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How to… comply with the Energy Saving Opportunities Scheme

19 December 2014
How to… comply with the Energy Saving Opportunities Scheme

The deadline for deciding whether your business needs to start work on the Energy Saving Opportunities Scheme is fast approaching. Malcolm Hanna looks at the steps businesses will need to take

The Energy Saving Opportunities Scheme (ESOS) is a government scheme backed by legislation that requires UK organisations to undertake energy efficiency assessments and identify potential energy savings.

It also has the potential to be the first step on the route towards improved energy efficiency. The Environment Agency is the scheme administrator.

Compliance runs in four-yearly cycles and the deadline for organisations to determine whether they need to comply is 31 December 2014. The deadline for compliance is 5 December 2015 and non-compliance could lead to civil penalties, including fines.

ESOS has recently reached its latest milestone following the publication by the Environment Agency of its first registers of professional bodies approved to provide lead assessors. This means that organisations subject to ESOS can take the next steps.

Who does ESOS affect?

The scheme applies to all businesses with 250 or more employees, or an annual turnover of more than £40m and an annual balance sheet of more than £34m. Where a corporate group includes at least one organisation that's subject to ESOS, then all the UK organisations in that group must comply, irrespective of their size.

And while ESOS mainly affects businesses, it can also apply to not-for-profit bodies and any other non-public sector undertakings that are large enough to meet the qualification criteria. The public sector is generally exempt, but some universities will have to comply.

How you can comply

If a hotel business is subject to ESOS, it needs to undertake an assessment to help work out what it needs to do to comply.

Having calculated its total energy consumption, the business is required to audit at least 90% of it, as well as its energy efficiency. This must be done across all its buildings, transport and industrial processes. These audits must be done using energy consumption profiling.

The business needs to identify the scope of the audits and the personnel and skills required to undertake them, as there will be a need for expertise across the three areas.

A lead assessor must be appointed to carry out, oversee or review the energy audits and the overall ESOS assessment. Lead assessors can be either external consultants or in-house experts. They must be knowledgeable and competent, and be members of an approved register. The Environment Agency has published approved registers.

The audits should review energy data, data management and how energy is used. It should also identify any potential energysaving opportunities. Any recommended opportunities should include the estimated costs and the benefits of implementation.

The audits should also include (a representative sample of) site visits. As with any audit, it's important to keep good records and they should be kept on file as evidence.

The audit must be based on 12 months' verifiable data, which must:

• be for a continuous period

• begin no earlier than 6 December 2010 for the first compliance period (and no more than 12 months before the start of future compliance periods)

• begin no more than 24 months before the start of the energy audit

• not have been used as the basis for an energy audit in a previous compliance period.

It's a requirement that the audit is reviewed and signed off by both the lead assessor and a board-level director (or two if the lead assessor is an internal member of staff).

The final stage is for the organisation to inform the Environment Agency that compliance has been achieved.

However, there are other ways to achieve compliance. What's more, provided a business covers 90% of its total energy consumption, it can use a mix of approaches with some of its energy consumption covered by ISO 50001, some by Display Energy Certificates (DECs) or Green Deal Assessments (GDAs) and some by ESOS energy audits.

If a business is fully covered by ISO 50001 (implementing and operating an independently certified ISO 50001 energy management system), it doesn't need to carry out an ESOS assessment. It just needs to notify the Environment Agency that this is the case and that it's compliant with ESOS.

A business can also use valid DECs and their corresponding recommendation reports. However, a DEC is based on a building's operating data only, so the business will still need to audit its energy use in transport and any industrial processes. DEC documentation is valid for 10 years, but can't be used for more than one ESOS cycle.

Alternatively, a business can opt to use valid GDAs, which consist of Energy Performance Certificates (EPCs) and Occupancy Assessments.

However, like DECs, they only apply to buildings and are valid for 10 years. Although there's no legal requirement to implement any energy-saving recommendations, businesses are encouraged to go down this route. Any costs will be outweighed by the long-term financial benefits derived from
reduced energy bills and increased efficiency.

If you haven't already, find out whether your organisation is subject to ESOS before the 31 December deadline, and then decide if you need any help as soon as possible.

Malcolm Hanna is technical director at the National Energy Foundation, www.nef.org.uk.

Full details about ESOS are available on the government website at www.gov.uk/energy-savings-opportunity-scheme-esos

What help might you need?

Although the responsibility for compliance with the Energy Saving Opportunities Scheme lies with the business itself, many will need help from organisations such as the National Energy Foundation. Businesses will be looking for a range of support services, for example:

• Pre-assessment gap analysis to identify any work that has already been done that might count towards compliance.

• Providing a lead assessor to carry out, oversee or review the energy audits and the overall ESOS assessment.

• Developing a strategy, including costs and benefits, pay-back periods and feasibility of any energy-saving opportunities.

• Preparing and maintaining an evidence pack to substantiate the audits, their findings and the recommendations.

• Building a business case for investment in energy efficiency opportunities, including their funding and practicality.

Costs and benefits

Commissioning external assistance will be just one of the direct and indirect costs of compliance with the Energy Saving Opportunities Scheme.

Others include:

• Administration and training

• Employing a lead assessor and other specialist internal or external staff

• Possibly appointing an energy manager

• Implementing and sustaining the recommendations

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