Energy Savings Opportunity Scheme – the effect on the commercial sector

The Department of Energy and Climate Change (DECC) has published the Government response to the Energy Savings Opportunity Scheme (ESOS) consultation with guidance for potential scheme participants. EECO2 looks at what this has in store for the UK commercial sector

The Department of Energy & Climate Change (DECC) in the UK has published the Government response to the Energy Savings Opportunity Scheme (ESOS) consultation with guidance for potential scheme participants and laid regulations in Parliament to give legal effect to the scheme, and published guidance for potential scheme participants. EECO2 takes a look what this has in store for the UK’s commercial sector./p>

The Energy Savings Opportunity Scheme is a mandatory energy assessment and energy saving identification scheme for large undertakings (and their corporate groups). The scheme applies throughout the UK.

The qualification date for ESOS is 31 December 2014. You are likely to fall within scope of ESOS if you are:

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

What do I have to do to comply with ESOS?

  1. Measure your total energy consumption
  2. Conduct energy audits to identify cost effective energy efficiency recommendations
  3. Report compliance to the Environment Agency

The government estimates that ESOS will help large enterprises save around £300m in energy costs in 2016, while the Carbon Trust believes it could be two or three times this amount as long as businesses implement the efficiency measures highlighted.

ESOS requires all qualifying organisations to conduct an energy efficiency audit by December 2015 – but there is no obligation to carry out any of the measures identified. This is entirely optional.

The cost of conducting an ESOS audit is estimated around £21,000 for an initial audit and this has to be repeated every four years by a qualified assessor. All energy use by an organisation – in buildings, industrial processes and transport – will have to be calculated and all 'significant' areas of energy consumption audited.

The ESOS assessment and subsequent notification to the Environment Agency must then be signed off at Director level, clearly underlying the intention to raise the profile of energy consumption within organisations.

Consider the routes to compliance available to cover your areas of significant energy.

Consumption

You must conduct compliant energy auditing assessments or energy management activity in relation to all of your areas of significant energy consumption by the compliance date.

There are four distinct types of qualifying assessments and management activity available to you: ESOS Energy Audits – these may include any energy audit work undertaken during the compliance period under other schemes (such as activity under the Carbon Trust Standard, Logistics Carbon Reduction Scheme and Green Fleet Reviews), provided your Lead Assessor confirms this work meets the minimum standards required for ESOS Energy Audits); an ISO 50001 certified Energy Management System; Display Energy Certificates (DECs) and accompanying advisory reports; or Green Deal Assessments.

To contribute to your compliance, ESOS Energy Audits and other compliance activities can be undertaken at any time within a compliance phase. This means that you can comply by conducting a number of staggered assessment activities at different times.

Importantly, whichever route or combination of routes to compliance you choose, you will need to cover all of your areas of significant energy consumption in each phase. For example, if you had four areas of significant energy use that accounted for 90% of your total energy consumption and an ISO 50001 Energy Management System covered only three of these four areas, you would need to choose another route to address the fourth area of significant energy use.

Once you have considered any compliant activity already undertaken in relation to areas of significant energy consumption, you should consider which compliance activities you want to undertake in relation to the remaining areas of significant energy consumption.

ESOS in brief

  • All large enterprises will be required to participate, excluding the Public Sector.
  • SMEs are exempt, defined as employing fewer than 250 people and with annual turnover no greater than €50m.
  • Charities that do not fit the SME definition must participate.
  • A corporate group can qualify for exemption if all its businesses fall into the SME category.
  • The date for assessing if your business fits the qualifying criteria is 31 December 2014.
  • Submission of the first ESOS assessment is required by 5 December 2015.
  • Data gathered for ISO 50001, Display Energy Certificates and Green Deal assessments can be used, as long as it falls into the relevant compliance period.
  • As with the CRC Scheme, the Environment Agency will administer ESOS.
  • There will be no requirement for mandatory disclosure of ESOS results but the EA will ask for voluntary information to publish.
  • If you don’t comply when required to do so, there are fines ranging from £5,000 to £50,000.

Companies