The government’s current focus on moving to a net zero emissions economy means they need to find ways to encourage businesses to reduce their energy usage.
Combine this with tighter budgets and higher demands on resources, there has never been a more crucial time for businesses to find cost effective ways of saving energy.
The government’s Energy Savings Opportunity Scheme (ESOS) is the UK’s interpretation of Article 8 of the EU Energy Efficiency Directive. It’s an initiative to lower carbon emissions and mandates that organisations undertake comprehensive assessments of energy use and energy efficiency opportunities at least once every four years.
It is a mandatory scheme for organisations in the UK who meet certain qualification criteria and is mainly aimed at large commercial businesses. Those that qualify must carry out repeated assessments, scheduled to happen every four years, to identify cost-effective energy saving measures. These assessments are audits of the energy used by their buildings, industrial processes and transport. Businesses must then notify the Environment Agency by a set deadline to inform them that they have complied with their ESOS obligations.
- ESOS applies to UK organisations and their corporate groups that are large enough to meet one of these qualification criteria:
- Employ more than 250 people
- Have an annual turnover in excess of €50 million and an annual balance sheet in excess of €43 million
- You are part of a group where one entity meets the above criteria
There are however some exemptions, some of these are:
- Housing trusts
- Public bodies
If you qualify for ESOS it’s all about providing evidence that you have been able to identify energy efficiency and energy management opportunities when you have an audit.
ESOS is now in Phase 3 and the deadline for compliance is 5th December 2023. We would advise to plan early to help with some of the challenges that can occur along the way. For example, getting accurate data can be problematic, so the more time you have to do this the easier it will be. By getting everything in order early it will also help to minimise disruption and potential problems.
Although the deadline for Phase 2 passed on 5th December 2019 organisations who comply but missed the deadline will unfortunately be fined for non-compliance until it is met so are advised to act quickly. This is something Indigo Swan can help with. We can help you become compliant quickly and efficiently.
Penalties for non-compliance
Any organisations that qualify for the ESOS scheme but fail to meet their obligations by the deadline will be issued with a non-compliance enforcement notice, alongside potential fines. Non-compliant undertakings will be reviewed on a case by case basis. Companies in breach of the ESOS regulations may also be named and shamed.
After the deadline for Phase 1, many organisations received enforcement notices from the Environment Agency as a result of not submitting their evidence by the deadline of 5th December 2015. Fines also followed ranging from £1,000 to the largest fine of £45,000.
What it helps you with
The scheme is more than just a compliance exercise, it provides detailed recommendations of where and how to save energy. ESOS provides businesses with a platform to work from to reduce capital expenditure and improve operational efficiency.
It is estimated that annual costs can be reduced by 20% through energy efficiency and management (Carbon Trust 2014). Any cost associated with ESOS can be outweighed by the long-term financial benefits it will bring to your businesses by reducing energy bills and increasing efficiency.
The first steps are to ascertain whether ESOS compliance is required for your business. If required, you will need to find a suitably qualified Lead Assessor to carry out the audits and guide you through the process.
Your Assessor will be able to help you decide the most appropriate route for compliance (Audits, Display Energy Certificates, ISO50001), and formulate a strategy best suited to you and your business.
It’s worth noting that there are two types of Lead Assessors – those that come from within the industry and those that become an accessor through the exam route. They offer varying degrees of experience in the different aspects of the energy management audit covered by ESOS. It’s up to you to select the most appropriate for your needs. It is advisable to not look for the cheapest but one that offers a competitive price and has the necessary experience to help you see benefits from the process.
ESOS will take time and have a cost to your business, but by embracing this with a good Lead Assessor you could look to recover costs by making changes to how you use your energy, which is the intention of the process. You may find that this opens opportunities for additional projects and savings.
Lee Hart is Head of Knowhow at Indigo Swan – an energy consultancy based in Norwich. He has over 15 years’ experience working within the energy industry and works closely with all the members of the team to ensure they are up to date with industry and market developments.
“As the name of the scheme suggests, ESOS should not be seen as a headache, but a great opportunity to reduce your business costs and its impact on the environment.” Lee Hart commented.
Indigo Swan can provide organisations with bespoke and tailored support as well as guidance surrounding compliance with ESOS. They can assist in providing a qualified Lead Assessor or if you would prefer to manage your own submission, can discuss accessing and analysing half hourly data from smart meters to demonstrate a starting point and the impact of measures.