10 things you need to know about ESOS
ESOS is the new government policy which calls for mandatory energy audits in the UK. Here are the 10 things you need to know.
1. What is ESOS?
The Energy Savings Opportunity Scheme is the Government's response to the European Union's Energy Efficiency Directive which came into effect in December 2012. The scheme requires large companies to produce detailed reports on the energy use and efficiency of their organisation every four years.
2. Is your business affected by ESOS?
ESOS applies to any company which is classified as a 'large undertaking'; with more than 250 employees or a turnover of more than €50m and a balance sheet exceeding €43m. The business qualifies if it meets the criteria on 31 December 2014.
It is important to note that a company must carry out an ESOS assessment - even if it is not a 'large undertaking' - if it is part of a corporate group with another UK-based company which does meet the ESOS guidelines.
3. Are there any exemptions and what about smaller businesses?
Organisations subject to the Public Contracts Regulations (2006) are currently exempt, although some trusts, public bodies and not-for-profit organisations may be included. Overseas energy use is also excluded from ESOS but undertakings within the EU will have to comply with local regulations.
Small businesses not classified as 'large undertakings' are not currently affected by ESOS, however, as above, they might be if they are part of a larger corporate group.
4. How does a business comply with ESOS?
The business must carry out an audit of 90% of its total energy usage for a one-year period. A qualifying company must also identify efficiency opportunities; evaluate these through lifecycle costs, store the data and inform their regulator (such as the Environment Agency or Natural Resource Wales). Companies are also encouraged to implement energy efficiency measures and produce annual reports; however this is not yet mandatory.
Regulators will also have the power to issue civil sanction including financial penalties for organisations not complying with ESOS.
5. How should the audit be carried out?
First, the business must appoint a lead assessor to carry out and review the energy audit and overall ESOS assessment. The audit must be conducted by a qualified assessor approved by a professional body. The assessment will take into account energy partly covered by ISO 50001, Display Energy Certificates or Green Deal assessments.
If you are fully covered by ISO 50001 then you won't need to carry out a full assessment, you just need to notify the Environment Agency that this is the case. You will still need to carry out an ESOS assessment if you are only partially covered.
6. When is the deadline?
In order to comply with ESOS, businesses must produce their first environmental audit report by 5 December, 2015.
7. How many companies will be affected?
The Carbon Trust estimates that as many as 7,300 enterprises in the UK will be affected by ESOS. This covers more than 200,000 buildings and 10,000 industrial plants and accounts for 35% of total UK consumption.
8. What does the Government want to achieve?
DECC and Carbon Trust estimate that, with a conservative 6% average energy saving, the UK could save 3TWh per year - enough to power 160,000 homes. This will contribute to meeting the EU's 20% energy reduction target by 2020.
The Carbon Trust has also recently reported that, by making efficiency savings, large businesses could save 15% on energy bills and it is 'not uncommon' for this to rise to 25%.
9. How much will this cost your business?
The Government estimates that the average cost to each business will be around £6,600 for the cost of an audit per four-year cycle, but a recent report on ESOS estimates that businesses will save around £35,400 from their initial audit. Of course, a business will only realise this benefit if it implements cost-effective recommendations to improve its energy efficiency.
10. What are the potential savings?
The Carbon Trust estimates that companies complying with ESOS could save £300m in 2016, but that the actual benefits could be two or three times higher than those estimates if businesses implement just four of the ten standard recommendations from their energy audit.
In the long run, the Carbon Trust estimates that £1.9bn net savings can be made between 2015 and 2030.
See below for the government's full Guide to Esos: