1 Aug 14

Understanding ESOS: What you need to know

160056403_620dc9cbf5_mThe Energy Savings Opportunity Scheme (ESOS) is a new government policy that requires enterprises in the UK to complete mandatory energy audits. 

Why has ESOS been introduced and what is its purpose?

ESOS originates in EU legislation and the energy efficiency directive, which requires member states to introduce mandatory energy audit systems for its larger organisations.

As the UK didn’t already have a system that met the requirements, ESOS was designed to fulfil this need. It is important to note that ESOS is not just a tick box exercise; a core part of ESOS is to help the UK meet its energy policy objectives through the delivery of energy savings across companies.  One of the key aims of ESOS is to minimise the cost to business and ensure that UKcompanies are not disadvantaged when compared to their EU peers.

While it can be tempting to approach ESOS from a compliance perspective, there really is an opportunity, as the name suggests, to assess your company’s energy performance.  Organisations can use this information to make real energy performance improvements; benefiting from the associated cost, energy and carbon emission savings. 

How does ESOS provide value?

ESOS will help large organisations identify energy saving opportunities and raise awareness of energy management within organisations.

It has been estimated by DECC that the potential value to the UK is approximately £1.6 billion in net benefits, the majority of these being direct savings by business from energy reductions.

In essence, the main focus of ESOS is how you can identify and implement cost effective energy efficiency measures. To understand more, here are some of the key ESOS facts:

  • The ESOS audits must be signed off by a company director. Companies that are planning their audit will need to bear this in mind

  • The audits will cover energy consumption in buildings, industrial processes and transport activities

  • To comply, organisations will have to complete an audit and produce an evidence pack which covers 90% of its total energy usage over one year

  • The audits can be carried out internally or externally, depending on an organisation’s preference and we await clarification on the requirements of a lead assessor

  • There are different routes to compliance, for example; organisations who already have ISO 50001 will not have to complete a separate assessment

  • ESOS is being administered by the Environment Agency

  • As an ESOS participant you are required to carry out audits every four years across your energy portfolio, with the first report due by December 2015

What qualifies an organisation for ESOS? 

ESOS applies to a company if it employs more than 250 people or has an annual turnover in excess of 50 million euro and an annual balance sheet in excess of 43 million euro.  Although it applies primarily to larger companies some trusts, partnerships and not-for-profit organisations that are involved in trade or business will also qualify.   

Qualification for ESOS will be through the structure of your corporate group.  If there is one enterprise undertaking within the group, then the whole group will qualify.  This means that SMEs that are part of corporate groups with one or more enterprise undertaking will be affected by ESOS. 

DECC estimates that 9,400 organisations qualify for the scheme in the UK, covering up to 200,000 buildings, and covering a third of the UK energy demand.  Although DECC estimates up to 70% of qualifying organisations are already measuring and reporting their energy consumption under existing policies, these participants will still need to identify and report recommendations for improvements, if they are not already doing so.   

What if my company already qualifies for the CRC?

ESOS participants will be allowed to align data collection to the CRC timetable.  If your organisation is in the CRC, you can use electricity and natural gas data collected to comply with the CRC scheme to support your ESOS Assessments.  You will need to ensure that you have processes in place to collect additional data you may need for ESOS Assessments that isn’t included in CRC e.g. combustion of other gaseous, liquid and solid fuels and wastes; fuel usage in transport; and imported heat.

While we await final details of ESOS lead assessor requirements, there is time to consider your organisation’s approach to measuring, managing and reporting your energy consumption.  Proper planning will enable your business to go beyond compliance and benefit from the opportunity to save carbon emissions, energy consumption and cost. 

For more information on how to get your energy data talking to you talk to us today:

 

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[Image Credit: Ryan Lackey]

Reporting Guidance , ESOS

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