Energy Savings Opportunity Scheme (ESOS)

 

ESOS is a compulsory scheme that came into force in July 2014. It means large businesses and organisations in the UK must carry out an ESOS assessment every four years.

 

Businesses that are fully covered by ISO 50001: 2011 energy management systems certification are exempt from the ESOS assessment.*

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. 


Qualifying organisations


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.
 
Exemptions
Qualifying organisations can also demonstrate compliance with ESOS, in whole or in part, in a number of ways. 
 
*Large undertakings that are fully covered by ISO 50001: 2011 Energy Management Systems - i.e. certification covers all areas of significant energy consumption - are exempt from the ESOS assessment, providing that the certification took place within the compliance period and is still valid at the compliance date of 5 December 2015. 
 
In these cases, there is no need to appoint a lead assessor to oversee or approve compliance. The organisation only needs to notify the Environment Agency of their certification and that they are compliant with ESOS.
 
If an organisation is not fully covered by ISO 50001 certification they are still required to carry out an ESOS assessment. The assessment will however, take into account those areas of energy partly covered by ISO 50001, Display Energy Certificates (DECs) or Green Deal Assessments (GDAs).

It is estimated that the cost to large undertakings of conducting an ESOS assessment could be as much as £25,000. Achieving ISO 50001 certification offers a more cost-effective route to compliance but, in addition, also brings many other benefits with it:
  • compliance with ESOS requirements
  • reduction in energy costs through measurement and management of energy consumption leading to energy efficiency
  • reinforcing good energy management behaviours throughout the business
  • promoting energy efficiency throughout the supply chain
  • evaluation and prioritisation of new energy-efficient technologies
  • increasing new business opportunities
  • meeting legal and contractual obligations
  • increasing stakeholder confidence and enhancing reputation
  • integration with existing management systems such as ISO 9001 & ISO 14001
  • supporting corporate social responsibility commitment and initiatives.

Compliance


Qualifying organisations are required to carry out an ESOS assessment (energy audit). This assessment requires qualifying organisations to:
  1. 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.
  2. 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.
  3. 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.  
  4. 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. 

ESOS Deadline


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.

ISO 50001 certification
Certification to ISO 50001 is one way of complying with ESOS regulations.
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