Summary and implications
An Energy Savings Opportunity Scheme (or ESOS) assessment is an
audit of the energy used by a qualifying organisation in their
buildings, industrial processes and transport. The purpose of the
assessment is for the organisation to identify cost-effective
energy saving measures. The Environment Agency is the UK
Administrator of ESOS and the initial compliance period runs from
17 July 2014 to 5 December 2015.
The scheme is underpinned by the ESOS Regulations 2014, which
implement Article 8 of the EU Energy Efficiency Directive
(2012/27/EU). The Directive requires Member States to introduce
various energy efficiency measures which will go towards the
EU's energy efficiency target of reducing the annual
consumption of primary energy by 20% by 2020.
The Environment Agency Guidance sets out the qualification criteria
for organisations who qualify for this mandatory scheme and what
they need to do to comply. If you fall into one of the categories
below, you must notify the Environment Agency that you have
complied with the ESOS obligations.
Large UK undertakings and corporate groups that meet the threshold
of either:
- employing 250 or more people; or
- having an annual turnover in excess of €50m (approximately £37m) and an annual balance sheet total in excess of €43m (approximately £33m).
Changes to the deadline
If you qualify for ESOS, you will have originally been told to submit your notification of compliance by 5 December 2015. However, The Environment Agency has now said that although they cannot amend the compliance deadline of 5 December 2015, they were not expecting to take any action against firms provided that they submitted the necessary notifications by 29 January 2016. "This is not an extension to the legal deadline," the Environment Agency said in new guidance on compliance with the ESOS obligations. "Rather, it reflects the ability to exercise discretion" which is described as follows:
- Not taking action for notification after 5 December 2015 provided it is received by 29 January 2016. The Environment Agency have demonstrated the right sentiment to allow submissions to be made, however the extended period doesn't go very far to alleviate the compliance pressure faced by the industry given that it overlaps with the Christmas period and an influx of notifications should be expected in January.
- Giving until 30 June 2016 to achieve ISO 50001 (international energy management standard) certification as a form of compliance.
- A focus on bringing bodies into compliance using enforcement notices where necessary (normally allowing up to 3 months for organisations to remedy outstanding actions), and relying on civil penalties only as a last resort.
- In cases where an organisation's energy use is at a domestic level (defined for the first compliance period as 40,000kWh/yr or below) they will not normally take it forwards for failure. But the organisation concerned should still make a notification, confirm their energy use falls below the domestic threshold, consider and document opportunities for reducing their energy consumption and record their compliance approach in their evidence packs.
- Organisations that qualify but have zero energy consumption, will only need to declare this to the Environment Agency without a full blown assessment of usage and recommendations of how it can be reduced.
It is worth noting that if an organisation cannot comply with the original deadline, then they need to notify the Environment Agency by the 5 December 2015. The Environment Agency would expect them to keep records of their efforts towards ESOS compliance, including appointment of a lead assessor, prior to the deadline.
ESOS - Energy and financial savings for your business
Figures have been published on the potential savings following the audit. The aim of the scheme is to encourage and support organisations in identifying where energy efficiency savings could be made and to increase good energy management. Organisations should treat the ESOS assessment as a valuable opportunity to use the data gathered and conclusions reached to decide where profitability may be improved through energy saving. The scheme is estimated to lead to a £1.6bn net benefits to the UK, with the majority of these being directly felt by businesses as a result of energy savings.
Jo Scully, the Environment Agency's ESOS project lead said in a press release on 22 September 2015 that: "This scheme will save all of these companies money as well as bringing significant environmental benefits. The government has calculated that if businesses covered by ESOS reduce their energy use by just 0.7%, they will save around £250m each year."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
