ESOS offers 20% reduction in business energy costs, Carbon Trust finds

The Government's initial estimates of the financial savings of its recently enforced Energy Savings Opportunity Scheme (ESOS) could be much lower than the actual savings being realised by qualifying organisations, according to a sample of ESOS assessments undertaken by the Carbon Trust.

Writing in an exclusive blog for edie, the Carbon Trust’s energy consultant David Tobin claimed that the average cost reduction achievable through the implementation of energy saving opportunities identified by ESOS audits stood at 20%.

Based on analysis of 86 full audits carried out by the organisation, the Trust found the average energy spend of ESOS-qualifying organisations to be around £1.8m, meaning that a busines with an average energy spend and everage reductions identified through ESOS would be in line for savings of £360,000.

This is much higher than previous estimates made by the Department of Energy and Climate Change (DECC), which suggested that ESOS could collectively save businesses £250m if just 5% reductions in energy bills were achieved.

“The real impact of the regulations could be far greater than expected if organisations make sure that their ESOS evidence packs become the basis for action,” Tobin wrote. 

“The next compliance deadline is almost four years away and it is inevitable that some ESOS evidence packs will sit on a shelf collecting dust until then. But for those businesses that do seize the opportunities highlighted by ESOS the average overall payback period for measures we identified was less than three years.”

Big savings

According to the Trust, construction firms had the highest average level of energy spend, with annual energy costs of around £4.9m. Energy management, lighting, heating and metering were popular recommendations identified by ESOS audits, with businesses able to save around 25% on average.

Manufacturers, which took up a significant proportion of the Carbon Trust’s ESOS audits, were able to identify average energy cost savings of 23%, thanks in part to energy efficiency improvements industrial processes such as steam systems, compressed air, motor efficiency and motor control.

Crucially, almost all businesses assessed by the Carbon Trust were found to have scope for improving general energy management practices and behaviours, which require minimal investment to implement. This finding is supported by Environment Agency data which suggested that more than 40% of ESOS participants that complied before the original December deadline had to make estimates to determine their total energy consumption – showing a clear deficiency in the measurement practices that underpin good management of energy.

“Based on our experience so far it is fair to say that ESOS has been successful in making sure that businesses have properly assessed and better understood their energy saving opportunities,” added Tobin. “But the real proof of success will be in the rates of actual implementation.

“We would encourage all ESOS participants to make the most of having to undergo a compliance process and realise the significant cost savings on offer.”

Compliance deadlines

ESOS requires all ‘large undertakings’ with more than 250 employees or a turnover of more than €50m to produce detailed reports on their energy use and efficiency every four years. Lead assessors will carry out an energy audit, paid for by the business, but there is no obligation to implement any of the efficiency measures identified. 

An initial low uptake of the scheme meant that the ESOS compliance deadline was put back to 29 January, 2016. But even by that deadline, the Environment Agency had received 5,948 notifications of compliance and exactly 1000 notifications of intent to comply, thousands more organisations unaccounted for.

The Agency is now allowing an extended grace period of up to three months for all ESOS-qualifying firms to become fully compliant with the scheme, meaning that the ultimate deadline stands at 29 April.

The circa 10,000 businesses affected by ESOS are facing total assessment costs estimated at £165m, but – as identified here by the Carbon Trust – the resulting financial benefits of implementing energy efficiency improvements could massively outweigh the costs of administrating the scheme.

FREE WEBINAR: Where’s the ‘Opportunity’ in ESOS?

Is ESOS another toothless compliance scheme which will fail to deliver concrete benefits for qualifying businesses? Or, with the assessment done, does ESOS pave the way for meaningful, measurable energy savings at scale? A recent edie webinar, which is now available on demand, answered these key questions…

In the hour-long webinar, energy management experts from Environment Agency, Jacobs Engineering and Starbucks were all on-hand to explain exactly how ESOS could be the key to securing crucial board-level buy-in for UK energy managers and unlocking massive savings.

View the ESOS webinar on demand here.

Luke Nicholls

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