ESOS has its origins in Article 8 (4-6) of the EU Energy Efficiency Directive (EED) 2012/27/EU, which came into force in December 2012. The Environment Agency is the scheme administrator. Compliance runs in four-yearly cycles and the deadline for organisations to determine whether they need to comply was 31 December, 2014. The deadline for compliance was 31 December, 2015 and non-compliance could lead to civil penalties, including fines. The Department of Energy and Climate Change produced a full guide to ESOS.
Over the course of the first tranche of ESOS compliance, we worked with a number of organisations and identified hundreds of energy-saving opportunities, the potential value of which was millions of pounds of savings. Using half-hourly energy data, utility bills, finance records and mileage claims, we identified energy savings equivalent to £2.9 million per year off fuel and utility bills.
Who is affected by ESOS?
ESOS applies to UK organisations that have:
- 250 or more employees.
- Less than 250 employees but an annual turnover of more than 50m Euros and an annual balance sheet of more than 43m Euros.
- Where a corporate group includes at least one organisation that’s subject to ESOS, then all the UK organisations in that group must comply, irrespective of their size.
- ESOS mainly affects businesses but it can also apply to not-for-profit bodies and any other non-public sector undertakings that are large enough to meet the qualification criteria. The public sector is generally exempt but some universities have to comply, depending on their funding.
How to comply with ESOS
If an organisation is subject to ESOS, it needs to undertake an assessment, which will help work out what it needs to do to comply.
- Having calculated its total energy consumption, the organisation is required to audit at least 90% of it, as well as its energy efficiency. This must be done across all its buildings, transport and industrial processes.
- These audits must be done using energy consumption profiling.
- The organisation needs to identify the scope of the audits and the personnel and skills required to undertake them, as there will be a need for different expertise across the three operational areas.
- A Lead Assessor must be appointed to carry out, oversee or review the energy audits and the overall ESOS assessment. Lead Assessors can be either external consultants or in-house experts. They must be knowledgeable and appropriately competent, and be members of an approved register. The Environment Agency has published approved registers.
- The audits should review energy data, data management and how energy is used. It should also identify any potential cost-effective energy-saving opportunities.
- Any recommended energy-saving opportunities should include the estimated costs and the benefits of implementing them.
- The audits should also include (a representative sample of) site visits. As with any audit, it’s important to keep good records and they should be kept on file as evidence of compliance.
- The audit must be based on 12 months’ verifiable data.
- It’s a requirement that the audit is reviewed and signed off by both the Lead Assessor and a board-level Director (or two if the Lead Assessor is an internal member of staff). This ensures that the board is aware of both what’s required and any energy-saving opportunities that have been identified.
- The final stage is for the organisation to inform the Environment Agency that compliance has been achieved.
However, there are other ways to achieve compliance. What’s more, provided an organisation covers 90% of its total energy consumption, it can use a mix of approaches with some of its energy consumption covered by ISO 50001, some by Display Energy Certificates (DECs) or Green Deal Assessments (GDAs) and some by ESOS energy audits.
- If an organisation is fully covered by ISO 50001 (implementing and operating an independently-certified ISO 50001 energy management system) it doesn’t need to carry out an ESOS assessment. It just needs to notify the Environment Agency that this is the case and that it’s compliant with ESOS.
- An organisation can also use valid DECs and their corresponding recommendation reports. However, a DEC is based on a building’s operating data only so the organisation will still need to audit its energy use in transport and any industrial processes. DEC documentation is valid for 10 years but can’t be used for more than one ESOS cycle.
- Alternatively, an organisation can opt to use valid GDAs, which consist of Energy Performance Certificates (EPCs) and Occupancy Assessments. However, like DECs, they only apply to buildings. Again, they are valid for 10 years.
How we can help you with ESOS
Although the overall responsibility for compliance with ESOS lies with the organisation itself, many need external help with the necessary specialist skills in energy consultancy. Organisations often look for a range of cost-effective support services - possibly on a ‘pick and mix’ basis - when and where they need it.
- Provide pre-assessment gap analysis. Identifying any work that has already been done that might count towards compliance and highlight any areas that require improvement. This will also include a review of data and information availability and ESOS readiness.
- Provide a Lead Assessor role and carry out comprehensive assessments. This includes the full range of roles and responsibilities including the management and/or delivery of audits, the development of an evidence pack to substantiate the audits, reporting and the presentation of findings and recommendations.
- Develop a strategy, including its costs and the cost benefits, pay-back periods, and feasibility of any energy-saving opportunities that are identified.
- Work with you to build a business case for investment in any energy efficiency opportunities identified, including their funding and practicality.
What are the costs and benefits of ESOS?
Commissioning external assistance is just one of the direct and indirect costs of ESOS compliance. Others include:
- Administration and training.
- Employing a Lead Assessor and other specialist internal or external staff.
- Possibly appointing a permanent Energy Manager.
- Implementing and sustaining the recommendations.
Although there’s no legal requirement to implement any energy-saving recommendations, organisations are encouraged to go down this route. As a result, any costs are outweighed by the long-term financial benefits derived from reduced energy bills and increased efficiency.
Further details about ESOS are available on the Government website.
Practical advice and tips from the Government on how to get the most out of ESOS compliant energy audits.