ESOS - Energy Savings Opportunity Scheme
Despite the current political uncertainty following the UK’s decision to leave the EU and further legal concerns around Brexit, one thing is certain, and that’s ESOS Phase 3 and ESON Phase 4 will continue in its current four-yearly phases with eligible companies now already in phase 3 of the process.
ESOS is a mandatory energy assessment scheme requiring organisations with more than 250 employees, or a turnover above €50 million, to measure their total energy consumption and identify energy efficiency opportunities.
You will not be able to carry out the assessment of your total energy consumption (TEC) as this must include the qualification date of 31st December 2022, however where you know that an energy supply will be included in your significant energy consumption (SEC) you can do the audit work on this supply from January 2023.
On 28 July, BEIS published the outcome of its consultation Strengthening the Energy Savings Opportunity Scheme (ESOS), which is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria. It stated that there was widespread support for the proposals to increase energy and carbon savings for those that participate in ESOS.
Proposals to be adopted for Phase 3 include:
> A standardised template for including compliance information in the ESOS report.
> The reduction of the 10% de minimis exemption to up to 5%.
> The addition of an energy intensity metric in ESOS reports.
> Requirement to share ESOS reports with subsidiaries.
> Requirement for ESOS reports to provide more information on next steps for implementing recommendations.
> Requirement for participants to set a target or action plan following the Phase 3 compliance deadline, on which they will be required to report against for Phase 4.
> Collection of additional data for compliance monitoring and enforcement.
The document also sets out a summary of feedback received on two further options, which will inform developments in future phases. This includes extending the scope of the scheme to include medium-sized businesses, not already part of a corporate group containing a large business, and mandating action on audit recommendations.
ESOS - Phase 3
Following a recent announcement from The Environment Agency whom have the responsibility to administer the scheme, they have recommended implementing a programme of regular energy audits so to help companies keep on top of ESOS phase 2 compliance.
Although we are now in ESOS Phase 3 of the ESOS compliance scheme, the required deadline for submissions isn’t until Thursday 5th December 2023. With some 2-years until the deadline why start worrying about it now.
The first important date is the 31st December 2022, as this is the qualifying date that companies must assess whether they are required to participate in ESOS Phase 3.
As with phase 1 and 3 of the Energy Saving Opportunity Scheme there are multiple routes to ESOS compliance such as Energy Site Surveys, Display Energy Certificates, Green Deal Assessments and ISO50001 accreditation.
For those organisations that delayed on starting the process for previous phase compliance, they will be aware of the difficulties that companies encountered in trying to find lead assessors and auditors to complete their compliance requirements.
Some will also be keen to avoid the exaggerated and over inflated charges that some suppliers chose to charge their customers, because of the lack of lead assessors available at the time.
For these very reasons, the Environment Agency is wisely encouraging businesses to start work on their Phase 3 energy audits, well in advance of the deadlines this time around as was recently indicated in an Environment Agency June newsletter, which says:
“If you know that you will qualify for Phase 3, there is no reason why you shouldn’t start doing your energy assessments now. You will not be able to carry out the assessment of your ‘total energy consumption’, as this has to include the qualification date of 31 December 2022. However, where you know that an energy supply will be included in your ‘significant energy consumption’, you can do the audit work on this supply.”
Another time consideration is for those organisations wishing to go down the ISO50001 route, as it can often take well over 12-months to achieve certification.
In addition to all of these points, it makes good commercial sense to actively review the opportunities for energy optimisation over the coming year, given the backdrop of steep accelerated costs in non-commodity charges.
The impact of DCP228 and DCP161 along with the capacity market mechanism from Apr18 and TCR from Apr22, means that for those companies that are just looking to keep energy budgets the same are now facing an uphill battle.
It never been a better time to review and optimise your company’s energy consumption and unlock those hidden savings.
ESOS Phase 1 and 2 Results
Last month the Environment Agency also published the results of their audit into previous phase submissions. It now appears that hundreds of businesses could be fined as much as £50,000 if they incorrectly claimed that they did not qualify for the scheme. Some 6,800 companies submitted compliance from an expected 10,000.
From these submissions, the Environment Agency also audited 200 of these, and found only 16% of them to be fully compliant. This raises a real concern of the quality of the service provided by some lead assessors and the true value of the information provided to end users.
Catalyst’s Total Approach ESOS Service
Our Award-winning energy management team at Catalyst can provide you with a full ESOS service, that goes way beyond the standard requirements to deliver a comprehensive top down review that will provide process and operational recommendations for energy reduction and financial savings.
We know from our previous qualifying ESOS customers that on average those companies can reduce their annual costs by 20% through improving energy efficiency and onsite energy management.
Given the real and tangible concerns about the quality of some of the phase 1 and 2 audits that were carried out, we can say with confidence that we had a 100% success rate with our ESOS compliance submissions.
With that in mind we encourage businesses to start thinking now about there up and coming strategy for phase 3 compliance of ESOS.
For those companies that are forward thinking and wish to engage early with this project will have the freedom to select a preferred supplier who will have plenty of capacity to deliver a quality and valuable audit.