ESOS

ESOS – the Energy Savings Opportunity Scheme

Legislative Background

The scheme derives from EU legislation transferred into UK legislation. It is run by the Environment Agency (EA). The EA’s guidance on ESOS runs to 83 pages. Key points are explained below.

Purpose of Scheme: 

  • To encourage large organisations to achieve energy savings, by forcing them to go through a process of formally identifying savings opportunities and reporting on them to the EA. Process known as an ESOS assessment (often referred to as ESOS audits).
  • Assessment reports must be compliant with criteria set by the EA.
  • The EA can fine organisations that fail to achieve compliance by the due date.
  • There is not yet any formal requirement to implement savings opportunities identified: the expectation is that the opportunities identified will prove financially attractive in their own right.

Large Organisations.

Large organisations are deemed to be those that either:

  • Employ more than 250 people, or,
  • Have a balance sheet total in excess of 43 million euro (£s equivalent) and an annual turnover in excess of 50 million euro (£s equivalent).

or fall into both of the above categories. (Most schools that are liable for ESOS fit the 250+ staff category).

Audit & Compliance Timeframes.

  • Phase 2 Compliance Deadline: 5 December 2019. This means that an assessment report meeting the EA’s criteria and signed off by a certified ESOS lead assessor must have been filed with the EA by that date.
  • Phase 2 Compliance Period. From 6 December 2015 to 5 December 2019.
  • Phase 2 Qualification Date – 31 December 2018. Part of the assessment entails calculating the organisation’s Total Energy Consumption (TEC) over a 12-month period. The TEC must include the qualification date and end before the compliance deadline.

EA Defined Scope of Work.

Liable organisations must:

  • Calculate the TEC for a 12-month period.
  • Exclude no more than 10% of the TEC from the assessment. For example, in a school this could be the fuel used for the minibus fleet.
  • For the remainder of the TEC:
    • Analyse the organisation’s energy consumption and energy efficiency.
    • Identify any ways in which the organisation’s energy efficiency can be improved.
    • Recommend practical and cost-effective energy saving measures for the organisation.
    • Identify the estimated costs and benefits of any energy saving opportunity.

All this work can be done by the Lead Assessor; or it can be done by in-house staff, but must then be checked and signed off by the Lead Assessor.

Approach to ESOS.

  • Organisations can opt for the bare minimum of work necessary to achieve compliance, leading to a very short list of energy saving opportunities. Alternatively, a more proactive approach can be adopted, by conducting a wide-ranging assessment of an estate and deriving more energy saving opportunities. Both approaches achieve compliance. The latter seeks to derive greater benefit for the organisation.
  • In our experience, many ESOS Phase 1 assessments (reporting in 2014/15) were thin on recommendations, especially considering the price paid for the work. We also know that fees varied widely and there was a rush towards the end of the reporting period, enabling audit prices to be raised.
  • We’re keen to avoid our clients suffering from this in the 2018/19 round of reporting. We can offer the minimalist or full-on approach, depending on a specific client’s requirement, and have established a set of fixed prices taking into account approach and scale of estate.

If you are liable for ESOS, the best thing would be to contact us to discuss the options.

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