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'Government has missed a trick with ESOS'

Author : David Strydom

16 October 2014

Energy reduction will not be delivered by impending legislation alone says the compliance director for Carbon2018, Melanie Kendall-Reid

Melanie Kendall-Reid, compliance and customer service director for Carbon2018, has a million things on her mind. She knows the facts related to energy management and sustainability so well it seems she was born with them imbedded in her brain. In fact, her memory is so overloaded with the facts and requirements surrounding legislation, she gets visibly frustrated when she can’t instantly recall each detail of every piece of energy legislation since Year Dot.

One thing is clear, though: Kendall-Reid is adamant on the importance FMs must place on the Energy Saving Opportunity Scheme (ESOS), due to take effect in 2015. ESOS was born of Article 8 of the EU Energy Efficiency Directive requiring member states to introduce a programme of regular energy audits for ‘large enterprises’. Audits must be undertaken by 5 December 2015, then at least every four years from the date of the previous audit.

ESOS will take into account about 7,800 organisations and of those, they’ll be required to undertake an energy audit if they fall within the criteria: employing more than 250 staff and have an annual turnover of E50m or a balance sheet with a total exceeding E43m). “It’s an assessment of 90% of a company’s energy emissions across the organisation, as opposed to building-by-building,” Kendall-Reid explains. “The ESOS audit will take into account issues such as transport, so it even exceeds the scope of the CRC which encompasses electricity and gas for heating purposes only.”

The Environment Agency suggests audits will cost about £17,000 originally, then £10,000 thereafter. While a list of recommendations will be one of the outputs from the audit there's no obligation to action them. There's also no requirement to make any changes to energy use once the audit has been completed. If you’re ISO 50001 certified, you’ll automatically be deemed to be compliant. “It’s a case of looking at whether your organisation gains ISO 50001 accreditation or whether it pursues compliance through ESOS” Kendall-Reid says.

“Government has missed a trick with ESOS” says Kendall-Reid. “If we want to see energy reduction, why is there no requirement to implement energy saving measures under ESOS? Of course, the other main legislative requirement unfolding is the Energy Efficiency in Buildings Regulations due to come into force in 2018. In 2018 it will be unlawful to sell or let a commercial property with an EPC rating of F or G. This threshold will be reduced further in future years.
 
Melanie Kendall-Reid has been working with DECC on the drafting of the 2018 legislation and is keen to see the requirements be effective enough to ensure that real energy savings are achieved. A significant barrier to this is that an EPC measures the fabric of the building (no behavioural change is reflected); had a Display Energy Certificate been used as the benchmark, actual energy use would have been incorporated thus requiring a reduction in usage.

How is this all relevant to Carbon 2018? “We will be a lead assessor for our clients,” says Kendall-Reid. “It’s about identifying energy-saving opportunities, then reporting your compliance to the Environment Agency. ESOS is going to be a significant cost to organisations – as we currently manage Mandatory Carbon Reporting and CRC for many organisations, we’re in a strong position to be able to deliver compliance with this scheme.”

That concern with how and – critically, when – energy is used is very much the bread-and-butter of Carbon2018’s mission statement. The company describes itself as an energy management and environmental consultancy that looks to take a holistic approach to its client’s energy. That, says Kendall-Reid, incorporates compliance with legislation, getting the best value for money and ensuring energy waste is reduced. “We’re very ethical, so we’re geared towards energy conservation and efficiency, but we also have a great understanding of the commercial industry,” Kendall-Reid explains.

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One night earlier this year, Melanie Kendall-Reid was participating in the 26-mile ‘Moonwalk’ around central London when she happened to walk past a client’s building. “I know that it’s a 9-5, five-day-a-week commercial building, and it was 50% alight. I can almost guarantee that none of my clients’ staff was at work.

“All of our clients are cost conscious but some are more focused on sustainability than others. We help to ensure a business’s energy policy is implemented, measured and monitored – after all driving energy usage will drive down cost.”

The company’s biggest challenge, says Kendall-Reid, is getting energy reduction high enough on the client’s agenda that it becomes a focus at all levels. FMs are concerned with looking after the building occupiers who use the building on a daily basis. Those occupiers are, in turn, concerned with whether cleaners have cleaned the bathrooms and whether the lifts, the boilers and the air conditioning is working. The person who pays the bill, the financial controller, may be interested in the bigger energy saving picture, but ultimately the management of energy is a small part of the day to day role of an FM.”

Carbon 2018’s business aim, Kendall-Reid explains, is ‘to take the pain away’ from FMs by letting them manage the day-to-day running of the building while Carbon2018 manages the energy. “From metering strategies, energy management, procurement and occupier engagement – we can deliver and remove the burden which resides traditionally with FMs. Behavioural change should be driven from the Board Room throughout the business.”
 
Kendall-Reid says the company communicates with its clients often. “With all the recent legislative developments, we ensure compliance is achieved with little demand on our clients’ time. We work with all levels, from the CEO, the CFO, FMs and accounts teams to ensure our service is end to end. We integrate ourselves into every area of the clients business. “


I suggest to Kendall-Reid that the playing field of those offering to manage companies’ energy effectively must surely be saturated with competitors. She’s not sure that’s true. “I would argue we have many competitors trying to find ways of creatively demonstrating the financial saving they can make without considering efficiency at all,” she says.

“It’s far easier to sell a financial saving to a company than it is to sell an energy efficiency solution. That’s because most people are interested in the bottom line. If I say: ‘I can save you £100k on your energy’, you’re going to listen. If I suggest you reinvest it on energy efficiency measures which will continue making savings year on year… that is where Carbon2018 shines through!”


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