Energy savings opportunity for larger companies

Energy savings opportunity for larger companies


Author: Sophie Wilkinson

The Department of Energy and Climate Change (DECC) is currently consulting on proposals for a new Energy Savings Opportunity Scheme (ESOS).

ESOS will impose a mandatory energy saving assessment on larger companies and non-public sector organisations in the UK. It is part of the UK's implementation of the EU Energy Efficiency Directive 2012 (EED).

EU Energy Efficiency Directive 2012
The EED requires member states to introduce a framework of measures for promoting energy efficiency, in order to meet the EU's 2020 energy efficiency target (for further detail click here).

Member states have until 5 June 2014 to implement the EED.

One of the requirements is introduction of regular energy audits for large enterprises to promote energy efficiency measures. These audits must be undertaken by 5 December 2015, and every four years thereafter.

Who will be affected by ESOS?
All enterprises with 250 employees or more will have to participate in ESOS. Organisations with fewer than 250 people will also be included if annual turnover exceeds #50m and annual balance sheet total exceeds #43m.

Public sector organisations are not covered by ESOS as other parts of the EED require public sector action on energy efficiency.

For groups, the Government intends targeting the highest UK parent company in respect of all of its UK legal entities, following the approach under the CRC Energy Efficiency Scheme. It is also proposed that corporate groups could disaggregate, so that subsidiaries could carry out ESOS assessments separately.

The consultation will consider whether sites that have a valid Display Energy Certificate (DEC) or have undertaken an assessment under the Green Deal within the previous four years could be deemed to have complied with the ESOS requirements. It will also consider whether organisations certified to ISO50001 or ISO14001 standards could be deemed to be compliant.

What will ESOS require?
The EED sets out minimum criteria for energy saving assessments. The Government considers that ESOS assessments must, as a minimum:
. include a review of total energy use and energy efficiency of the organisation
. provide clear information on potential savings, which identify and quantify cost-effective energy measures

There will need to be approved ESOS assessors, and the Government will establish a framework for their approval and establish a scheme administrator.

The consultation seeks views on options for reporting compliance with the scheme. Options include:
. organisations providing basic notification to the scheme administrator, confirming they are affected and have conducted an ESOS assessment
. organisations reporting details of ESOS results to a central body
. public disclosure in the annual report of whether an ESOS assessment has been carried out and a summary of key action taken as a result

Other proposals
. re-use of existing data, for example if a process is covered by a Climate Change Agreement
. some flexibility regarding the period of time for which energy data is required to make it easier for data from existing schemes to be used
. administrative burden to be proportionate to benefits and assessors to be given discretion to use their professional judgement
. civil sanctions to be imposed in the event of a breach of the ESOS requirements

Next steps
The consultation closes on 3 October 2013.

The Government intends bringing in legislation introducing ESOS in Spring 2014.