Everything You Need to Know on the Latest Energy Compliance Rules

Below, Richard Smith, Director of Business Strategy at Inprova Energy discusses phase two of ESOS, the latest energy compliance rules.

Phase 2 of the UK Government’s Energy Savings Opportunity Scheme (ESOS) has been given the official go ahead by each of the UK’s environment agencies. This ends recent uncertainty surrounding the future of the mandatory energy assessment scheme, which was under review as part of the previous government’s 2015 energy efficiency tax landscape reform.

Who does ESOS concern?

ESOS applies across the UK to ‘large undertakings’, such as organisations with more than 250 employees, or a turnover in excess of 50 million Euros and balance sheet worth more than 43 million Euros. It requires qualifying organisations to measure their total energy consumption and identify energy efficiency opportunities, but is not applicable to organisations that are required to comply with the Public Contracts Regulations.

There are four-yearly compliance phases. The first phase covered from 6 December 2011 to 5 December 2015 and phase 2 follows on from 6 December 2015 to 5 December 2019. Organisations that participated in ESOS phase 1 must repeat the exercise if they continue to meet the criteria, but cannot use the same data. There are also likely to be a number of new organisations that now qualify for the second phase due to a growth in employee numbers or turnover.

The scheme administrators have taken robust action to penalise organisations that fail to comply with phase one of ESOS. As well as fines of up to £50,000, non-compliant organisations are also ‘named and shamed’.

How to comply with ESOS phase 2

  1. Determine if your organisation qualifies under ESOS legislation. Smaller businesses that are part of a larger corporate group may find that they fall into the scheme if one of the organisations in the group exceeds the employee and turnover thresholds. The qualification date is 31 December 2018.
  2. Appoint an accredited ESOS lead assessor to support the compliance process. While audit work can be carried out by suitably qualified individuals, the overall compliance process must be verified by an accredited lead assessor.
  3. Carry out compliant assessment activities/audits, identifying cost effective energy saving opportunities.
  4. Measure and record your organisation’s total UK energy consumption for a continuous minimum 12 month period. This must include all buildings, industrial processes and transport activities and must include or span the qualification date of 31 December 2018.
  5. Complete your evidence pack and report on ESOS compliance to the Environment Agency by the compliance date of 5th December 2019.

Benefits of ESOS

Although ESOS doesn’t yet require organisations to implement the recommended energy saving measures, there is powerful evidence of the financial wisdom.

From more than 150 ESOS audits completed by Inprova Energy during phase 1 of the scheme, our assessors identified energy savings opportunities ranging from 5 to 20%. This could amount to tens and hundreds of thousands of pounds worth of potential cost savings for typical sites.

Routes to compliance

Organisations can achieve automatic compliance with ESOS by gaining accreditation under the international ISO 50001 Energy Management Standard, which specifies the requirements for building, maintaining and continually improving a high functioning energy management system.  When choosing this route to compliance, it is important for all of your organisation’s energy data to come within the scope of your ISO 50001 certification.

Alternative routes include implementing ESOS compliant energy surveys to identify energy saving opportunities; commissioning Display Energy Certificates (DECs) with accompanying advisory reports; or Green Deal Assessments.

ESOS Lead Assessors may also be able to consider audit work undertaken within the four-year compliance period (2015 -19) as part of other energy audit schemes, such as activity under the Carbon Trust Standard, and Logistics and Green Fleet Reviews, where these meet the requirements of ESOS.

The environment agencies are encouraging organisations to begin the auditing process as soon as possible. In particular, the ISO 50001 route requires early action, as it can often take well over 12 months to achieve certification and put in place a high performing energy management system. Allowing plenty of time will also avoid the last minute bottlenecks experienc