ESOS Compliance Consulting and Audits

What is the Energy Savings Opportunity Scheme (ESOS)?

ESOS is a mandatory energy assessment scheme for organisations in the United Kingdom which meet the criteria, with qualifying organisation mandated to carry out ESOS Assessments every four years which must include (where appropriate), Buildings, Transport and Industrial Processes to identify cost-effective energy saving measures.

Who qualifies for the ESOS scheme?

ESOS Phase III requires the collection and analysis of at least 90% of energy consumption to be audited, where an organisation met the ESOS criteria on 31 December 2022 of a large undertaking, as defined below:

any UK company that either:

• employs 250 or more people, or
• has an annual turnover in excess of 50 million euro (£44,845,000), and an annual balance sheet total in excess of 43 million euro (£38,566,700)
• an overseas company with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK)

ESOS Compliance can be met; using the scheme defined sampling strategies and / or the provision of Display Energy Certificates, physical site Energy Audits by an ESOS Lead Assessor and / or ISO 50001 UKCAS Certified Energy Management System.

Where other fuels such as Transport and Processes can be demonstrated to be less than 10% of overall energy use, these can be regarded as de-minimis for the purpose of the requirements of ESOS. However, it is a requirement of the scheme that these energy uses be audited, to demonstrate they can be regarded as de-minimis.

ESOS Reporting should be presented in accordance with BS EN 16247:2014, Part 2 – Buildings, Part 3 – Processes (where applicable) and Part 4 – Transport (where transport use is not deemed de-minimis).

Why was ESOS introduced and what are the benefits?

ESOS was introduced in order for the United Kingdom to comply with Article 8 of the Energy Efficiency Directive 2012/27/EU, incorporated into UK Law June 2014.

The objectives of the policy are to promote the take up of cost-effective energy efficiency measures whilst minimising the cost to business of complying with the mandatory auditing requirements. By providing enterprises with tailored information about how they can make cost-effective savings ESOS should increase the take up of cost-effective energy efficiency measures. This will increase productivity, support higher economic growth, reduce carbon emissions and improve security of supply.

The scheme is estimated to lead to £1.6bn net benefits to the UK businesses as a result of Energy Savings.

We are required to participate with ESOS, are there any Exemptions from undertaking an ESOS Audit?

Your organisation may be exempt from undertaking an ESOS Audit, where the organisation has implemented an Energy Management System and gained UKAS Accreditation to ISO 50001 for all relevant energy consumption, as defined by the Environment Agency. Your organisation will still be required to submit a Notification of Compliance to the Environment Agency, before the ESOS Phase III deadline of 5^th December 2023.

ESOS Phase 3 Guidelines

The qualification date for ESOS Phase III is 31 December 2022, with the compliance deadline of 5 December 2023. Energy Use for 31 December 2022 must be included within the 12-month data period when preparing the ESOS Energy Audit Report, as such the earliest energy data to be used may be January to December 2022, up to a maximum of November 2023, although this would risk not submitting a timely compliance report and failing to comply with the scheme by 5 December 2023.

ESOS Phase 3 objectives

The report aims to set out potential energy saving opportunities in short, medium and longer-term projects, with an estimated cost and savings matrix, to enable organisations to readily select opportunities of interest for further exploration, in order to reduce energy cost and Greenhouse gas emissions enabling them to:

• Monitor and manage energy consumption.
• Identify investment opportunities, with the aim of achieving the greatest savings potential.
• Provide an estimated Cost / Benefit Analysis, presented as Net Present Value (NPV), Discounted Cashflow and for very simple, low cost solutions simple payback
• Comply with the requirements of ESOS, in a cost-effective and least disruptive manner.

ESOS Phase 3 scope

An outline of the work required to complete and submit an ESOS assessment includes:

• Analysis of energy consumption for Natural Gas, Electricity and Transport Fuel
• Assessment of building infrastructure to facilitate a sampling approach and most cost-effective method of energy auditing
• Physical site visits to identify
  – Significant Energy Users
  – Opportunities for energy savings
  – Confirmation of Gross Internal Areas and Energy Density (of selection of buildings)
  – Analysis of Heating and Cooling Degree Day Data (appropriate to building use)
  – Physical check of energy metering and proposals for improved monitoring
  – Assessment of Building Fabric, Thermal Bridges, and Insulation
• Evaluation and calculations against energy saving opportunities, presented in a matrix, ordered in short, medium, and long-term paybacks, showing kilowatt-hour, tCO₂ and financial savings, with simple paybacks.
• Finalised Report in PDF Format to BS EN 16247:2014, and submission to the Environment Agency before the compliance deadline.

We suggest using your Financial Year data, as the energy data must contain usage as at 31 December of the relevant compliance year, for ESOS Phase III the data needs to include your energy usage as at 31st December 2022.

Should you fall under the Streamlined Energy and Carbon Reporting scheme, we recommend aligning your energy data with your financial year, as a methodology of providing continuous assessment and comparison, whilst reducing duplication in future years for ESOS Phase IV for example?

How Powerful Allies can help?

Powerful Allies can undertake your ESOS Compliance work, utilising our in-house ESOS Registered Lead Assessor. We would advocate where organisations meet both ESOS and the Streamlined Energy and Carbon Reporting, that these are carried out consecutively, minimising disruption and cost. During Phase I and II of ESOS, many organisations were unaware of the complexities, and time required to undertake a meaningful audit, as such their reports may have found themselves in the back of a drawer. It is essential that the auditor gets to understand the operational requirements of the business, has sufficient time to produce a targeted and valuable report. You should start planning your ESOS Phase III compliance now; building on the requirements of the Streamlined Energy and Carbon Reporting (SECR), the sooner you start the greater the savings.