12 Nov 14

ESOS guidance: a straightforward look at what you need to know

There has been a lot of talk recently about the new Energy Savings Opportunity Scheme (ESOS). With the first phase due to start on 31st December 2014, many organisations have questions about the scheme. To follow up from our post on Understanding ESOS, here is a further look at what is involved in ESOS and what qualifying organisations need to know.

How will ESOS work in practice?

The scheme will work by requiring qualifying organisations to measure the total energy usage across all buildings, transport and industrial activities.  It’s an audit of how energy is used in your organisation, which will include a review of trends in your energy usage – has it increased or decreased over time- and a review of your energy intensity ratio.

To comply with ESOS, at least 90% of all your total energy consumption must be subject to one of the following:

  • An ESOS compliant energy audit
  • A Display Energy Certificate
  • A Green Deal Assessment
  • A certified ISO 50001 Energy Management System

In addition, unless your total energy consumption is covered by a certified ISO 50001 Energy Management System, you will also need to make sure that the ESOS assessment is conducted or reviewed by a qualified Lead Assessor.

Which organisations qualify for ESOS?

In short, ESOS will apply to any large UK enterprise in the private or third-sector that:

  • Has 250+ employees
  • Fewer than 250 employees, but a turnover exceeding €50m and a balance sheet exceeding €43m
  • Is part of a corporate group that includes one or more undertakings that meet the above criteria

Organisations that are required to comply with the Public Contracts Regulations 2006 are currently exempt from ESOS.

What are the financial and legal implications of ESOS?

ESOS is essential a chance for large enterprises to evaluate their energy usage and identify opportunities to makes savings. Or, to put it another way, to find ways to save money by reducing their energy bills.

While there aren’t yet exact figures, DECC estimates that ESOS could result in £1.6bn net present value of benefits to the UK. This is based on ESOS participants reducing their energy consumption by an average of 0.7%.

In addition, the standardised performance metrics from the ESOS audit process can also help organisations to implement a cohesive, organisation-wide strategy, to better manage total energy use.

For qualifying organisations, ESOS is compulsory.  For non-compliance, organisations can be fined a fixed £5000 penalty, plus an additional £500 per day for up to 80 days from the date of compliance until the assessment is complete. Organisations can also be named and shamed for non-compliance with ESOS.

Do you have more questions about ESOS? Talk to us today to get the answers that you’re looking for.