ESOS: Thousands of businesses face enforcement action as final deadline passes

EXCLUSIVE: Compliance rates for the Government's Energy Savings Opportunity Scheme (ESOS) appear to have stalled at a critical time, with thousands of qualifying organisations still unaccounted for upon Friday's (29 April) ultimate deadline.

A spokesperson for the Environment Agency, which is managing the Scheme, revealed to edie that, as of 15 April, 6,239 organisations had submitted notifications of ESOS compliance – just 291 more than the 5,948 businesses that were compliant by the initial 29 January deadline.

The Agency had also received around 400 additional notifications of their ‘intent to comply’ by 15 April. But, with the three-month grace period for ESOS compliance coming to an end today (29 April), this means that around 3,000 of the circa-10,000 ESOS qualifying organisations were unaccounted for as of mid-April and are therefore now at risk of enforcement action.

edie had asked the Environment Agency to provide compliance figures as of today’s grace period deadline, but these are the latest figures available.   

When asked about the enforcement process that will now be undertaken, the Environment Agency spokesperson said: “We have recently started contacting organisations who we believe may be captured by the ESOS regulations and have not complied with the requirements of the scheme. All cases will be reviewed, with enforcement notices used where necessary and civil penalties served in the most serious cases.

“Our focus remains on bringing organisations into compliance with ESOS to ensure that the scheme delivers the energy savings and financial and environmental benefits intended.”

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

‘Great opportunities’

When it comes to the intended and potential benefits of the mandatory scheme, a host of energy efficiency firms, industry experts and ESOS auditors have told edie that, by not complying with ESOS or by failing to act on the findings of the audits that have been carried out, big businesses are sitting on millions of pounds’ worth of energy cost savings.

Britta MacIntosh, vice -president of operations at qualified ESOS assessor Ameresco UK, said: “Businesses should seriously consider following through on the recommendations made by the energy experts. Many of the recommendations provide great opportunities for businesses to save both energy and money, often without a substantial time or cost commitment. This is a chance for organisations to drive grassroots change that can have strong long-term corporate and community benefits.”

Previous estimates made by the Department of Energy and Climate Change (DECC) have suggested that ESOS could collectively save businesses £250m if just 5% reductions in energy bills were achieved through the Scheme. But MacIntosh believes the potential cost savings “could be even greater for certain businesses”, with Ameresco seeing energy reductions of up to 35% identified through the audits it has carried out.

Meanwhile, Thomas Beney, principal consultant at fellow ESOS assessor Carbon Smart, told edie that – of the 100+ businesses his organisation carried out audits for – “only a handful had robust enough data to meet the requirements of the regulation ahead of our work with them”.

“This tells us that many businesses were not prepared enough to comply with the requirements of the ESOS regulation in phase one,” said Beney. “We fear that inaction in the coming 24 months could mean businesses have to overspend to achieve last minute compliance for ESOS phase two as well.”

Reporting landscape

Writing in an exclusive edie blog earlier this month, the Carbon Trust’s energy consultant David Tobin claimed that – based on a sample of 86 full ESOS audits carried out by the Trust – the average cost reduction achievable through the implementation of energy saving opportunities stood at 20%. The Trust found the average energy spend of ESOS-qualifying organisations to be around £1.8m, meaning that a business with an average energy spend and average reductions identified through ESOS would be in line for annual savings of £360,000.

“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,” wrote 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.”

Despite thousands of businesses still failing to comply with ESOS, the scheme could be set to take up a more central role in the business energy reporting landscape. In last month’s Budget, Chancellor George Osborne confirmed a shake-up of carbon reporting requirements, with the scrapping of the Carbon Reduction Commitment (CRC) from 2018-19.

The official Budget document states that the CRC will be replaced, “in a revenue-neutral way”, with an increase in the Climate Change Levy (CCL) from 2019. The Treasury had previously proposed the creation of a single reporting framework, designed “through the prism of ESOS”.

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 this 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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