Now several months on since the government’s new Energy Saving and Opportunity Scheme (ESOS) came into force, there is a growing buzz around the Scheme. Much of this buzz is fuelled by outreach from involved government agencies, such as the Department of Energy and Climate Change and the Environment Agency. Indeed, as the government releases key documents such as the ESOS Guide, as well as letters informing businesses of their need to comply, more and more seminars, webinars, articles, and forums are popping up around the new Scheme.
Amidst this ESOS-buzz, it can be overwhelming for organisations to ascertain exactly what it means for their operations. As Pulse Business Energy have already begun to advise a number of clients on ESOS compliance, we understand that ESOS is often seen as a burden that has caught many organisations off guard.
While it is true ESOS is an imposition onto organisations, one of the best ways to prevent the scheme from becoming an insurmountable burden is to become familiar with the fundamentals of the Scheme. This is part one of a three part series of articles surrounding ESOS, running up to our free ESOS (and Energy Contract Training) workshop on 2nd December.
In this first article, information gathered from DECC’s ESOS Guidelines, as well as a number of other material on the Scheme, is synthesised in order to provide you with a solid foundation on ESOS.
Here are seven key points you should know:
1) ESOS is targeted at large organisations.
If an organisation, by 31st December 2014, is a large undertaking, it needs to comply. A ‘large undertaking’ has:
250 employees or more
OR
Has less than 250 employees, but has: An annual turnover exceeding €50m AND A balance sheet exceeding €43m
OR
Part of a corporate group which includes an undertaking which meets either of the above criteria
There are several ways that you can work out if you actually meet the thresholds (should you be close to either of those thresholds above), which are spelled out in the above-linked guidelines.
You are still welcome to participate in ESOS if you are not a large undertaking. An ESOS assessment has the potential to identify many energy (thus cost) savings.
2) There are two key dates:
31st December 2014
This is the cut-off date for determining qualification. If you meet the above criteria by this date, you need to comply with the scheme.
Important to note is that if your organisation has completed the threshold calculations (referenced in point 1) and determined you do not meet the thresholds, then you need to make sure it has not met the threshold for two consecutive accounting periods between 2011 and the qualification date of 31st December 2014. See section 3.2 of the above linked guidelines for more information and examples of the ‘change of status’ (two-year rule).
And
5th December 2015
This is when you need to report compliance to the agency which is administering the scheme in your part of the UK. See point 5 for more information on the various ESOS administrators. You will report compliance via an online notification system. [/efsli]
3) An ESOS Assessment has three main sets of tasks:
- Measure energy consumption across your entire organisation to determine significant areas of energy use.
- Carry out energy audits on areas of significant energy use, and make cost-effective recommendations about how to reduce energy in these key areas.
- Report compliance. This includes obtaining board-level (senior management) approval of recommendations, sign-off from an ESOS lead assessor, and compilation of an evidence pack.
4) ESOS recognises current and historical efforts made toward energy efficiency within your organisation.
The Scheme allows you to use most types of energy audits, carried out between 6th December 2011 and 5th December 2015, toward compliance for the first compliance period (2011-2015).
Additionally, if your organisation is ISO 50001 certified, you are automatically compliant and do not need to carry out an ESOS Assessment. If only a portion of your organisation has ISO 50001 certification, you would need to carry out ESOS Energy Audits on the rest of your areas of significant energy use.
5) The Scheme is complementary to other energy and carbon-related legislation.
ESOS does not replace other climate change policies or energy efficiency schemes, so if your organisation qualifies for these schemes as well as ESOS, it will need to comply with both or all.
Other UK climate change policies which are related include the CRC Energy Efficiency Scheme, Climate Change Agreements (CCA), the EU Emissions Trading Scheme (EU ETS), and mandatory company reporting.
Many of these schemes require parts or all of your organisation’s energy consumption to be measured. While the scope of energy use may differ between these schemes and ESOS, you can use information gathered for these toward ESOS compliance, where possible.
6) There are a number of government agencies involved.
ESOS was devised by the UK Department of Energy and Climate Change (DECC), to keep the UK compliant with the European Union’s Energy Efficiency Directive (EU/2012/27).
While the Environment Agency is the ESOS Scheme Administrator for the whole of the UK, there are country-specific administrators to submit compliance to. The below table indicates which compliance body will be used for each area of the UK.
| England | Wales | Scotland | Northern Ireland | Offshore |
|---|---|---|---|---|
| Environment Agency | Natural Resources Wales | Scottish Environment Protection Agency | Northern Ireland Environment Agency | Secretary of State via DECC Development Unit |
7) There are penalties for non-compliance.
The Environment Agency has outlined a number of instances of non-compliance, from failure to notify the Scheme Administrator of compliance to making a false statement. Each of the various types on non-compliance have associated penalties, which range from publishing information on those who are non-compliant, to fees of up to £50,000.
Penalties should not be the sole motivation for compliance with ESOS, however. The Scheme requires that all energy saving opportunities be put through a lifecycle cost analysis, and only cost-effective recommendations be recommended. This means that your ESOS assessment will identify options where you will you certainly save energy, thus money. Pulse believes that our quality analysis and reporting will mean that your ESOS assessment will be a blueprint for reducing your operational cost over the next four years.
In the coming weeks, Pulse will explore ESOS and what it can mean for your organisation leading up to our ESOS and energy trading seminar on 2nd December 2015. Click here for more information on that free event and to reserve your place now.
Next week, Pulse will delve deeper into ESOS, providing analysis on two ways to view your ESOS assessment: as an exercise in basic compliance or as a chance to create a blueprint for reducing energy and cost savings generation. Should you require specific information about how ESOS will apply to your organisation, or be interested in obtaining a preliminary cost estimate, please contact Robin Hamaker. She is Pulse’s dedicated ESOS energy analyst and consultant.
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