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How to comply with ESOS as the scheme enters its third phase

Author : Stuart Fairlie

13 January 2020

The Energy Saving Opportunity Scheme (ESOS) is a mandatory government scheme that was launched in 2011 as a central plank of the government’s efforts to achieve a 20% reduction in energy consumption by 2020.

The scheme was drafted to run in three, four-year phases from 2011 to 2015, with the second phase running from 2015 to 2019, before beginning its third phase this year.

ESOS applies to all large organisations in the UK, defined as any organisation with 250 or more employees, or those with an annual turnover of €50million and an annual balance sheet of €43m.

While ESOS will primarily affect larger companies, if an SME belongs to a corporate group that contains one or more entities that meet the requirements, they too need to participate in the scheme.

Furthermore, while public bodies are in the main exempt, universities not subject to public contracts regulations would need to comply, as would one which receives more than half its income from private sources.

Companies and organisations that fail to comply risk civil penalties, including fines, and with the scheme now well established and in its eighth year, authorities are starting to enforce with more rigour.

According to data released by the Environment Agency, the computer software firm Amdocs UK received a £45,000 fine for failure to comply.

Forever 21 UK, a fashion retailer, and AMG Care Services, a care home provider, received fines of £22,500. ESOS does not have to be bad news and can easily be an opportunity.

While the scheme requires an initial outlay for an audit of energy consumption, this can be more than recouped by the savings identified.

Below are five steps required to comply with the letter of the law and ensure maximum savings are achieved:

1) Conduct an ESOS assessment. This involves an initial assessment of the organisation’s energy usage, including the areas and processes that are most energy intensive (90% or greater).

2) Nominate a Lead Assessor who will be entrusted to carry out stage three (below), a detailed energy audit of those areas/processes identified as using energy, in order to identify where savings can be made and then draft recommended steps to achieve them. An organisation can nominate a member of staff with in-depth knowledge of conducting energy efficiency audits and be a member of an approved register.

3) The detailed energy audit is the meat of what the Lead Assessor does and it is vital that this is of a sufficiently stringent standard. ESOS reports should include an analysis of utility, transport, and manufacturing process gas consumption over a 12-month period; an analysis of savings opportunities identified; evidence to support the findings; and a signature page where the Lead Assessor and board level director/s can sign off.

4) By ensuring a board director signs off the report will confirm the detailed workings of the assessment are brought to the board’s attention. ESOS participants are required to submit formal notification of their compliance to the Environment Agency via an online portal.

5) Implementation rivals the audit itself in importance and it is here that the organization implements the energy efficiencies discovered and thus makes financial savings. It is important to note that a properly drafted audit sets out in detail exactly how efficiencies can be implemented.

ESOS does not have to be a burden on business, but instead, when carried out professionally and carefully, it should be an opportunity.

Stuart Fairlie is technical director for Elmhurst Energy Consultancy

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