ESOS - More than just an energy audit
By 5th December 2015, approximately 10,000 UK organisations (qualified by the Government) will need to confirm their compliance with the mandatory energy assessment scheme, Energy Savings Opportunity Scheme (ESOS). Unlike the energy audits already undertaken by many companies, the ESOS differs in that it should be utilised as a tool to identify energy reduction measures and make energy savings.
Under the ESOS, organisations which are categorised as either large UK undertakings or corporate groups must provide 12 months of verifiable energy data and present recommendations for cost-effective, energy-efficient improvements. Failure to comply or undertake an assessment before the December deadline can result in a fine ranging between £5,000 and £50,000. If just 6% of the identified energy-saving opportunities are implemented, ESOS is estimated to lead to a £1.6 billion net benefit between 2015 and 2030.
How does the scheme work?
The ESOS assessment must cover all UK operations over a twelve month period. It requires participants to do the following three things every four years:
- Measure total energy consumption – Consumption should be measured across buildings, transport and industrial activities.
- Conduct energy audits to identify cost-effective energy efficiency recommendations – During each phase of the scheme, at least 90% of the total energy consumption must be subject to either:
- An ESOS compliant energy audit
- A Display Energy Certificate
- A Green Deal Assessment or
- A certified ISO 50001 Energy Management System
For the first phase, any energy auditing activity dating back to December 2011 can be used to support compliance provided that it meets the minimum standards required.
- Report compliance to the Environment Agency by 5th December 2015. The assessment must have been reviewed by a board-level director and approved by a lead assessor.
Making the most out of ESOS
It is not a requirement to implement the energy efficiency recommendations identified during the ESOS assessment, but companies could be otherwise missing out on the financial benefits which the implementation of the recommendations could bring. The ESOS is designed to help aide companies in the following ways:
- The ESOS assessment must be signed off by a company director which exposes the issue of energy efficiency and any recommended savings to a senior level. Due to traditional corporate structures, this exposure could have otherwise been difficult to achieve.
- Whereas a standard energy audit would usually just summarise current expenditure, the ESOS requires businesses to present approximate costs of potential energy-saving initiatives and their life cycle paybacks. This information can help companies act strategically to improve their energy efficiency in both the short-term and a long-term.
- The cost to the corporation undertaking an ESOS audit is likely to be between £5,000 and £50,000 or approximately 0.5% of their annual energy expenditure. It is anticipated that the cost of the audit will be offset by the savings made through the implementation of the recommended energy efficiency initiatives.
Implementing energy-saving measures
Unlike standard energy audits, the more detailed ESOS report should be used as a gateway to engage senior management and secure the financing needed to drive energy efficiency and reduce energy expenditure.
When undertaking an ESOS assessment, it is worth considering identifying renewable energy as an energy efficiency recommendation. Proven to be an effective solution to escalating energy costs, technologies such as solar PV, biomass, solar thermal and LED lighting can help businesses reduce their carbon output and become more energy efficient.
To find out more about ESOS and find out whether your company qualifies, click here.