ESOS Phase 2 is coming. Are you ready?
With less than nine months until the ESOS Phase 2 deadline, Stuart Denton-Brown provides advice on how to make the most from the scheme.
What is ESOS?
The Energy Savings Opportunities Scheme (ESOS) is a mandatory energy assessment scheme administered by the Environment Agency. Its main aim is to encourage businesses to be more energy efficient. ESOS requires eligible businesses to complete energy audits every four years. To be eligible a business must have over 250 employees or an annual turnover of more than €50M and an annual balance sheet total exceeding €43M on 31 December 2018.
2015 saw the first compulsory ESOS audit (ESOS Phase 1) and, as with any new compliance law, saw many companies struggle to work out how to be compliant. Amid confusion about deliverables, data sets required, and the time taken to conduct audits; 2,800 organisations were late in providing compliant audits, some being fined as a result.
Despite these problems, the benefits of implementing ESOS recommendations are clear. They can ensure dramatic cuts in energy consumption and carbon production, resulting in significant financial and environmental rewards. The ESOS Phase 1 interim evaluation report stated that 79% of businesses reported that they had implemented at least one energy saving measure, but only 33% stated that that measure was a direct result of ESOS which raises the question why more companies have not managed to turn this work into actual energy, cost and carbon savings. So, let’s learn from mistakes made during ESOS Phase 1 and make the most of the opportunities the scheme provides.
How to do it better this time
Think back to 2015:
- Did you pay too much for your ESOS compliance?
- Did you get good results and a reasonable number of project ideas?
- Were they well described, were they fully costed, were the savings defined?
- Did they cover a range of your processes?
- Did they cover a range of technologies?
- Have you made any savings since that work was undertaken and if not why not?
- Was that down to poor quality auditing in the first place or could it be that you don’t have capital to undertake these projects?
- Are there other barriers to implementation?
Use these insights to plan what you want to get from Phase 2 and stop yourself falling into the same pitfalls.
Many organisations in 2015 were late providing compliant audits due to delays starting the process or being unclear on how to be compliant. Detailed information about how to be compliant can be found on the gov.uk website but if you had difficulty in 2015 or have recently qualified to comply with ESOS, seek expert advice. Along with saving you time now, implementing their recommendations will lead to savings in the long run.
Leaving ESOS preparation to the last-minute increases costs and stress. Demand for Lead Assessors surged towards the 2015 deadline, leading to a shortage of Assessors and some companies being unable to submit their audits on time. It can take up to six months to plan, collect and audit all necessary data so don’t put it off.
Audits carried out now will be compliant if they include a year’s energy data between 6 December 2015 and 5 December 2019 and were not previously used for Phase 1. As most of the activities in ESOS compliance are undertaking those audits, they can be phased in to begin as soon as possible.
Make the most of the benefits
While around a third of businesses implemented at least one ESOS recommendation following the 2015 audit, many failed to. The scheme itself is meant to be an opportunity for saving energy and energy expenditure along with it, helping towards financial and environmental targets. It is hoped that Phase 2 will lead to a larger uptake in energy recommendations.
If your business is struggling to find the capacity to begin applying energy saving recommendations, it could be worth hiring experts in the field to streamline the implementation process for you. In the long-term this investment will allow you to move beyond compliance, reducing your emissions, providing financial savings and maximising the opportunities ESOS has to offer.
Be smart. Audit now. Make the most of the benefits.