What is the Energy Saving Opportunities Scheme ("ESOS")?

ESOS is the UK government’s implementation of a particular requirement of the Energy Efficiency Directive regarding energy audits.  It requires energy assessments (including the identification of energy saving opportunities) to be carried out every 4 years for large undertakings (and their corporate groups). It does not apply to the public sector. Participants must report compliance to the Environment Agency (as the scheme administrator). The Environment Agency will be publishing additional compliance guidance later on in 2014. 

Key points to be aware of

  • The qualification date for the first phase is 31 December 2014.
  • For ESOS purposes a “large undertaking” is one which either has 250 or more employees in the UK or one which has an annual turnover exceeding EUROS 50 million and a balance sheet exceeding EUROS 43 million.
  • The scheme requires participants to measure their energy consumption across buildings, transport and industrial activities.  Unconsumed supplies can be deducted. At least 90 % of total energy consumption must be covered and the de minimis is very flexible. 
  • Total energy must be measured over a 12 month reference period which must overlap with the qualification date.
  • Participants should note that the scope of the scheme is much wider than CRC which only covers gas and electricity.  Notably in relation to transport the scheme covers not only company cars but also fuel used in cars owned by employees where the employee is reimbursed for business travel.  Commuting to work is not included.
  • You may be able to use some of the information you are collating for other energy related schemes such as CRC, EU-ETS and Climate Change Levy agreements to help you comply.
  • It is likely you will need to appoint a Lead Assessor (unless all of your energy consumption is covered by an Energy Management System certified to ISO 50001). As a minimum the Lead Assessors will need to review the ESOS assessment.
  • Exemptions also apply where a building is covered by a Display Energy Certificate or has been subject to a qualifying Green Deal Assessment.
  • For the phase 1 you will need to have notified the Environment Agency by 5 December 2015 that you have complied with the scheme.
  • The energy audit must identify any way in which the participant can improve its energy efficiency, and recommend energy efficiency measures which are both practical and cost effective, and identify the estimated costs and benefits of such energy saving opportunities.  Notably there is no legal requirement to implement any energy saving recommendations which are identified.
  • As with CRC an evidence pack should be maintained.

Penalties

The scheme will be administered by the Environment Agency and enforced by a series of civil sanctions – although it should be noted that the financial costs could be significant.