with Article 23, supplementing this Directive by establishing an optional common
2
Interinstitutional file 2016/0381 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending
Directive 2010/31/EU on the energy performance of buildings – analysis of the final compromise text with a view to agreement, Brussels, 25
January 2018. Please note that we cite the original EC proposal. Negotiations on the actual update of the EPBD based on this proposal have
been ongoing between European Parliament, European Council and European Commission while preparing this paper. The current status is,
that the SRI is to be issued on a voluntary basis.

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European Union scheme for rating the smart readiness of buildings. The rating shall be based on an
assessment of the capabilities of a building or building unit to adapt its operation to the needs of the
occupant and the grid and to improve its energy efficiency and overall performance.“
Annex I a is added to the EPBD that provides a general framework for rating the smart readiness of
buildings. Annex I a defines the key functionalities relating to buildings and its technical building
systems and also emphasises that it should take into account the interoperability between various
digital systems and positive influence of existence of high speed communication networks.
The recitals strongly emphasize the emerging importance of digital solutions, and the updated EPBD
articles introduce the implementation of potentially higher frequencies for EPC update and issuing of
a smartness indicator. However, a clear formulation of the way SRI is meant to complement the
current EPC scheme is not available within the latest revised EPBD.
As stated in the previous chapter the revised EPBD refers to the enforcement of the SRI scheme as
follows in article 8 new paragraph 6 “The Commission shall, by 31 December 2019, adopt a delegated
act in accordance with Article 23, supplementing this Directive by establishing an optional common
European Union scheme for rating the smart readiness of buildings.”

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The SRI project
The ongoing project “Support for Developing a Smart Readiness Indicator for Buildings” (SRI project)
is commissioned by EC Directorate-General for Energy. The purpose of the project is summarized as
to provide technical support to feed decision processes and deriving a viable harmonized SRI
calculation methodology. The main components of the project are summarized below based on the
project presentation from the stakeholder consultation meeting. 3
o Quantify and assess impacts of smart technologies in buildings
o Propose a harmonised methodology to calculate and present the SRI of a building
o Compare policy options by an impact analysis
The three main pillars of the SRI are defined as follows considering ten main domains:
heating,domestic hot water, cooling, mechanical ventilation, lighting, dynamic building envelope,
energy generation, demand side management, electric vehicle charging, monitoring and control.
o Readiness to adapt in response to the needs of the occupant and to empower building
occupants by taking direct control of their energy consumption and/or generation (e.g.
management of heating system based on occupancy sensors; dashboards displaying current
and historical energy consumption)
o Readiness to facilitate maintenance and efficient operation of the building in a more
automated and controlled manner (e.g. signal when systems need maintenance or repair; use
of CO2 sensors to decide when to increase ventilation)
o Readiness to adapt in response to the situation of the energy grid (e.g. reduce power
consumption when grid demand is high; provide smart electricity grid with data on available
flexibility and future expected consumption).
The SRI aims to address all key stakeholders of the building industry by creating a framework that is
able to provide relevant information at the level required by each actor’s needs. However, ultimately
the most important audience is determined as the building occupants, bill payers and owners who
primarily will use and benefit from the SRI framework.
For its acceptance and delivering the results, the SRI and its methodology should ensure integrity
and credibility of the rating and assessment process; be adaptable to relevant contextual factors; be
future proof, allowing and enhancing innovation thus avoiding negative lock-in effects. The current
concept of the SRI is summarised in the figure below.
3 Presentation from Stakeholder consultation meeting, Support For Developing A Smart Readiness Indicator For Buildings, 21 December
2017, Brussels

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Figure 1: SRI calculation methodology.

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We acknowledge that the impact of smart technology on energy consumption is being considered
within the SRI project in a technically detailed way at system and service level as well as aggregated
level and between EPCs and SRI schemes. We aim to take a more abstract point of view to identify
how the SRI as a (kind of) label can contribute to reduce the energy performance gap and thus
complement EPCs.
The following chapters are organised as follows: chapter 2 provides an overview about the just
approved EPBD update and its reference to the SRI. Chapter 3 continues with lessons learned from
EPC schemes in order to identify potentially influential factors for a successful SRI scheme. Chapter 4
presents the discussions on the potential interaction between EPC and SRI. The focus of this
exploration is on the extent that the SRI may possibly reduce the performance gap between assessed
and actual performance of the building and thus may complement EPCs. Chapter 5 summarises
conclusions from the more technical part of the discussion in chapter 4, while in chapter 6 we
intentionally split up some further thoughts that refer to SRI’s potential impact on financing energy
efficiency improvements and its relation to EPC.

UENDE18068 8
3 Step 1 – Lessons learned from EPCs
Different national regulations in Member States result in different implementation approaches for EPC
schemes (e.g. chosen calculation methods, quality control mechanisms and enforcement systems).
The substantial knowledge gathered4, 5
and the experience on the implementation of EPC schemes in
MS over the years provide useful insights on important aspects to consider in implementation of SRI,
these are summarized in following points. Furthermore, the lessons learned can point towards areas
where SRI can complement a more efficient building performance certification scheme. These are
aspects that can further enhance the EPC credibility and market impact to become effective
instruments to track buildings’ energy performance and the outcomes of building policies. They are
briefly mentioned under each relevant point to facilitate the further discussion in detail in chapter 3.
• The evaluation method chosen for assessment of performance has a great influence on
the accuracy, therefore credibility and acceptability of the EPC scheme. Energy consumption
of a building can be quantified using different methods, both in the design stage (e.g. asset
ratings) and operational stage (e.g. operational ratings) of a building. Combined use of the
two have been cited among the best practice examples as the approach exploits benefits of
both, thus providing the most accurate representation of actual energy performance. This
consecutively contributed to higher uptake of EPC, providing links to its use in monitoring and
financing mechanisms for renovation activities. It is important to provide tools for the
assessment of SRI that can reflect the actual potential of the building.
Calculation procedures for quantifying the energy use of a building generally use standard
values and/or simplifications of real life with a series of assumptions. The results of such
design values often show significant discrepancies to measured energy use during occupation.
Therefore, their use as a baseline for actual performance is limited as it would risk not
achieving regulated targets6
. An analysis of several case studies on non-residential buildings
4
Buildings Performance Institute Europe (BPIE) (2014) Energy Performance Certificates Across the EU – A mapping of National Approaches
5
Bio Intelligence Service, Ronan Lyons and IEEP (2013) Energy performance certificates in buildings and their impact on transaction prices
and rents in selected EU countries, Final report prepared for European Commission (DG Energy)
6
Hermelink, A. and Machinchick, T., Avoiding common traps in energy savings (mis)calculation, 2018, available at
http://www.euractiv.com/section/energy/opinion/avoiding-common-traps-in-energy-savings-miscalculation/

UENDE18068 9
showed that the measured energy use is on average 34% more than predicted values7
. Using
asset rating alone, without verifying its result via actual performance data may fail to deliver
reliable performance data. Several studies have shown that there are notable differences
between the predicted and actual energy performance of a building once it is inhabited8,9
. The
findings in case studies10
highlight the discrepancies between predicted and actual energy
performance, even when the energy simulation was very accurate with respect to their
occupant behaviour assumptions. CIBSE summarizes11
the findings from large scale post
occupancy performance evaluation studies as ”Findings from the PROBE studies (Post
Occupancy Review of Buildings and their Engineering) demonstrated that actual energy
consumption in buildings will usually be twice as much as predicted. This was based on
postoccupancy reviews of 23 buildings previously featured as ‘exemplar designs’ in the
Building Services Journal (BSJ) between 1995 and 2002. More recent findings from the
Carbon Trust’s Low Carbon Buildings Accelerator and the Low Carbon Buildings Programme
have demonstrated that in-use energy consumption can be 5 times higher than compliance
calculations”. Smart technologies and services can play an important role in quantifying the
performance deviations. Furthermore, SRI can play a role in reducing the performance gap
between expected and actual performance.
• Frequent update of EPC is required to leverage the awareness on energy use in buildings in
EU and the market value of energy efficiency improvements. Update of EPCs on established
milestones of the building life time will enable availability of up-to-date actual data fed in with
technical accuracy. In the majority of MS the validity period of EPC is set to default 10 years,
where in few cases (e.g. Denmark) this period is linked to the identified energy saving
potential of the building. We suggest renewing EPC (at least) after major renovation,
additionally potentially “when a technical building system is installed, replaced or
upgraded”12
. The exploitation of EPC’s theoretical potential as tool for accelerating the cost-
7
van Dronkelaar C, Dowson M, Burman E, Spataru C and Mumovic D (2016) A Review of the Energy Performance Gap and Its Underlying
Causes in Non-Domestic Buildings. Front. Mech. Eng. 1:17. doi:10.3389/fmech.2015.00017
8
Gram-Hanssen, K., Georg, S., Christiansen, E. T., & Heiselberg, P. K. (2017). How building regulations ignore the use of buildings, what
that means for energy consumption and what to do about it. Summerstudy, ECEEE, European Council for an Energy Efficient Economy.
9
Majcen, D., Itard, L. C. M., & Visscher, H. (2013). Theoretical vs. actual energy consumption of labelled dwellings in the Netherlands:
Discrepancies and policy implications. Energy Policy, 54, 125–136. doi: 10.1016/j.enpol.2012.11.008
10
Martinaitis V, Zavadskas EK, Motuziene V, Vilutiene T. Importance of occupancy information when simulating energy demand of energy
efficient house: a case study. Energy Build 2015;101:64–75.
11
Anne Menezes, 2012, CIBSE, Energy Performance group, Carbon Bites, The performance gap, available at
https://www.cibse.org/getmedia/55cf31bd-d9eb-4ffa-b2e2-e567327ee45f/cb11.pdf.aspx
12
As mentioned in Article 8, new paragraph 5 in COM (2016) 765 final 2016/0381 (COD) Proposal for a DIRECTIVE OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL amending Directive 2010/31/EU on the energy performance of buildings, Brussels, 30.11.2016

UENDE18068 10
effective renovation of existing buildings requires more dynamic and informative EPC system
possibly coupled with or triggered by SRI update respectively. Implementation of SRI can be
a gate opener for implementation of operational rating with real time performance monitoring
and even self-assessment of the building technical system, monitoring the necessity of its
own upgrading.
• Almost all MSs have established EPC databases that register EPC data. Although it is not
required by EPBD, the registers served the purpose of monitoring and quality control. EPC
databases have proven to be an important source of information for different stakeholder
groups including policy makers as well as becoming crucial in quality control. A similar
approach in creating a data repository for SRI, potentially integrated to EPC databases as e.g.
assumed in the EPBD Impact Assessment, can improve the knowledge about the energy
performance of the building stock and extend the benefits from making use of building
performance data for policy making, monitoring and planning energy services.
• The display of the EPC, including comprehensive and useful information, e.g. in public
buildings and mandatorily in commercial advertisements while the building is sold or rented,
has critical importance for the uptake of the EPC mechanism by the market. This has
provided an understanding among buyers and tenants of the benefits of having a better
energy rating, in particular with regards to its impacts on energy bills. A similar approach for
displaying SRI can reinforce the understanding of future technical potential of building not
only in terms of energy savings but also when the building and the grid interaction is
considered, thus can lead to acceleration of actions for realizing this potential towards overall
energy efficiency. Yet, due to the very dynamic development of Technical Building Systems,
the SRI may also need frequent updates. This may call for online availability of SRI.
• A strong incentive for energy efficiency improvements have been created by linking
financial measures to EPC data, specifically to the monitoring of performance before and
after renovations. This in turn strongly increases the perceived value of EPC, moving away
from being seen as an administrative burden, provided that it is an up to date reliable
measure of energy saving achieved via renovation. SRI implementation thus should also
consider the integrated use of the data within the larger context of energy efficient
transformation of the building stock and its financing. Smart technologies can help determine
the right time for EPC updates and its reliability, and thus drive lifecycle energy performance.
Acceleration of cost-efficient renovation is the core target of EPBD update. Yet cost-optimality is
calculated on the basis of whole life time of the building, which requires that achieved
performance (e.g. after renovation) needs to be preserved (if not improved further) by correct
functioning of technical systems and building envelope components (persistence of renovation
depth). SRI could complement EPC in identifying the buildings potential in maintaining the
performance level and can help to shape a clear vision about the role of digitization, more
advanced technologies for increased efficiency and flexibility (technical systems) beyond simple
measures in the uptake of cost-efficient renovation. For example, according to a recent Ecofys

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study13
the optimisation of technical building systems quickly delivers cost-effective significant
savings without creating lock-in effects. Such optimisations could be implemented at a much
higher renovation rate than its indispensable counterpart “building insulation”. TBS update
happens at least at the rate of heat generator replacement, that is 3.6%.
13
Ecofys (2017) Optimising the energy use of technical building systems – unleashing the power of the EPBD’s Article 8

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4 Step 2 - Potential interaction between SRI and
EPC over smartness aspects
In the following we would like to systematically explore the potential interaction between EPC and
SRI. This is not meant to be exhaustive, but to provide input and food for thought for the upcoming
discussion on how to use the SRI after its definition will have been finalised. The focus of this
exploration is on the extent to which the SRI may possibly reduce the performance gap between
asset rating and performance rating.
For a systematic discussion, at this point we would like to consider the following elements which we
then intertwine as far as needed to explore the potential the SRI may have in conjunction with EPC:
• The cascade from the building user needs (energy service) to primary energy.
• SRI: The dimensions and impact categories of an SRI that so far have been elaborated in the
ongoing SRI project plus the well-known three smart readiness aspects.
• The elements an EPC is to include according to the EPBD.
The cascade from (building) user needs (energy service) to primary energy
Energy efficiency in buildings is about satisfying building users’ needs for an energy service with least
possible energy input. It is important to understand that users certainly do not have the need for a
certain amount of “kWh” but e.g. for a well-lit room, a comfortably conditioned room etc. The
resulting energy consumption is just a consequence of the level of this energy service, the
characteristics of the building envelope and its components and the technical building systems (TBS)
and their efficiency. Finally it matters how components and TBS are operated. If a gap between “on
paper” asset rating and operational rating occurs, reasons may be found at each step from the
energy service to primary energy.
According to energy performance of buildings (EPB) standards EN ISO 15603 or its successor 52000-
1 (“Energy performance of buildings — Overarching EPB assessment – Part 1: General framework
and procedures) the cascade from energy service to primary energy is as follows:
As the exact meaning of these terms is often mixed up, we briefly cite their definitions as given in EN
ISO 52000-1, yet focusing on heating and cooling (rather than also including ventilation, lighting, …)
to restrict the length of the list.
Energy
(building)
service
Energy
need
Energy
use
Delivered
energy
Primary
energy

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• building service:14
service provided by technical building systems and by appliances to
provide acceptable indoor environment conditions, domestic hot water, illumination levels and
other services related to the use of the building15
• other building service: service supplied by energy-consuming appliances
• EPB service: building service included in the assessment of the energy performance
• energy need for heating or cooling: heat to be delivered to or extracted from a thermally
conditioned space to maintain the intended space temperature conditions during a given
period of time
• energy use for space heating or cooling: energy input to the heating or cooling system to
satisfy the energy need for heating or cooling (including dehumidification) respectively; on
this assessment level to be found is also the auxiliary energy, i.e. electrical energy used by
technical building systems to support energy transformation to satisfy energy needs
• delivered energy: energy, expressed per energy carrier, supplied to the technical building
systems through the assessment boundary, to satisfy the uses taken into account or to
produce the exported energy
• primary energy: energy that has not been subjected to any conversion or transformation
process. Note: Primary energy includes non-renewable energy and renewable energy.
A concrete example is to illustrate these terms.16
A person wants to have very high thermal comfort in a heated room in winter – this is the energy
service. Translated to a former draft of EN ISO 7730 this means comfort class A, which again is
reached within a bandwidth of the so-called operative temperature of 22.45°C to 24.05°C. The
operative temperature is mainly composed of air-velocity, air temperature and inner temperature of
all room surfaces (floor, wall, ceiling, windows, heating devices). Therefore the energy need, i.e. the
energy the heating system actually needs to emit to a room for meeting the energy service “very
high thermal comfort” depends on the type of heating system (floor heating, air heating, radiator
heating …), the way the room is ventilated and the quality of the thermal envelope, as e.g. the
surface temperature of walls and windows depends on their U-value.17
Let’s assume a wall-heating is
used. It receives its heat through pipes coming from a condensing gas boiler. The pipes have heat
losses on their way to the room, i.e. not all heat sent into the pipes by the boiler reaches the room.
14
EN ISO 52000-1 takes up the context of building energy efficiency by renaming the “energy service” to “building service”.
15
Note: we disagree with the focus on technical building systems in this definition, as obviously also the characteristics of the building
envelope determine the service level.
16
Further explanations can be found in Hermelink (2008) – Ein systemtheoretisch orientierter Beitrag zur Entwicklung einer
nachhaltigkeitsgerechten Technikbewertung angewandt auf den mehrgeschossigen Wohnungsbau im Niedrigstenergie-Standard.
Dissertation, University of Kassel (Germany).
17
A sub-optimal thermal quality of the building envelope makes it impossible to achieve comfort class A at all.

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The heat sent out by the boiler (or in general the “heat generator”) into subsequent systems (pipes,
storage …) is the energy use. The condensing gas boiler again does not convert all of its energy
inputs into energy use; for example a part of the heat content of the burnt gas is sent through the
chimney. All energy inputs into the condensing gas boiler (gas, electric power for circulation pumps
and control systems) are called delivered energy. When all losses and energy consumption which
occur between the original energy source (gas bore hole, coal mining for power) and the building are
added to the delivered energy the sum is called primary energy.
The example illustrates that total efficiency between the building service and primary energy is
largely determined by human behaviour (user or investor respectively), which can be split up in user
behaviour and investment behaviour.18
• The user decides about the energy service level.
• The investor decides about the technology, that uses the energy emitted by TBS, i.e. the
building envelope.
• The investor decides how the building envelope is maintained and repaired, i.e. about the
persistence of the building envelopes quality.
• The user decides how the components of the envelope which can be controlled (e.g. windows,
shutters) are operated.
• The investor decides about the technical building systems.
• The investor decides how the TBS are maintained and repaired.
• The user decides how the TBS which can be controlled (e.g. thermostats) are operated.
Energy performance calculations (asset rating) are based on assumptions for all items mentioned
above for the whole calculation period. The “performance” gap is a consequence of deviations
between these assumptions and reality.
• If the SRI is to decrease the energy performance gap, it needs to help mitigate the gap
between these assumptions and reality during the calculation period.
• As reality is a consequence of investment behaviour and user behaviour (from building
service through primary energy), the question is, to what extent the SRI can signal an
adaptation and/or replacement of behaviour (investment and actual use) towards the
behaviour assumed for energy performance calculations.
• This means that while in EPC calculations human behaviour is just considered as a set of
standard physical parameters the SRI is about influencing that behaviour and its outcomes.
18
Hermelink, A. (1996): Kosten-Nutzen-Analysen von DSM-Programmen im Sektor der privaten Haushalte unter besonderer
Berücksichtigung des Anwenderverhaltens – Ergebnisse aus der Evaluierung des EU-PHARE-Fernwärmepilotprojektes in Eger (Ungarn)

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Smart Readiness Indicator (current status)
According to the European Commission, the following advantages are expected from smart
buildings:19
1. Optimised energy use as a function of (local) production
2. Optimised local (green) energy storage
3. Automatic diagnosis and maintenance prediction
4. Improved comfort for residents via automation.
Consequently the smart readiness indicator is to measure the technological readiness of a building;
• The readiness to adapt in response to the needs of the occupants => (4). This is about the
needs of the occupants. 20
• The readiness to facilitate maintenance and efficient operation => (3). This is about the
needs of the building.
• The Readiness to adapt in response to the situation of the energy grid. (1 and 2). This is
about the needs of the grid.
All these needs need to be fulfilled in a way to maximise energy efficiency and the use of renewable
energy as well as to minimise GHG emissions.
Linking this back to above mentioned energy cascade which splits up the places of action for reducing
the energy performance gap,
• the needs of the occupants correspond to the building services. Is the needed service actually
delivered?
• the needs of the building correspond to energy needs, energy use and delivered energy
(efficiency of the systems in the building) because they are all about the efficiency of systems
for the use and conversion of energy within the building;
• the needs of the grid deal with delivered energy (shape of the load curve) and primary
energy.
19
Cf. Slide 25, SRI project presentation from 21 December 2018
20
We intentionally simplify a little, to achieve a better fit with the energy cascade. It also turns out that this approach is very close to the
newly added Annex Ia within the latest version of the proposed EPBD revision.

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In the SRI project these needs have been split up further into “impact categories”, which can be
assigned to the previous three categories as follows:
• needs of occupants
o comfort
o convenience
o health
o information to occupants (feedback)
• needs of the building
o energy savings on site
o maintenance and fault prediction
o (information to occupants, e.g. in terms of feedback highlighting the need for
maintenance or wasteful energy consumption not necessary to meet the needs).
• Needs of the grid
o Self generation
o Flexibility for the grid and storage
o (information to occupants, e.g. highlighting ideal times of operation for an appliance
and incentivising tariffs).
The 10 domains identified in the SRI project, i.e. where SR technologies and services may be applied,
in the end tackle possibilities, where building systems’ operation, maintenance, management and
their interaction with the energy grid (including EV) can be automatized to a certain degree in order
to achieve a higher degree of fulfilment of the needs of occupants, the building and the grid with
least possible energy consumption.
• Heating
• Domestic hot water
• Cooling
• Mechanical ventilation
• Lighting
• Dynamic building envelope
• Energy generation
• Demand side management
• Electric vehicle charging
• Monitoring and control.
Later we’ll highlight those domains which seem to be most relevant for occupants’, buildings’ and
energy grid’s needs.

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Elements of an EPC
According to EPBD Article 11, an EPC needs to at least feature the following elements:
• The energy performance of the building => according to EPBD Annex I it can be
“determined on the basis of the calculated or actual annual energy that is consumed in order
to meet the different needs associated with its typical use”. This translates to EPC with “asset
rating” or “operational rating”. Furthermore the energy performance “shall include an energy
performance indicator and a numeric indicator of primary energy use.” Member States are
free to also include information like the annual energy consumption or the share of renewable
energy.
• Reference values (to allow the recipient judge the relative position of a building’s energy
performance compared to its peers).
• Recommendations for the cost-optimal or cost-effective improvement of the energy
performance (“unless there is no reasonable potential for such improvement compared to the
energy performance requirements in force.”)
Interestingly, there is no general difference made between new and existing buildings, although by
intuition recommendations for cost-optimal improvements would not be expected for new buildings.
This probably is to cover the cases where energy performance requirements in force do not (yet)
meet the obligation to be in line with cost-optimal requirements. So there can be recommendations
for new and existing buildings.
After having elaborated on these basic principles, characteristics or determinants of energy
consumption, SRI or EPC respectively, we merge these aspects in order to discuss the
complementary function the SRI could have with EPCs and its potential to reduce the energy
performance gap. Merging the overall smart readiness aspects with the elements of an EPC provides
a grid for assessing how SRI could complement EPC with regard to reducing the energy performance
gap.
In the following we will go through this grid by addressing the overall smart readiness aspects
(users’, buildings’, energy grids’ needs) one by one.

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4.1 Smart Readiness Aspect 1: “Occupants’ needs” – or to adapt in
response to the needs of the occupant
As pointed out above, for the purpose of a proper analysis we strictly assign the occupants’ needs
only to the energy service or building service respectively as this corresponds closest to how the term
“need” is used in social sciences.
When doing an asset rating for an EPC, each EU Member State provides a set of boundary conditions
for the energy performance calculation which also explicitly or implicitly includes assumptions about
occupants’ needs “associated with [the buildings] typical use” (EPBD Annex I), like indoor air
temperatures, air quality or ventilation rates or lighting levels respectively. Sometimes even usage
profiles for such parameters are provided and used in the calculation.
It is known that higher average indoor air temperatures and ventilation rates – compared to the
assumptions used for EP calculations - are top reasons for the energy performance gap, i.e. higher
consumption during operation than calculated upfront. There may be two reasons for that with
specific regard to the occupants’ needs:
• The assumptions about the building service needed by the occupant and used in the EP
calculation may not represent reality.
• Even if the assumptions about the needs would match reality, the ability or capability of the
user to let the building systems exactly follow his or her needs may be insufficient. This may
be e.g. because a typical daily schedule does not allow for the assumed (manual) operation
of the systems, the TBS does not provide feedback about the currently achieved building
service level, or the TBS is not able to exactly operate itself according to the users’ needs:
missing settings (like schedules), imprecise measurement of indoor temperatures, too slow
reaction time. …
The most relevant domains when it is about meeting occupants’ needs are (bold):
• Heating
• Cooling
• Lighting

UENDE18068 19
Relative to the three requirements for EPC according to the EPBD amongst others the following links
can be detected:
EPC requirement: Presentation of the energy performance
• A smart TBS (in combination with an appropriate building envelope) will allow the occupant to
exactly meet the level of building services assumed in EP calculations.
• A smart TBS will provide the occupant with clear feedback, when a drift (upwards) in the
energy service level is detected. This phenomenon is also called the rebound effect. Thus the
smart TBS supports the user to stick to his or her original energy service level.
• Ideally smart TBS will collect information about actual building service levels to inform
regulation. It is neither the mistake of the occupant nor the building with its TBS when e.g.
unrealistically low indoor air temperatures keep on being assumed in the regulation or codes
for EP calculations. Above we referred to comfort class A with operative temperatures
between 22.45°C and 24.05°C; we assume that most building codes assume lower levels for
their EP calculations for very low energy buildings.21
• With regards to EPC, regardless if it is about new buildings or existing buildings, a high SRI
(for meeting the occupants’ needs) would
o Increase the probability that actual energy performance meets the performance
stated on the EPC, because of being close to the assumed building energy service
(both because the system is able to follow needs and because information from smart
buildings, having a high SRI rating, will gradually improve the assumptions taken in
EP calculations).
o Increase the persistence of the stated EP, as the actual energy service achieved is
part of the systems’ feedback.
o With a view to cost-optimality calculations, which are based on a prediction of EP for
the next 20-30 years - increase the reliability or the confidence level of the cost-
benefit analysis and the assumed life-cycle performance increases.
o It needs to be stressed, that the SRI first of all states the readiness, i.e. the
theoretical potential, to provide different building services in a smart way. The actual
exploitation of that readiness or potential still depends on the occupant in the case of
occupants’ needs.
21
Even the range for comfort class B just goes down to 21.4°C – and not further. For energy performance calculations in Germany e.g. 19°C
as an average indoor air temperature is applied, which is clearly below real values from monitoring of low energy buildings, even when
taking into considerations times of absence with thermostat setback. We would like to stress that such unrealistic assumptions about
building service levels have nothing to do with rebound effects, as rebound effects should be determined relative to realistic assumptions.

UENDE18068 20
EPC requirement: Presentation of reference value
• Like with the EPC it may be an option to provide reference values for the SRI. As pointed out
above, in principle only a level of building services should be assumed in EP calculations
which accurately reflects reality and which can be realized by the typical setup of the building
which e.g. is assumed in cost-optimality calculations for new or existing buildings.
• Having this context, we feel it would make sense to:
o In the long-run state the average SRI of peer buildings (be it on the EPC or
elsewhere)
o Assign a rating like “0” SRI : +/0/ - or high/medium/low, where
▪ + / high SRI means the TBS/BACS installed to the building are advanced and
overall the building is equipped with high level of control system that will
provide a high possibility to exceed the standard (calculated) energy
performance
▪ 0 / medium SRI means the building is equipped with a standard level of
available BAC technology which enables the building to perform along the
energy performance, which is expected for (realistic) standard conditions.
▪ - / low SRI means the building is equipped with TBS/BACS to a low degree,
e.g. largely based on manual control and user action, leading to an EP which
is worse than the one resulting under realistic standard conditions.
o As for occupant behaviour, a high SRI should also alert about leaving of healthy
service levels which are acknowledged as good practice reference (like bad air
quality, too high temperature or air humidity levels, too low lighting levels in office
buildings etc.)
EPC requirement: Recommendations for improvement of the energy performance
• Like stated in Article 11 EPBD as for SRI there could be recommendations for TBS including
BACS which further increase the probability that occupants’ needs are met and thus would
lead to a higher SRI rating.
• As this is about concrete technical systems, the EPC recommendations could be structured
along the 10 dimensions and those 4 impact categories which deal with occupants’ needs.

UENDE18068 21
4.2 Smart Readiness Aspect 2: “Buildings’ needs” – or to facilitate
maintenance and efficient operation of the building
With the “buildings’ needs” we address the energy needs, energy use and delivered energy and what
information a SRI can provide or what actions stimulate respectively relative to these steps in the
energy cascade. For making things more concrete, we focus on heating.
When doing an asset rating for an EPC, each EU Member State provides a set of boundary conditions
for the energy performance calculation. This also includes assumptions about:
• the thermal quality of the building envelope, which together with internal loads and solar
gains determines the energy need of the building,
• the kind and quality of systems to emit, distribute and store heat, which including the losses
determines the energy use, and
• the kind and quality of heat generator, which determines the delivered energy (for ease of
understanding including from solar devices) needed for heating.
Each of these steps may contribute to the energy performance gap for the following reasons:
• One or several assumptions about the efficiency of the building envelope, or the TBS
including BACS may not match reality because
o a sub-standard investment behaviour (including maintenance), i.e. components with
less than standard efficiency may have been chosen,
o or in a sub-standard commissioning and operational settings which deviate from the
design; depending on the type of building this belongs to investment behaviour (as
external parties deal with commissioning and operation) or user behaviour, when the
occupant operates the systems himself or herself.
The most relevant domains when it is about meeting the buildings’ needs are (bold):
• Heating
• Cooling
• Lighting

UENDE18068 22
can be detected:
• A smart TBS may allow the occupant to detect failures in the building envelope resulting from
an internal building model, that processes real operation and occupancy data from TBS and
uses the data to infer to the quality of the envelope.
• A smart TBS will have the capacity to inform the occupant whether the TBS is set up and
running according to the design values, ideally distinguishing between heat emission,
distribution, storage and generation and inform about the performance losses.
• A smart TBS will be able to diagnose needed maintenance and repair and to inform the
occupant or the party responsible for maintenance and repair about the need for action. This
is also one of the main advantages stressed around smart buildings.
• systems have a shorter life time, especially compared to building structure and envelope. At
the point when significant BACS system upgrades takes place this can be reflected in SRI as
well as EPCs.
• Advanced smart TBS will be able to “self-maintain”, i.e. adjust settings within some
bandwidth. Yet, self-maintenance only will be possible within certain limits as systems
degrade during their lifetime. Rapid upgrading is possible when they no longer perform
optimally; to provide them with increased functionality; to comply with new operating
(energy) performance standard or goal; or because they are obsolete, not supported by the
manufacturer. Newer systems can introduce additional capabilities which in turn increase
building’s “smartness “. Although mostly TBS are only replaced after breaking down, tackling
problems before they escalate is more cost effective, allows for better planning and creates
better outcomes for occupants. Research results show that an average annual increase of 6%
in time spent on preventive maintenance operations, over a period of 5 years, resulted in a
20% decrease in the demand for corrective maintenance and an average annual saving of
500 MWh in energy consumption22
. Therefore a smart TBS will signal the need for
replacement.
• If a building has part or all of above mentioned capabilities and thus a high SRI rating for
these aspects, this will increase the confidence level for an EPC asset rating to meet the on-
paper performance throughout its whole life-cycle. This is a major point, as energy
efficiency improvements need to persist over their lifetime, in order to contribute their
expected share for reducing GHG emissions. Buildings having a high SRI rating will have a
higher probability that savings persist.
22
J. García-Sanz-Calcedo, M. Gómez-Chaparro, Quantitative analysis of the impact of maintenance management on the energy consumption
of a hospital in Extremadura (Spain), In Sustainable Cities and Society, Volume 30, 2017, Pages 217-222, ISSN 2210-6707,
https://doi.org/10.1016/j.scs.2017.01.019.

UENDE18068 23
• In case of EPC based on operational rating (normalised measured consumption) the reasons
for a certain performance usually remain a black box (except from e.g. weather). Information
from TBS like just mentioned would allow for much more transparency about the reasons
for a certain performance as in the end they all result from physical parameters that could be
measured or monitored by a TBS. Having this transparency will have a direct impact on
detecting cost-effective measures in existing buildings.
• We hope that the discussion around SRI will also boost the discussion around persistence of
energy performance during the building’s life-cycle. Looking e.g. at cost-optimality
calculations, typically the initial (perfect) performance is assumed to persist for 20-30 years
without adequate discussion how this will be achieved and whether the systems installed in
the building allow for such assumption. The topic is just covered by replacement of
components after their typical lifetimes and default values (percentages) for maintenance and
repair which appears to be over-simplified considering the importance of persistence. This
would be a way to consider the SRI rating in cost-optimality calculations => the higher the
SRI rating in the relevant domains the lower the degradation that has to be
assumed by default.
EPC requirement: Presentation of reference value
• Also for the “buildings’ needs” part it may be an option to provide reference values for the
SRI. Like with occupants’ needs, kind and quality (efficiency) of building envelope and TBS
could be assumed for the life-cycle EP calculation that corresponds to reality and which can
be realized by a typical setup of the building and its systems, from energy need (i.e. heat
emission in the case of heating systems) through delivered energy.
• Reference values could also provide hints whether the building already has the potential for
future innovations of TBS/BACS that improve energy efficiency and the responsiveness of the
building, e.g. a floor-heating system is a better option for moving to a smart ready heat-
pump than a high temperature radiator heating.
• Like with occupants’ needs, we feel it would make sense to
elsewhere), maybe even divided by occupants’, buildings’ and grid’s needs and
o assign a rating like “0” SRI : +/0/ - or high/medium/low, for details see chapter on
“occupants’ needs”.
o Like for occupant behaviour, a high SRI rating come along with alerts about entering
“unhealthy” operational conditions for the building or the systems,
▪ e.g. frequent switch on/switch off of heat pumps.
▪ analysing temperature and humidity data can help identify properties with
condensation and mould growth. This enables landlords to act to prevent
damp worsening and combat mould in afflicted properties.
▪ Connected heating controls can be used to remotely test and diagnose faulty
boilers. This not only saves landlords money before the cost of remedying

UENDE18068 24
escalates, it also allows them to take a proactive approach to compliance with
gas safety
EPC requirement: Recommendations to improve the energy performance
As for EPC recommendations we see the following aspects:
• Depending on the SRI rating there will be more or less room for cost-effective upgrading with
“smart” features. Specific technologies or opportunities could be part of recommendations (be
it on the EPC or elsewhere).
• A smart system will be able to auto-generate recommendations about cost-effective upgrades
of the building envelope or TBS/BACS (like “smart” heat generator) respectively.
• As the buildings’ needs from our point of view belong to the major reasons for energy
performance gaps, in a digitised world recommendations from a smart system could be
dynamically updated on a digital EPC.
The SRI rating in the category “buildings’ needs” will have a major impact on the probability that a
building will meet the designed energy performance during its whole life cycle, be it for the case of
new buildings or for energetic renovations. It not only can help to meet the “on paper” performance
when operation starts but also to make that performance persist during the life-cycle. This is of
utmost importance for increasing the confidence level about the success of energy efficiency
renovations and very low energy buildings. Therefore, in our opinion a high SRI rating could
contribute to de-risking energy efficiency investments.

UENDE18068 25
4.3 Smart Readiness Aspect 3: “Energy grid’s needs” – or to adapt in
response to the situation of the energy grid
With the “energy grid’s needs” we address the shape of the load curve (delivered energy), and the
impact the building operation has on the overall conversion efficiency in the energy grid, GHG
emissions and use of renewable energy. The question is, to what extent an SRI rating covering those
aspects may complement a building EPC, what information a SRI can provide or what actions
stimulate respectively relative to these steps in the energy cascade. For making things more
concrete, we focus again on heating.
In contrast to “occupants’ needs” and “buildings’ needs”, when doing an asset rating for an EPC,
benefits of increasing the energy efficiency of a building exceeding the boundaries of the building, i.e.
energy grid’s needs, have not been accounted in EPC until recently. The relation between grid and
building is modelled as a one-way interaction by characterising the grid by means of Primary Energy
Factors (PEF) in the calculation of energy performance.23
Operating schedules etc. are usually not
included in EP calculations, as they ideally require hourly resolution which is not the typical level of
detail.
Only recently with the advent of nearly zero energy buildings and its potential inclusion of onsite or
nearby renewable energy production the topic gained broader awareness and has led to updates of
several international/European or national EPB standards to capture local production and feed-in,
which apparently has an impact on both the operation of the energy grid and depending on how a
Member States handles local renewable production, also on the energy performance of a building.
Of course again certain assumptions are made for EPC calculations, considering a certain smartness
of handling local production. Like before an energy performance gap may occur, when these
assumptions do not meet reality.
The most relevant SRI domains when it is about meeting the energy grid’s needs are (bold):
• Heating24
• Cooling
• Lighting
23
cf. EPBD (2010; currently valid version) Annex I: “The energy performance of a building shall be expressed in a transparent manner and
shall include an energy performance indicator and a numeric indicator of primary energy use, based on primary energy factors per energy
carrier, which may be based on national or regional annual weighted averages or a specific value for onsite production.”
24
Storage capacity (for heating, domestic hot water, cooling, or through thermal mass within the building envelope) also potentially adds
flexibility to the grid. We consider this tob e part of „demand side management“.

UENDE18068 26
• Demand side management – including the flexibility of the building offered e.g. by
high thermal mass, or other heat or cold storages, batteries etc.
can be detected:
In our opinion, the interoperability of the building with the grid is not so much about saving kWh of
delivered energy or total primary energy but clearly about:
• using kWh at the right time from the point of view of energy system efficiency and GHG
emissions and
• operating a building in a way that increases the use of renewable energy in the energy
system,
• without detrimental effects on “occupants’ needs” and “buildings’ needs”,
• so eventually it is about the ratio between renewable and non-renewable primary energy,
GHG emissions and probably even more than with occupants’ and buildings’ needs about an
efficient allocation of money in a complex system.
Flexible operation is the key to achieve this as the building may add additional potentials for load
shifting and peak clipping. The interaction between the grid and buildings “can involve storage and
generation facilities in the home, but even households without microgeneration, batteries, storage
heaters or hot water tanks have a potential resource in their demand, something which can be
reduced or shifted when this will assist network or grid management“25
and add to the efficiency of
the overall energy system. In principle by this, the building delivers an “energy system efficiency
contribution“. We’ll briefly discuss if credits on EPCs should be attributed depending on the SRI rating
in this category.
• A smart TBS will allow the occupant to optimise purchase of energy from the grid depending
on time variable tariffs.
• A smart TBS will have the capacity to inform the occupant whether the interaction with the
grid is running according to the design values.
25
Sarah J. Darby (2018) Smart technology in the home: time for more clarity, Building Research & Information, 46:1, 140-147, DOI:
10.1080/09613218.2017.1301707. Available at: https://doi.org/10.1080/09613218.2017.1301707

UENDE18068 27
• A smart TBS will even automatically adapt operation when system parameters like energy
prices change.
• A smart TBS will be open to future extended features, as e.g. Internet of Things still promises
much more interaction than what is standard today.
• A smart TBS may collect data that eventually helps to better understand further flexibility
potentials, like switching the heating system off for a certain period or patterns for charging
EV.
• A smart TBS will be able to maximise self-usage of self-generated power.
• If a building has part or all of above mentioned capabilities and thus a high SRI rating for
these aspects, this will above all increase the confidence level that the financial
performance which has been assumed for renovation measures or a new building will persist
throughout its whole life-cycle. It can be assumed, that buildings which lack abilities like
this will gradually be forced to rely on more expensive tariffs without offering these kinds of
system benefits.
• Taking this aspect on top of the ones discussed before we hope that the discussion around
SRI will also boost the discussion around persistence of the financial performance during
life-cycle. Looking e.g. at cost-optimality calculations, typically the initial (perfect)
performance is assumed to persist for 20-30 years without adequate discussion on how the
assumed energy prices may be affected in buildings that do not offer flexibility to the system
during that period.
EPC requirement: Presentation of the reference value
• For the “energy grid’s needs” it may be an option to provide reference values for the SRI,
too. More than with the other values it doesn’t appear to make sense to have this like a static
value, as the energy system is changing very quickly, and thus what can be called
“reference” is also moving quickly. Therefore, a reference, e.g. in the sense “What is the
current expectation about the minimum interoperability of a building” may be given.
• Reference values could also provide hints whether the building already has the potential for
future innovations of TBS/BACS that improve interoperability with the grid.
• Like with occupants’ and buildings needs, we feel it would make sense to
elsewhere),
o assign a rating like “0” SRI : +/0/ - or high/medium/low, for details see chapter on
“occupants’ needs”.
o Yet, as mentioned before this probably would need provided by a dynamic database
as a digital value rather than a fixed number on paper.

UENDE18068 28
EPC requirement; Recommendations to improve the energy performance
As for recommendations we see these aspects:
• Recommendations may clearly state whether a buildings’ interoperability appears to meet
current standards or expectations for a “future proof” building.
• Recommendations could point out the aspects that make a building future proof in this
respect. In the future, office buildings that do not offer EC charging points might have a
negative impact on the attractiveness for potential employees.
• Like before as the smart system should know about its status, it should be able to auto-
generate recommendations about cost-effective upgrades of the buildings’ capabilities for
interoperation.
In our opinion, the SRI rating in the category “energy grid’s needs” will have a major impact on the
probability that a building will meet the designed financial performance, be it for the case of new
buildings or for energetic renovations. This is of utmost importance for increasing the confidence
level about the financial success of energy efficiency renovations and very low energy buildings.
Therefore a high SRI rating for this aspect could contribute to de-risking energy efficiency
investments.
As we think, that the readiness to operate with the grid will provide financial incentives anyway, there
should rather be no additional bonus for the EPC rating.

UENDE18068 29
5 Concluding remarks
Energy labelling schemes and certification are among the primary tools that stimulate market
demand for environmentally friendly and energy efficient products and systems. These, together with
related control mechanisms such as national regulations and standards, are regarded as “market-pull
instruments” to promote environmental consumption and innovation. In the building sector such
concept and its impact on the market directly translates to the application of Energy Performance
Certificates (EPCs) that are the tool that transfers the information on the performance of the end
product, in this case the building, to the user/owner of the building.
In some Member States, where the EPC schemes have a long tradition, a positive impact on the real
estate market has been recorded. Access to EPC data repositories has shown a positive impact on the
market value of energy efficiency improvements, contributing to the market transformation the EPBD
aims at. However, challenges still exist to exploit the untapped potential that can be achieved by
more effective use of EPC schemes and data. The market requires incentives for EPCs to be regarded
as a useful instrument, that needs to accurately estimate a building’s characteristics, and not as an
additional administrative burden. Perceived value of EPCs, their reliability in terms of reflecting the
actual building performance and up to date status are highly questioned.
The recently approved revision of the EPBD includes emphasis on the emerging importance of digital
solutions, and promotes a potentially higher rate of EPC update and the implementation of the SRI.
We see there is significant potential interaction between EPC and SRI which we explored in this
discussion paper based on the overall smart readiness aspects: users’, buildings’, energy grids’
needs.
SRI rating in the category “occupants’ needs” will have a major role in decreasing the diversion
between asset based and actual energy performance of the building by e.g. qualifying the impact
different user needs may have on the energy performance of the building, thus finding ways to better
include this element of occupant behaviour in EPC.
The SRI rating in the category “buildings’ needs” will have a major impact on the probability that a
building will meet the designed energy performance, be it for the case of new buildings or for
energetic renovations. This is of utmost importance for increasing the confidence level about the
success of energy efficiency renovations and very low energy buildings. Therefore, in our opinion a
high SRI rating could contribute to de-risking energy efficiency investments.
SRI rating in the category “energy grid’s needs” will have a major impact on increasing the
probability of making the building able to fit into a future energy system and thus to continue having
favourable conditions to access it.

UENDE18068 30
All three aspects of smart readiness, namely users’, buildings’, energy grids’ needs, are combined in
an overall SRI rating. As we have been talking about “probabilities”, it is clear, that the focus of SRI
is the future energy performance and specifically about confidence in future energy performance.
In contrast EPC are much more focused on past performance, which we find is a major reason for
the lack of trust the market has in EPC with regards to how well they capture buildings’ future energy
performance.
This means, if well designed and established in the market the SRI can be a very welcome
complement to EPC that helps increase market players’ trust in EPC.

UENDE18068 31
6 Further thoughts
While EPC and SRI tend to be discussed in a rather “technical” context, finally we’d like to stress their
relevance for building finance and building value.
One of the major challenges of making the European building stock climate neutral is the financing of
this process. With regards to this challenge in the context of the EC/EIB initiative “Smart Finance for
Smart Buildings” the SRI’s potential gets clear:
• A smart building with a high SRI should have a higher probability to meet the predicted
energy performance, i.e. on average the energy performance gap should be low(er).
• In our opinion the SRI is the first systematic approach to capture the “unknown animal”
called “occupant” better in energy performance predictions.
• Buildings with a high SRI rating (stressing the smartness potential) may be a signal for
utilities in DSM to include these buildings in their measure portfolio and offer attractive
prices.
• For banks this makes investments in energy efficiency “bankable”, as – taking all SRI aspects
summarized above - the financial performance of a building during its life-cycle gets more
predictable. This is also called de-risking of energy efficiency investments.
The real estate prices – like publicly traded shares – largely depend on expectations about future
performance. Thus a high SRI rating together with a good EPC rating, should have a positive impact
on real estate value.
As the actual interaction between EPC and SRI is not at all clear at this point, because we explored
possibilities for this interaction, we would like to point out that adding the SRI to sustainability labels
like LEED, BREEAM, HQE or DGNB may also be worthwhile thinking about to boost the market pull
effect of the SRI rating.
Finally, we would like to raise the point whether SRI rating and EPC rating could or should be totally
decoupled from each other, i.e. “Can a building with a very poor EPC rating at the same time have a
very high SRI rating?”. We think there should be limits to decoupling these aspects as the
overarching target is to meet the climate target for the European building stock. We assume that
once in place, a high SRI rating will have and is to have the notion of “high (energy) performance”.
This means we recommend an adequate lower limit to for the corresponding EPC of a building with a
high SRI rating should be considered.

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T: +49 (0) 221 27070-100
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