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MSL Property Care Services highlights the costs of ESOS inaction

10 August 2016

As firms across the UK get to grips with implementing ESOS improvements, MSL Property Care Services have worked closely with their lighting partner Lumilow Lighting to advise their clients on the benefits of, and why implementation of ESOS improvements is, so essential.

Respective company Managing Director, Jeremy Harrison of MSL describes his experience of ESOS. DECC recently produced a very interesting document; 'A Guide to Implementing Energy Savings Opportunities.'

In it, DECC describes the cost of inaction. Very simply, this describes the cost a given company is paying now for energy and maintenance, minus the reduced energy and maintenance after energy saving proposals have been put in place.

We've always been aware how startling the benefits of energy savings are. After all, DECC's guidance says that businesses could save over £250m, and 3TWh of energy per year if they achieve just 5% of the cost-effective energy efficiency potential ESOS audits should identify.

With this in mind, it is sometimes beyond belief why firms don't implement the energy saving opportunities. Especially when you consider much of this technology will be applicable for the Enhanced Capital Allowance Scheme, meaning it can be 100% offset against taxable profits.

The truths behind ESOS

Of course, ESOS has been and remains a massive exercise for many companies, and the first stage was the audit.

MSL working closely with Lumilow Lighting have dealt with more than its fair share of surveys on behalf of ESOS Lead Assessors, calculating the savings that could be achieved through LED lighting specification.

But, strangely, it all now seems to have gone a bit quiet, which is potentially a vast missed opportunity in so many ways.

Energy savings, bottom line improvements, to say nothing of carbon benefits and mitigation, all are in the palm of our hand.

We will never know whether companies actually planned to implement the savings, and it has certainly been a costly exercise for all concerned. But none of that matters now. All that's important is firmly grasping the chance to make a step change in UK energy efficiency for the better.

For anyone in doubt, here are some choice numbers from DECC's analysis.
1) On average, a business can reduce its annual energy costs by 20% through improving energy efficiency and energy management
2) It is not unusual to save 5%-10% with minimal capital expenditure

DECC's cost of inaction metric

Adding to the potency of the argument, DECC's precise numbers on the costs of inaction really tell the tale.

In the DECC example, investing in an energy saving opportunity would reduce the annual energy bill of a business by 20% from £600k to £480k.

Assuming an annual energy price increase of 4%, the business-as-usual energy bill after 10 years would be over £850k, which the investment could reduce to a little over £680k.

Therefore, the energy saving potential over this 10 year period is £1.4m. In this example, the ‘cost of inaction’ for not making the investment is more than £1.4m pounds over 10 years, or in excess of £2,700 per week.

These numbers are staggering; this is the business case for implementing ESOS audits.

It is such a shame these metrics aren't more widely shared, to incentivise UK firms to implement, now.

Contact MSL today; we will happily discuss your business case, and examine how you could save energy with energy efficient lighting.


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