ESOS: Keep Calm and Carry On (almost)

Aug 8, 2014

DEFRA have announced new legislation affecting all large businesses in the UK to come into effect next year: the Energy Savings Opportunity Scheme (ESOS). ESOS mandates large organisations (or “undertakings” in DEFRA speak) to carry out energy assessments and identify energy savings opportunities.

Many of the ‘large undertakings’ affected by ESOS will be letting out an organisational sigh: “another piece of energy legislation, more audits”. And make no mistake, ESOS is just that, but the aims of the legislation are at least laudable. By asking organisations in scope of the ESOS legislation to measure their energy consumption and conduct energy audits, the scheme is estimated to deliver £1.6bn net benefit to the UK economy between 2015 and 2030.

ESOS is designed to highlight no- and low-cost energy efficiency measures and bring the potential benefits of these measures to the attention of the company board through its legislative nature and by requiring a member of the board (or senior management team) to sign off a final report.

The good news is that you are probably already doing much of what ESOS requires, particularly if you are already reporting to the CRC EES, the Mandatory Carbon Reporting regulations, or through other schemes such as the Carbon Trust Standard. What’s important is having the tools that minimise the duplication in effort where multiple external schemes apply.

There’s no need to go into any great detail here – whilst the DEFRA guidance documents run to 80 pages plus Annexes, it’s reasonably accessible, further guidance will follow, and Ecometrica are only a phone call away should you want to talk through the implications of the new legislation. The timetable for its introduction is relatively relaxed, with qualification based on your organisation’s status as of 31st December 2014, and compliance (i.e. reporting appropriate activity to the Environment Agency) by 5th December 2015.

The data you use to report to the Environment Agency should include all fuels used including from vehicles, electricity, renewables and “any other form of energy”. This does vary from other schemes such as the CRC EES, particularly around use of fuels in transport, and you should consider this when looking at the boundary for reporting. The energy used will need to be reported to the Environment Agency as a standard unit – so for instance you’ll need to convert litres of diesel into KWh or GJ – a process that the Ecometrica Platform already does as standard.

With this in mind there is some work to do before the end of 2015 to be able to demonstrate compliance. The “take away” messages for the new legislation are:

  • Work out if you qualify – you do if you have more than 250 employees or turnover in excess of EUR50m and balance sheet (i.e. assets, equity and liabilities) over EUR40m.
  • Make sure that you are measuring your energy consumption within the UK and are able to report this as a standard unit across all energy/fuel types – you’ll already be doing this if you are using Ecometrica’s Ecometrica Sustainability sustainability accounting platform.
  • Now is the time to start planning qualifying energy audits (or reviewing recent audits) – these can vary from specific ESOS audits to related schemes such as ISO50001 or the Carbon Trust Standard.
  • Treat the new legislation as an opportunity to further promote energy efficiency within your organisation and potentially save money and reduce carbon emissions.
  • Keep calm – the chances are that you are already doing much of what ESOS is asking for – but start looking into how best to comply early. Particularly for larger organisations, the audit process (or obtaining ISO50001) could offer some challenges between now and the December 2015 compliance deadline.

Finally seek advice – the Ecometrica Platform already provides tools to manage energy data and over the coming months we will be developing the infrastructure required to manage the ESOS evidence pack. We’d be delighted to work with you to ensure that the other pieces of the ESOS puzzle are in place in plenty of time.

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