Large UK companies who have yet to start the Energy Savings Opportunities Scheme auditing process should act quickly, before it’s too late

ESOS is the abbreviated form for the Energy Savings Opportunities Scheme which is the UK’s interpretation of the EU Energy Efficiency Directive 2012 aimed at highlighting, through a defined audit process, quantified areas in which “large organisations” can reduce their energy consumption.

It is a mandatory scheme targeting buildings, industrial processes and transport. Developed by the UK government department, DECC, in consultation with stakeholders, it is enacted in UK law and now being policed and monitored by the Environment Agency (and its equivalents in Scotland and Northern Ireland).

The scheme will run on a 4-year cycle with the first compliance deadline (for the first compliance period) of 5 December 2015 looming fast.

It affects “large organisations” – defined as those carrying out a trade or business having >250 employees or having turnover of €50m and a balance sheet of €43m in their last financial year ending before or on 31 December 2014. Thus it affects mainly private sector organisations though some “not-for-profits” and universities may qualify. The rest of the public sector is not affected.

It is up to clients to determine whether they qualify and this should have already been done by the end of December 2014. Detailed guidance on the scheme is to be found on the Gov.UK website, then search on DECC and ESOS to find the latest information.

Objectives of ESOS

Companies are obliged by the scheme to appoint a lead assessor, who will undertake an energy audit and subsequently produce a list of Energy Saving Opportunities. These will range in nature from zero cost options, like communication, target-setting and improved management systems through low-cost, improved maintenance routines, training of employees, to more investment-led options like installation of new or improved lighting, control systems or more energy-efficient plant and equipment.

Lists, particularly where organisations have no track record of improving energy efficiency, are likely to be long. Smaller schemes are likely to stick with simple cash payback to determine the return on investment whereas larger, more complex, ones may well benefit from the use of life cycle cost analysis. LED lighting would be a good example of the latter due to the sizeable savings made from lower relamping frequencies and lower failure rates.

There is currently no mandatory requirement to implement any energy-saving measures however. As client organisation directors are required to sign the overall submission, the scheme relies on commercial pressures on board directors, from stakeholders and the like, to progress with the greatest opportunities for cost-saving.

How to comply

If they qualify as a “large organisation”, companies will need to either have full and certified ISO50001 compliance (including transport) or be covered by current Display Energy Certificates or Green Deal Assessments, though these have limited application.

Otherwise they’ll need to carry out an ESOS assessment for assets and activities not covered by the above. This involves a number of stages, the first of which is to assess their total energy consumption over a 12 month period which must include 31 December 2014 (the qualification date). This can be done in a number of ways, from trawling through hard copy bills to using sophisticated data systems and can also include data compiled for other schemes, the main one being the Carbon Reduction Commitment.

All organisations going through the ESOS assessment process must appoint a lead assessor who is registered with an approved professional body, e.g. the Energy Institute, a list of which is regularly updated on the EA/DECC website. Lead assessors can be internally appointed within organisations or, for the majority, they will be external consultants. Their role is to ensure that the assessment process and associated data gathering and audits are in line with mandatory requirements.

Lead assessors need to be familiar with the sector in which they operate and have experience in auditing that sector.

The risks and current state of play

Many organisations have yet to consider how they will comply with ESOS and time is running out. To achieve ISO 50001 from scratch is likely to take many months. Several organisations have yet to appoint a lead assessor. There is a limited supply of suitably qualified assessors, meaning that each could be responsible for up to 20 organisations. Whilst this may be possible for smaller organisations it will be very difficult for larger ones.

Engagement between all parties involved is necessary to maximise potential benefits from the scheme from an early stage, in particular the client and lead assessor, to plan what successful implementation, and beyond, could bring in return, as well as to plan what resources and finance will be needed.

Organisations who have yet to start on the ESOS process should be actively progressing now, before it’s too late. By the end of each compliance period, the first of which ends on 5 December 2015, the client will need to have completed a compliance form and sent it to the Environment Agency. This needs to be signed by the lead assessor and an approved client director. There are a range of stiff penalties for non, late or inaccurate compliance statements.

What the lead assessor does

Firstly the lead assessor will determine where energy is being consumed, so significant energy-using assets and activities need to be identified covering at least 90% of total energy consumption. This may be lighting or other building services or it could be an important element of production in many industrial processes. Or it may, as is the case in specialist transport companies, be the fuel used to operate ships or planes.

Next the lead assessor works out how efficiently the organisation is using its energy. Comparisons of energy consumption profiles can be drawn with other similar organisations, or indeed for large portfolios, it may be possible to do this “within company”, as with extensive building estates comprising relatively similar buildings – these can be clustered because of their similarities in construction or operation.

A key requirement to understanding energy consumption profiles and relative efficiency is to carry out energy audits using as recent, accurate and complete data as possible. The types of audit used will depend heavily on the type of building or installation which is being audited and will usually be in line with accepted best practice guidance, e.g. for building services ISO50002 and BS EN 16247, to ensure maximum effectiveness in identifying and analysing performance and the underlying reasons for that performance.

The audits will comment on the age and condition of equipment, whether it is being maintained to manufacturers’ recommendations and what factors affect its energy performance; this will also apply to the industrial sector and transport operations so that, over a full 4 year compliance period, a clear picture of how the organisation uses its energy will be assembled.

Evidence pack

All the documents and supporting data have to be retained in an Evidence Pack which is kept by the client and made available for inspection by the Environment Agency to help demonstrate compliance with the mandatory scheme. This will include such things as organisation charts, audits and the list of opportunities.

Mervyn Bowden is MD of Intuitive Energy Solutions Ltd

ESOS  energy 

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