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ESOS - Energy Savings Opportunity Scheme

The Energy Savings Opportunity Scheme (ESOS) requires large enterprises to undertake energy audits to identify opportunities to save money on energy bills through improved energy efficiency. It is estimated that the scheme will deliver £1.6 billion of net benefit to the UK. The scheme is the UK Government’s approach to meeting the requirements of Article 8(4-6) of the European Energy Efficiency Directive (2012/27/EU), which came into force in November 2012 and became UK law in 2014. ESOS mandates that large enterprises (non-SMEs) carry out four-yearly energy audits. The key driver is to encourage the uptake of more energy efficiency measures, highlighting areas of energy wastage, and present cost-effective opportunities to reduce energy costs and associated carbon emissions.

The energy audit will encompass all areas of significant energy consumption including:

  • Buildings
  • Transport
  • Industrial processes 

It is expected that a de minimis level of energy exclusion will be introduced. It is estimated that the audit will need to capture 90% of total energy use, however, you will need to be able to measure your total energy consumption in order to determine the 90% level.

Key steps to complying with ESOS

ESOS 2

Which organisations does it apply to?

The EU requirement is that all ‘large enterprises’ will be included and participation in ESOS is mandatory if you answer yes to one of the following:

  • You have more than 250 employees or
  • You have a turnover of more than £42.5m and a balance sheet of £36.5m or
  • You are part of a corporate group containing a large enterprise (even if you are a small organisation and your highest UK parent organisation contains a large enterprise).

Therefore, large companies, partnerships, charities, not-for-profits and some universities (depending on how they are funded) will all be included.

ESOS will not apply to any public sector organisations, SMEs, nor does it apply to franchisees of organisations, provided that the franchisee is not a large enterprise in its own right. However, SMEs or public sector bodies could still benefit from voluntarily meeting the ESOS requirements, ie using a qualified ESOS assessor to undertake energy audits of their own organisations.

If you are an organisation which operates across the EU, then you will need to check each Member State’s transposition of the Directive as you will be required to comply with local legislation.

When is action required?

In order to minimise business risk, it is always recommended to act early as delaying only leaves more to do in less time. However, there is still sufficient time to make a considered plan to gather data and schedule site surveys.

The Government consultation closed on 3 October 2013, a written Ministerial Statement was made by the Minister of State for Energy and Climate Change on 26 June 2014 and a New Guide has been released. The first key date for action is Phase One compliance 31 December 2014, by which time you will need to have notified the scheme administrator. All qualifying organisations will then have to have conducted and submitted their compliant audit by 5 December 2015. Thereafter, an audit must be completed at least every four years after the initial audit (Phase Two compliance date 5 December 2019).

It could be that your organisation is already on the way to ESOS compliance through existing energy management strategies, site surveys and energy efficiency programmes. The UK Government's aim was to transpose the EU Directive at minimal cost and disruption to most businesses.

If you view ESOS only as a statutory Government scheme then it is likely to cost your organisation more. However, an energy audit will highlight a number of cost-effective energy efficiency measures which can be easily implemented and compliance costs can be capitalised. Typical energy audits leading to implementation of projects can yield a return on investment of 35-40% in existing buildings.

Who can undertake an ESOS audit?

Audits are to be carried out by a ‘qualified ESOS lead auditor’ in an independent manner and will recommend appropriate energy efficiency cost saving opportunities.

Both external consultants and in-house professionals will be entitled to carry out the audits, but will have to be certified to do so. The Environment Agency has now confirmed that there are 13 approved registers of Lead Assessors including the Energy Institute's Chartered Energy Managers and those on their Register of Professional Energy Consultants (RPEC). Courses are currently being held to ensure that qualified professionals can demonstrate the full set of competencies required to undertake an ESOS audit.

Carbon Energy’s Engineering Director, Phil Coles, is a Member of the Energy Institute (MEI) Chartered Energy Manager, is on the Register of Professional Energy Consultants and has carried out Carbon Trust energy audits and Carbon Trust Standard assessments since 2003. He is one of currently only 112 people qualified as Lead Assessors to sign off the new mandatory ESOS scheme in the UK!

Next Steps

You should assess your requirement for compliance as soon as possible - planning ahead will help reduce any risks to your organisation. 

  • Notification of the scheme administrator
  • Energy Review, including total energy use, organisation energy efficiency, de minimis exclusions, energy consumption profiles
  • Identification of Energy Saving Opportunities based on representative site surveys and including life cycle assessment not just simple paybacks
  • Reporting or Disclosure of the results of the organisation’s energy review and energy saving opportunities identification.

The site surveys conducted should be sufficient to give the auditor a clear and complete view of the organisation so that the recommendations are applicable and valid.

If you think that you need to act on ESOS, or wish to discuss this in more detail,  please contact Paul Turgoose of Carbon Energy Ltd on 01264 790248 or email p.turgoose@carbon-energy.co.uk