Following a consultation by the Department of Energy and Climate Change (“DECC”) in July 2013 the Energy Savings Opportunity Scheme Regulations 2014 (“ESOS”) were made on 24 June 2014 and came into force on 17 July 2014. The Government established ESOS to implement relevant parts of the EU Energy Efficiency Directive (2012/27/EU).

ESOS requires larger companies and non-public sector organisations in the UK to carry out mandatory energy saving assessments. Participants are required to calculate their total energy consumption, carry out energy audits and identify where energy savings can be made. The aim of the scheme is to help organisations identify energy efficiency savings and to support and increase good energy management. Energy efficiency is seen as an important part of climate change mitigation, both at a UK and at an EU level.

ESOS is mandatory for organisations in the UK that meet the qualification criteria set out in the Regulations. The Environment Agency is the UK scheme administrator. Organisations must then notify the Environment Agency by a set deadline that they have complied with their ESOS obligations.

DEADLINES FOR COMPLIANCE AND NOTIFICATION

By 5 December 2015 qualifying organisations must carry out their ESOS assessment and notify the Environment Agency (the relevant regulator in England). Participants must then carry out an ESOS assessment in each four-year compliance period ending on 5 December 2019, 2023 and so on. By the end of 2014, the Environment Agency will provide information about the online notification system and when this will be available. Organisations do not need to pre-register or inform the Environment Agency that they qualify. The first date qualifying organisations must contact the Environment Agency by is 5 December 2015, when they make their notification confirming compliance.

DO YOU NEED TO COMPLY?

ESOS applies to large UK undertakings and their corporate group. It mainly affects businesses, but can also apply to not-for-profit bodies and any other non-public sector undertakings that are large enough to meet the qualification criteria. An organisation qualifies if on 31 December 2014 it meets the ESOS definition of a large undertaking. Corporate groups qualify if at least one UK group member meets the ESOS definition of a large undertaking.

A large undertaking is an organisation that carries out a trade or business which:

  • Employs at least 250 persons; or
  • Employs fewer than 250 persons but has an annual turnover in excess of €50 million and an annual balance sheet in excess of €43 million.

To assess if you qualify, you need to take employee numbers, turnover and balance sheet totals from the accounts:

  • For the financial year ending on the qualification date of 31 December 2014; or
  • In the twelve months immediately preceding the qualification date of 31 December 2014.

HOW TO COMPLY

If your business or organisation qualify for ESOS and it is already fully covered by ISO 50001 it is not necessary to carry out an ESOS assessment. You just need to notify the Environment Agency that this is the case and you are compliant with ESOS . If you qualify for ESOS , but your organisation is not fully covered by ISO 50001 you will need to carry out an ESOS assessment. The assessment will help you work out what your organisation needs to do to comply with ESOS . The assessment will take into account energy partly covered by ISO 50001, Display Energy Certificates (“DECs”) or Green Deal Assessments (“GDAs”).

For your assessment, it will be necessary to:

  • Calculate your total energy consumption;
  • Identify your areas of significant energy consumption;
  • Appoint a lead assessor to carry out, oversee or review your energy audits and overall ESOS assessment;
  • Notify the Environment Agency that you have undertaken and ESOS assessment and are compliant with your obligations under the scheme (you must do this by the compliance date of 5 December 2015, and if applicable, every four years thereafter;
  • Keep records of how you have complied with ESOS in an evidence pack (there is no set format for this).

PENALTIES FOR NON-COMPLIANCE

The Environment Agency can serve an enforcement notice on a responsible undertaking that is in breach of ESOS. The enforcement notice must include the nature of the breach, how to remedy it, and a deadline for compliance. Civil penalties are also available for a number of breaches of the Regulations including;

Failing to provide the Environment Agency with information about Compliance;

  • Failing to maintain records;
  • Failing to carry out an energy audit;
  • Failing to comply with an enforcement notice;
  • Making any false or misleading statement in information that it provides to the Environment Agency.

Financial penalties can be as high as £50,000 and can also include additional penalties of £500 per day of non-compliance and the costs of the Environment Agency in carrying out additional auditing activity to check whether ESOS has been complied with. The Environment Agency can also publish a penalty notice setting out the breach on its website, which may have implications for a business’ reputation.