ESOS: 40% of businesses non-compliant by deadline day

Less than 60% of the circa 10,000 businesses that qualify for the Government's Energy Savings Opportunity Scheme (ESOS) were compliant by last Friday's extended deadline, the Environment Agency has today (1 February) confirmed.

An Environment Agency spokesperson revealed that it has received 5,948 notifications of compliance and exactly 1000 notifications of intent to comply with the mandatory energy efficiency scheme, leaving more than 3,000 organisations unaccounted for.

In the two days before the 29 January deadline, the Environment Agency received 1015 notifications of compliance – indicating another late compliance surge, but leaving thousands of companies at risk of enforcement action.

“We believe that approximately 70% of organisations that qualify for ESOS are on the road to compliance,” the spokesperson said. “It will take some time to match all of the notifications to the expected participant groups and verify whether the remaining organisations do in fact qualify.

“Our focus is on bringing organisations into compliance with ESOS and we will start contacting those organisations that have not yet complied this month. We will normally use enforcement notices to bring organisations into compliance and only issue civil penalties in the most serious cases.”

Enforcement approach

An edie Freedom of Information (FOI) request carried out last month revealed that just 4,242 – around 42% – of the circa 10,000 eligible companies – were fully compliant with ESOS as of 8 January. That FOI request also revealed that an additional 2,500 companies had informed the EA that they intended to comply with the legislation by 29 January.

The Environment Agency’s ESOS project manager Jo Scully then confirmed that any organisation covered by the scheme that submits a notification of compliance after 29 January would risk “enforcement action”. When asked for information on exactly what this enforcement action would be, Scully responded: “Each non-compliance will be considered on a case-by-case basis, in accordance with our published enforcement approach.”

The Agency’s official document on enforcement and sanctions details that the maximum penalty for failing to undertake an energy audit ahead of the compliance deadline is up to £50,000 and up to £500 for each working day the responsible undertaking remains in breach of the mandatory scheme, for a maximum of 80 working days.

But that document also states that civil penalties will normally be used only in the most serious cases and that, for the first compliance period and new entrants in subsequent compliance periods, the Agency would normally allow up to three months to remedy the failure before issuing any fines, meaning that the ultimate deadline would be 29 April.

Business case

Commenting on the deadline day compliance figures, Karthik Suresh, director at Ameresco – a qualified ESOS lead assessor – said: “ESOS provides private sector businesses with the opportunity to save money by improving energy efficiency. Sadly, despite more businesses signing up in recent months, so far ESOS has been an opportunity lost as only around 70% of eligible businesses have registered for the scheme or notified the Environment Agency of their intent to comply.

“We believe that DECC and The Environment Agency have done a good job of outlining a compelling business case for ESOS – it is in the implementation of ESOS that we believe changes could be made. In the UK, you only need to do an ESOS audit – the large firm does not have to implement the measures. Additionally, if the businesses does not own its own buildings or other assets, they cannot gain from the rise in value of the asset.

“As the ESOS audits need to take place every four years, in future years there could be an opportunity to tweak ESOS to directly target asset owners.”

The Government is currently reviewing responses to a crucial consultation on simplifying the UK’s carbon reporting and tax landscape. Suresh believes a “carrot and stick approach” could encourage businesses that not only want to avoid fines but also want to increase the value of their assets through ESOS.

edie webinar: The ‘Opportunity’ in ESOS

One month on from this compliance deadline for ESOS, edie will be hosting a webinar that explores what happens next, with expert advice on how the Scheme could be the key to secure crucial board-level buy-in for UK energy managers.

Taking place on Thursday, 25 February, the webinar will investigate the ‘Opportunity’ in ESOS; providing an insight into how energy managers found the whole compliance process, and how they are planning to use the scheme as an effective tool to drive energy efficiency changes within their organisation.

To find out more about this webinar and register your interest to tune in, email [email protected].

Luke Nicholls

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie