ESOS compliance only at 70%

Thomas Vazakas | Technical Director | RPS

The Energy Savings Opportunity Scheme (ESOS) was introduced by the Government in June 2014 and it obliges all large enterprises to carry out an energy efficiency audit every four years. The scheme is required under the 2012 European Energy Efficiency Directive and has a scope which is wider than current carbon schemes, such as CRC, as the focus is on energy, not carbon. ESOS also covers all parts of an organisation’s energy consumption, including buildings, industrial processes and transport.

ESOS is a mandatory energy auditing scheme for large companies. The qualification date for the first phase of ESOS is 31st December 2014. An organisation falls within the scope of ESOS if it is:

  1. 1. An undertaking which has 250 or more employees in the UK;
  2. 2. An undertaking which has fewer than 250 employees, but has an annual turnover exceeding €50m and a balance sheet exceeding €43m; or
  3. 3. Part of a corporate group which includes an undertaking which meets criteria (1) or (2) above.

To ensure compliance with the first phase of the ESOS legislation, all companies should have notified Environment Agency of their compliance by 5th December 2015. But the large numbers of firms set to fall foul of this deadline forced a rethink, with the EA accepting notifications after this date from firms working toward compliance by 29th January 2016.

With the second deadline passed, just 70% of businesses are compliant with audit requirements of the ESOS, the Environment Agency (EA) has revealed. In more detail, 5,948 companies have notified EA of compliance and exactly 1,000 companies notified of their intent to comply (these companies have until June to implement ISO 50001). This percentage may seem small but it is actually very compared to the percentage on the first year on similar legislations (i.e. Energy Performance Certificates, Air Conditioning Inspections etc). This is because both because the companies that have to comply with ESOS are significantly less than less than the number of buildings that required an EPC or an ACI. In addition, Environment Agency actively advertised this legislation and also sent numerous letters to the companies that expected to comply with ESOS. However, still about 30% hasn’t complied with ESOS, which is assumed to be because they either decided to ignore the legislation or they believe that they do not need to comply.

Those still to comply after the grace period will now face enforcement action from this month. It is believed that EA will start contacting those organisations that have not yet complied. EA will normally use enforcement notices to bring organisations into compliance and only issue civil penalties in the most serious cases. However, in order for this legislation to be effective, it is important that Environment Agency actively police this scheme by imposing penalties and publishing the details of the non-compliant companies.

The majority of companies have unfortunately seen ESOS as an administrative burden with an additional cost. They seem to have failed to understand the value of ESOS, as it is a legislation that forces them to accurately measure their total energy consumption. The role of the ESOS Lead Auditor is crucial in not only ensuring compliance with the legislation but also in ‘persuading’ their clients on the opportunities that this legislation offers to their business.

All ESOS reports have a list of energy saving measures, which if implemented can significantly reduce the energy consumption of the company, hence the energy cost. Companies should implement the energy saving measures identified from the ESOS report to save energy and not miss this opportunity. They should also use the expertise of their ESOS Lead Assessors for other energy management and engineering activities on design and maintenance that would go on. The Carbon Trust (on behalf of DECC) has produced a guide for organisations that have completed an ESOS assessment and want to make the most of the identified energy saving opportunities. It will give businesses an overview of the next steps they can take to maximise the impact and return on investment of their ESOS assessments. The guide is particularly aimed at organisations that have little experience in implementing energy saving projects and may lack a dedicated energy manager. It may also be of interest to organisations that have identified energy saving opportunities independently of ESOS.

Moreover, as ESOS is repeated every 4 years, companies have the opportunity to constantly monitor their energy consumption and evaluate the impact of any energy saving measures that they may have implemented. As there is now a four year lull until the next ESOS compliance period, so many larger companies will likely start thinking about how they can implement the energy saving measures or even adopt ISO 50001 for automatic compliance.

Finally, from our involvement with ESOS getting accurate energy data was the most difficult point in the ESOS process for the majority of our clients. However this is the most important part of the process, as it is impossible to reduce the energy consumption if this cannot be measured first. No energy savings can be applied and evaluated when the actual energy consumption is unknown. The absence of these data highlights why legislation like ESOS can be very useful. ESOS demonstrates the importance of energy management, at top level, in any company and this can be the start in reducing energy consumption.

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