Get Ready for ESOS Phase Two

‘Instead of seeing ESOS as another tick box exercise and revenue cost, participants should embrace the opportunity to use ESOS as a springboard for continuous improvement. The focus for phase 2 should include moving forward the opportunities identified in phase 1, if they haven’t already done so, and looking more closely into automation, innovation and the new and developing technologies available’.

Liam McDonagh, MD of CMR Consultants Limited

For businesses who complied with ESOS Phase 1, Phase 2 compliance period is almost half way through.

With poor levels of businesses signing up to the initial scheme due to a severe lack of knowledge on the subject, it is now more important than ever for businesses to know what ESOS is and how it can benefit them so they won’t miss the Phase two deadline.

What is ESOS?

ESOS, or the Energy Savings Opportunity Scheme, is the UK Government’s interpretation of Article 8 of the EU Energy Efficiency Directive (2012/27/EU). This article aims to lower the amount of energy businesses in Europe consume to lower EU member state’s carbon emission and hence, help the environment.

ESOS Phase 1, required large organisations in the UK to carry out ESOS assessments of their significant energy (including transport) usage. The criteria stated all businesses with a large undertaking (employing over 250 people) and/or had an annual excess of €50 million, with a balance sheet in excess of €43 million on the qualification date, had to confirm compliance through the Environment Agency portal by the 5^th December 2015. Businesses that did not comply, yet were eligible for the scheme faced enforcement action, including heavy fines.

Such was the lack of knowledge and awareness of ESOS Phase 1 that the Environment Agency found nearly 500 eligible organisations did not engage in the scheme, resulting in over 300 enforcement notifications. Even amongst those that did comply it was found only 16% of the participants were fully compliant and 75% of the participants had to undertake remedial actions in order to become compliant.

What is ESOS Phase Two then?

The Government scheme has been programmed around four compliance periods, each lasting four years with qualification based on the status of the organisation at that time.

With a deadline of 5^th December 2019, Phase 2 of ESOS seeks to encourage more eligible businesses to comply, cutting carbon emissions and increasing the efficiency of UK organisations.

Although the Phase 2 deadline may seem a long way off, experience from phase 1 has tought us that as the deadline approaches, ESOS lead assessor and consultant availability becomes stretched, increasing assessment costs, compromising assessment report quality and risking missed compliance deadlines. There is also a requirement to gather energy, transport and organisational information and data, which for large multi-site organisations can take over 6 Months.

During the Phase 1 ESOS assessments, audit reports identified savings of up to 20% on their energy costs by implementing energy saving measures, an annual average saving of £360K.

What do I need to do and how?

If you run a business or organisation and think you might be eligible for ESOS phase two, the first thing you need to do is check if you fulfil any one of the following criteria:

• You employ over 250 people in one ‘undertaking’
• Your organisation has an annual turnover in excess of 50 million euro (£38,937,777), and an annual balance sheet total in excess of 43 million euro (£33,486,489)
• You are NOT part of the public sector (however some bodies receiving public funding may qualify such as Universities)

If the answer is ‘Yes’ to any of the above then you will need to carry out an energy audit on your business. To do so you must first recruit a qualified ESOS lead assessor. This can be done by becoming a member of an approved professional body register or bringing in experts such as CMR Consultants.

To conduct the audit you will need to:

• Calculate your total energy consumption (including transport usage).
• Identify your areas of significant energy consumption (must be greater than 90% of total energy consumption) and implement energy audits to identify opportunities for savings. Essential Control have on-line tools to support identification of energy saving opportunities and energy consumption products to help implement them.
• Notify the Environment Agency using their on-line notification system.
• Keep a record of the audit and associated ESOS energy data, calculations and organisational information (evidence pack).

Alternatively you can become certified to ISO 50001. This is an EnMS (Energy Management System) which sets in place processes and procedures to ensure continuous energy efficiency improvements. If your business is certified to ISO 50001 then you will not have to conduct ESOS audits, but will still need to comply with the regulations in terms of gathering evidence and notification.

So by firstly confirming if your business needs to comply, gathering energy and transport data and ensuring at least 90% of your total energy consumption is subject to one of the ESOS ‘routes to compliance’, collating an evidence pack and notifying the Environment Agency, you can ensure compliance by the Phase 2 deadline of 5^th December 2019.

For organisations who were involved in Phase 1, to really benefit from a Phase 2 audit, the focus should be on implementing opportunities identified in Phase 1 and giving due consideration to new and developing products and technologies.

About Essential Control 

We have over 19 years of experience in building bespoke energy management systems across all industry sectors. Our proprietary, cloud-based, technology drives business efficiencies, reduces energy consumption, and realises your corporate and social responsibility strategy.