An income-based analysis of the value premise for property energy performance

• Development of exploratory scenario descriptions of the UK energy system.
• Application of scenarios to income-based financial valuations of buildings.
• An investment strategy promoting cheap energy most financially beneficial to property.
• Premiums different order of magnitude to observations of Energy Star scheme using statistical regression.

There is a body of literature that has given some empirical support to the notion that energy efficient buildings may be associated with significant financial premiums. However, such evidence is not entirely conclusive and may be confounded by an associated workplace quality factor. In light of the perceived lack of clarity within this body of literature to provide empirical support to the existence of financial premiums for building energy performance, this research aims to explore the potential financial value of property energy performance through the application of futures studies to income-based valuations. This is addressed through applying exploratory scenario descriptions of the UK energy system to the valuation of 24 commercial offices. In doing so, every opportunity is given to identify the significance of property energy performance to financial value. The results of this research demonstrate how, even when exploring an extreme set of diverse energy-system futures and accounting for the social costs of climate change, the potential of financial premiums for energy efficient property are not of the same order of magnitude as those observed in the literature. These differences may be explained by confounding associations between such labels and overall facility quality, or by short-term market sentiment.