What is ESOS?
The Energy Savings Opportunity Scheme (ESOS)
is a mandatory energy assessment and energy saving identification scheme that applies to thousands of large businesses and organisations within the UK.
Under the assessment, organisations have to:
- measure their total energy consumption for a continuous 12 month period
- carry out energy audits every 4 years to identify cost effective recommendations
- appoint a lead assessor to carry out, oversee or review the energy audits and overall ESOS assessment
- report compliance to the Environment Agency.
ESOS has been introduced by the British Government in response to Article 8 of the European Commission's Energy Efficiency Directive (EED). Under the Directive - which came into force on 5 December 2012 - all 28 EU member states are required to introduce a programme of regular energy audits for large organisations and their corporate groups.
ESOS came into force on 17 July 2014, and the UK Government expect more than 9,000 large enterprises to qualify for the first phase of the scheme.
ESOS applies to large UK undertakings and their associated corporate groups. It mainly affects businesses, but certain not-for-profit bodies and other non-public sector organisations, such as universities, may also be of sufficient scale to meet the qualification criteria.
An organisation qualifies for ESOS if, on 31 December 2014, it meets the ESOS definition of a 'large undertaking.' A large undertaking is an organisation that carries out a trade or business which:
- has at least 250 employees, including owner-managers and partners; OR
- has an annual turnover exceeding £42.5 million AND an annual balance sheet in excess of £36.5 million.
Corporate groups qualify if at least one UK group member meets the definition.
To assess if they meet the qualification criteria, large enterprises need to take their employee numbers, turnover and balance sheet total from the accounts:
- for the financial year ending on the qualification date of 31 December 2014; OR
- in the 12 months immediately preceding the qualification date of 31 December 2014.
Public bodies and other organisations that are required to comply with the Public Contracts Regulations 2006 or the Public Contracts Regulations (Scotland) 2012 are exempt from the scheme.
Qualifying organisations are required to carry out an ESOS assessment (energy audit). This assessment requires qualifying organisations to:
- Measure their total energy consumption
This is the energy used by held assets or activities carried out by the organisation or group and includes energy consumed by buildings, transport and industrial processes. Energy consumption must be measured for a continuous 12 month period.
- Conduct energy audits to identify cost-effective recommendations
The audit must identify areas of 'significant energy consumption' and cover at least 90% of an organisation's total energy usage. The audit must include site visits and document the estimated costs and benefits of implementing the energy-saving recommendations. There is no regulatory requirement to implement the energy-saving measures identified. Energy audits must be conducted every four years.
- Appoint a lead assessor
Qualifying organisations are required to appoint a lead assessor to carry out, oversee or review the energy audits and overall ESOS assessment. Lead assessors can be either employess ot external contractors, provided they are members of an approved professional body register.
- Report compliance to the Environment Agency
The ESOS assessment must be reviewed by a board-level director and approved by the lead assessor before the Environment Agency is notified of compliance. Records of compliance must be retained in an evidence pack.
The first compliance phase began on 6 December 2011, and qualifying organisations must carry out an ESOS assessment and notify the Environment Agency of compliance by 5 December 2015 and every four years afterwards.