The Energy Savings Opportunity Scheme presents a new and significant opportunity for large UK businesses.

The Energy Saving Opportunity Scheme (ESOS) is a mandatory scheme for large organisations in the UK. It requires organisations to undertake a regular assessment to identify cost effective energy savings measures. This scheme was established by the Department of Energy and Climate Change (DECC) in response to the requirement for all Member States of the European Union to implement Article 8 of the Energy Efficiency Directive.

Does this relate to me?

• You have more than 250 employees in the UK; or
• You have fewer than 250 employees, but have:
  i) an annual turnover exceeding €50m; and
  ii) a balance sheet exceeding €43m; or
• You are part of a corporate group containing a large enterprise

This definition includes not-for-profit bodies outside the public sector, so long as they are large enough to meet the qualifying criteria. Currently Public bodies are not subject to the ESOS directive.

The Energy Savings Opportunity Scheme Assessment

To comply with ESOS regulations large enterprises will need to undertake an ESOS Assessment, including the following elements:

• Measure your total energy consumption for buildings, industrial processes and transport;
• Identify areas of significant energy consumption, accounting for at least 90% of your total energy consumption;
• Appoint a ‘Lead Energy Assessor’ to oversee the ESOS Assessment; (they can be an external consultant or an in-house expert as long as they are on an approved register)
• Selecting a route to compliance in respect of each area of significant energy consumption and undertaking the activity to comply via this route – these include ESOS compliant energy audits, certified ISO 50001 coverage, a Green Deal Assessment (not available in Northern Ireland) or a Display Energy Certificate;
• Identify cost-effective energy efficiency recommendations for areas of significant energy consumption;

The first round of audits must be undertaken and notified to the Environment Agency by December 5 2015 and then at least every four years from the date of the previous audit.

ISO 50001

Organisations that are fully covered by the ISO 50001 energy management standard will not need to complete any additional assessment or audits for the purposes of ESOS. If that is the case then it is merely necessary to notify the Environment Agency of compliance with ESOS

The Energy Savings Opportunity Scheme Compliant Energy Audit

An ESOS compliant energy audit is one that:

• Is based on 12 months verifiable date for a continuous period, beginning no earlier than 6^th December 2010 for the first compliance period and no more than 24 months before the start of the audit (the data also may not have been used for an energy audit in a previous compliance period).
• Analyses the organisation’s energy consumption and energy efficiency
• Recommends cost effective energy savings opportunities
• Identified the estimated costs and benefits of the energy savings opportunities recommended.

It will be for each organisation to determine what it wants to do on the basis of the assessment. There is no regulatory requirement to implement the recommended measures.

Key Facts

1, If you supply energy to a third party that consumes the energy, but you do not measure this supply and cannot calculate or reasonably estimate it, then you cannot deduct the supply to the third party as unconsumed supply and you will need to include it within your total energy consumption.

As an example, where energy is supplied from a landlord to a tenant and the amount of that energy is measured, and known by the tenant, the landlord does not have to include that energy as part of their ESOS Assessment.

Where energy is provided from a landlord to a tenant and the amount of that energy is not measured and known to the tenant, the landlord must include that energy as part of their ESOS Assessment.

2, A landlord who provides energy to the shared parts of a tenanted building is required to include that energy in scope. This is because the provision of energy to the shared parts of the building is part of the activity of the landlord. As such it must be included as part of an ESOS Assessment.

3, Where a participant disposes of an asset or undertaking, or ceases an energy-consuming activity, prior to the compliance date, the energy use from these may be excluded from the determination of total energy consumption. Assets or undertakings acquired, and activities commenced, after the qualification date should be excluded from your total energy consumption, even if they are acquired before the compliance date.

You will need to retain records that demonstrate that you have undertaken an assessment of your total energy consumption, including the identification of areas of significant energy consumption, within your ESOS Evidence Pack (see Section 6.6.1).

4, Assets/activities that are sold/discontinued after the qualification date but before the compliance date do not need to be audited. The energy use of such assets/activities in the reference period does not need to be included in the participant’s total energy consumption.  Assets/activities purchased/commenced after the qualification date but before the qualification date do not need to be audited. The energy use of such assets/activities in the reference period does not need to be included in the participant’s total energy consumption.

5, For each highest parent group (see Section 3.3.2), the responsibility for complying with the requirements of ESOS lies, as a default, with the highest parent. The highest parent may agree that another undertaking within the highest parent group takes on this responsibility for ensuring compliance with ESOS, as the nominated „responsible undertaking‟.  Where disaggregation occurs (see Section 3.3.3), the highest parent or nominated responsible undertaking will be responsible for the compliance of only some of the undertakings within the highest parent group. Those undertakings that have disaggregated will be responsible for their own compliance.  Where aggregation occurs (see Section 3.3.4), the highest parents must come to mutual agreement on which of them, or which nominated responsible undertaking from among the aggregating parties, will take lead responsibility for ensuring compliance.

6, Your ESOS Energy Audits and activities to comply via other routes (e.g. Green Deal Assessments) will need to address all your areas of significant energy consumption.   If you have already undertaken audits which you wish to be used for the purpose of ESOS compliance then please note that if an asset, activity or legal undertaking was not part of your organisation or group when an audit of such areas of significant energy consumption was last undertaken, but was acquired subsequently, then that item cannot be considered to have been covered by the previous energy audit.   For example, if you acquired a new building on 1st April 2014 – after an ESOS Energy Audit of your organisation’s buildings conducted in December 2013 – the new building cannot be considered to have been covered by the December 2013 audit. In these circumstances, you will need to consider whether you need to conduct an audit of that area in order to ensure that you audit at least 90% of your total energy consumption.

7, You should agree the audit methodology to be followed with your lead assessor, as well as any other auditors/assessors, before the audit(s) starts as part of maximising the effectiveness of, and standardising, the audit work being undertaken.  You will need to record the methodology used within your ESOS Evidence Pack. This will allow you to evidence that your energy audits meet the requirements of ESOS.

8, Areas of operational control – examples

If you are a tenant occupying a leased office within a multi-occupancy office building, your ESOS Energy Audit may highlight the opportunity to save energy by installing double glazed windows in your office.

However, as a tenant you may be unable to modify the windows. As such, this measure could be considered outside your operational control.

In such a case, the recommendation to install double glazed windows for the office would not be a valid recommendation for you as the tenant as part of your ESOS Energy Audit.

If a landlord undertakes an ESOS Energy Audit and it has the authority and access to make upgrades to the areas of the office building occupied by its tenants then the installation of double glazing would be a valid recommendation for its ESOS Energy Audit.

If the landlord of the office building does not, under the terms of the lease, have access to or control over the use of the tenanted areas of the building, then they should not receive recommendations relating to the tenanted areas as part of their ESOS Energy Audit. However, the Energy Audit should include recommendations regarding energy consumption in common areas and measures over which it has control, such as the boiler, exterior wall insulation, etc.

9, An assessment of a building’s energy performance as part of the Display Energy Certificates or Green Deal schemes is considered compliant with the requirements of ESOS. Note that DECs are not available for buildings in Scotland13.

Display Energy Certificates (DECs)14 are required for non-domestic buildings that have a floor area of more than 500m2 and are either occupied by a public body or an organisation providing a public service and visited by the public. DECs are also voluntarily available for other buildings.  A DEC shall constitute an ESOS compliant energy assessment for the aspects of energy consumption within a building which it covers, provided:

it is still valid on the compliance date of a compliance period; and  the assessment has been undertaken and the certificate issued (and accompanying recommendation report provided) within the compliance period.

Green Deal assessments are provided under the Government’s Green Deal scheme for domestic and non-domestic buildings. Where these assessments are qualifying assessments, they shall constitute a compliant energy assessment for the aspects of energy use within a building which they cover, provided they are conducted within the compliance period and are still valid at the compliance date. Where DECs or Green Deal assessments are used to contribute to compliance with ESOS, there remains a requirement for your organisation or group to consider whether they constitute an assessment of all areas of significant energy consumption. Where this is not the case, further assessment work will be required for the undertaking to be in compliance.

10, Energy Performance Certificates, in Scotland or in the rest of the UK, do not provide an alternative route to compliance.

11, buildings – typically expressed by the normalised performance indicator (NPI), the weather-adjusted kWh per square metre of floor area;

12, Assets held in trust will be included in ESOS if the organisation that is party to the agreement for the supply of energy to the assets qualifies for ESOS. The qualification of these parties will be determined in the normal way (see Section 3).

13, As an ESOS participant you will need to provide a notification to the Environment Agency, that you have complied with the requirements of ESOS on or before the compliance date of each phase.

14, Before you can submit your notification to the Environment Agency, you will need to have your ESOS Assessment signed off by a director (see definition in the box below) or, if your organisation does not have a director, an equivalent senior manager.  A director is any person occupying the position of the director as per Section 250 of the Companies Act. If the participant does not have any directors, then a senior manager may provide this sign-off. A senior manager is a person exercising management control in an undertaking.  The requirement for sign-off and notification applies irrespective of the compliance route, or routes, you’ve chosen in complying with ESOS – i.e. ESOS Energy Audits, Display Energy Certificate (DEC) reports, Green Deal assessments or an ISO50001 certified Energy Management System.  Making a senior representative take responsibility for reviewing whether an organisation has complied with ESOS will help to ensure that senior figures within your organisation or group are fully aware of the compliance requirements as well as highlighting the opportunities for improved energy efficiency to them.

If you are using an in-house Lead Assessor to conduct, oversee, or verify assessments, two directors (or senior managers) are required to sign off that they have seen and considered the ESOS Assessment. This is to provide an additional safeguard as to the independence and quality of the report, given that it is being conducted in-house.

15, As part of your notification you will need to include the following basic details:

1. Information on the participant
2. Information on any aggregation or disaggregation that has taken place.
3. Information on the lead auditor/assessor
4. Information on the ESOS Assessment

16, As part of your notification you will need to include the following details:

Organisation name/name of highest parent (for groups) (and trading name if different);
The company registration number of the highest parent (if applicable);
The registered office address (or place of principal activity if no registered office exists);
The name and contact details of at least two persons, one of which should be the responsible officer.
Where the participant is a group of undertakings, the number of undertakings making up the participant
Details of the director(s) who has reviewed the recommendations of the ESOS Assessment on behalf of the participant, including:

o name of Director(s)/senior manager(s);
o full title(s);
o contact details (telephone and email address); and
o the date the directors(s)/senior manager(s) signed off the ESOS Assessment.

ESOS will be operated by different agencies for the different parts of the U.K.  (This seems contradictory as the EA has both the U.K. and England yet other parts of the U.K. have their own) 

GreenRock ESOS Lead Assessor
ESOS Qualification(s): Lead Assessor Fully Qualified
ESOS Specialisms: Buildings, Process, Transport
LCC Qualification(s): LCC Simulation

Further Guidance
UK and England: Environment Agency

See pages: https://www.gov.uk/government/organisations/environment-agency 

Wales: Natural Resources Wales

www.naturalresourceswales.gov.uk

 Scotland: Scottish Environment Protection Agency

www.sepa.org.uk

 Northern Ireland: Northern Ireland Environment Agency

www.doeni.gov.uk

 Offshore: Department of Energy and Climate Change

https://www.gov.uk/oil-and-gas-uk-oil-portal