ESOS (Energy Savings Opportunity Scheme)

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ESOS (Energy Saving Opportunity Scheme) Update;
Jun 20, 2014 By JE | Category: EPBD

We at ACI Reports have previously made our clients aware of potentially significant legislation changes with regard to energy monitoring and use, the ESOS (Energy Saving Opportunity Scheme 2015). This piece of legislation is gathering pace fast, and this short news update follows latest ESOS developments;

We also provide below a commentary on potential issues and concerns on implementation, in addition to our TM44 and EPC work, all of which is starting to become connected. Green Deal Assessments on commercial buildings will also affect the enterprises caught by ESOS. We can undertake Green Deal Assessments for commercial buildings if required.

At this stage the legislation remains in consultation and so requirements and implementation are likely to change prior to formalisation later in 2014, but ESOS will catch up with Companies fast.

The Energy Saving Opportunity Scheme (ESOS) launched for consultation by the Department of Energy and Climate Change (DECC) in late July 2013, and will catch all businesses with more than 250 employees. It will obligate the Company/Enterprise to commission an ‘Approved’ assessor either in-house or externally to carry out comprehensive audits of all their energy usage, including transport, every four years. At ACI Reports we have found over many years that the most cost effective approach is to outsource the data gathering and report compilation.

The consultation closed on 3 October 2013 and ACI Reports are tracking DECC, who are in charge of the ESOS legislation, and will update interested organisations through the ACI Reports news section on their website.

What is ESOS (the Energy Savings Opportunity Scheme)

Properties in the United Kingdom are already subject to a number of compliance, auditing and inspection requirements covering issues such as TM44 Air Conditioning Inspections, EPCs, DECs, F Gas testing, logs and registers. It now appears that energy will be the next major audit requirement for UK property owners, although this has been partly dealt with under GHG legislation.

Over the next 18 months years, the government will introduce ESOS (Energy Saving Opportunities Scheme). The Scheme is a compulsory programme of regular energy audits for 'large enterprises' that are to be undertaken by 5 December 2015. Following the undertaking of the audit, companies will then have to assess their overall position on energy consumption. The requirement derives from the EU Energy Efficiency Directive that came into force on 14 th November 2012; this update identifies the key features of the directive and the government's proposed light-touch approach to its implementation. This light touch is gradually changing, as is the earlier EPBD (European Performance of Building Directive).

The EU Directive (ESOS element – Article 8)

The key requirement under ESOS can be found in Article 8 of the EU Energy Efficiency Directive. In short, EU member states must introduce independent and cost-effective energy audits for all 'large enterprises'. An 'enterprise' is defined as "any entity engaged in economic activity, irrespective of its legal form". This will extend beyond companies and include partnerships and unincorporated associations, among other entities.

'Large enterprises' are defined as any non-small or medium-sized enterprise (SME) and is therefore any enterprises that have:

  • 250 employees or more; and

  • an annual turnover exceeding €50 million or an annual balance sheet total exceeding €43 million.

The Public Sector is not required to participate.

According to DECC, the audits would cost in the region of £17,000 on average in the first instance and £10,000 for each subsequent audit, which will substantially improve the business case for a dedicated energy manager. Although each audit will result in a set of energy saving recommendations, the business is not obliged to follow them up. DECC estimates that ESOS could save each business an average of £56,400 per year with £17,000 of investment; whether this the case is yet to be seen.

However the scheme overlaps with other existing energy efficiency legislation, and places yet more administrative pressure on energy managers. Of the 7,300 businesses expected to fall into ESOS, up to 6,000 are set to be already in the CRC Carbon Reduction Scheme, as well as mandatory carbon reporting. This potentially means a “get-out” for those businesses. ACI Reports can advise further in this.

Proposed implementation of the EU Directive (ESOS)

The government considers that the United Kingdom has already made considerable advances in energy efficiency through a number of measures, such as the Green Deal (even though it has largely failed), FITs (Feed In Tariffs), ECO measures, EPCs, DECs and TM44 Assessments. The government also recognises that ESOS will have many similarities with a number of existing UK policies, such as the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, climate change agreements and mandatory greenhouse gas reporting (through the GHG Regulations and Ozone Regulations).

Therefore, the government is proposing that enterprises be allowed to make full use of any data from other schemes as part of their ESOS assessments. Further proposals regarding the interaction of ESOS with existing UK regulations or best practice include:

  • excluding from an ESOS assessment any energy use that is not paid for directly by the relevant enterprise;

  • allowing buildings that have valid display energy certificates or that have undertaken Green Deal assessments within the past four years to be deemed to have satisfied ESOS requirements for that building;

  • allowing use of the data collected in a climate change agreement to assist in respect of ESOS obligations;

  • deeming a transport fleet to be compliant with ESOS transport requirements if it has been subject to a Green Fleet review within the past four years;

  • allowing enterprises that are certified to ISO50001 or ISO14001 (where this meets minimum standards of the directive) to be deemed ESOS compliant;

  • allowing audits in 2015, at the discretion of the ESOS administrator, to be based on other initiatives, such as the Carbon Trust Standard, and in subsequent years allowing these initiatives to be certified for their approach as any other enterprises wishing to conduct ESOS assessments would be; and

  • allowing flexibility around the period of time for which energy data is required, making it easier for enterprises to use data measurements from other schemes to inform the ESOS assessment.

The government has also expressed a wish to interpret the directive in a practical manner, and has therefore set out that ESOS assessments must provide, at a minimum:

  • a review of the total energy use and energy efficiency of an enterprise as a whole – this would include an energy intensity ratio (e.g. energy use per employee) and the variation in energy use over time within key buildings, industrial operations and transport activities; and

  • clear information on potential savings that identifies and quantifies cost-effective energy savings opportunities – this should, wherever practical, be based on a life cycle assessment instead of simple payback periods.

The approach above would appear to differ from a literal reading of the directive, which appears to require enterprises to create a full independant energy profile for all key sites, transport and processes. It is yet to be seen how this all pans out, but ACI Reports are monitoring progress and will report directly to any interested enterprise. ACI Reports have developed their own data gathering “app”, called “SiteSmart” which is used for much of the necessary information gathering – interested clients should mail

ESOS gears up for Assessor Accreditation, ACI Reports advises Clients, read more>


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