The Energy Savings Opportunity Scheme (ESOS) requires large businesses in the UK to measure their total energy consumption at least every four years and carry out audits (or alternative compliance route e.g. ISO 50001) of the energy used by their buildings, industrial processes and transport. The audits are intended to identify practical and cost-effective energy saving opportunities. Completion of an audit is mandatory, but implementation of the recommendations from the audit is left to the discretion of the participant.
The Department of Business, Energy and Industrial Strategy (BEIS) has identified a potential conflict between the energy efficiency recommendations from an ESOS audit and the recommendations required to help a business along its journey to net zero. For one, shorter term cost saving actions recommended through current ESOS audits can sometimes conflict with longer term investments that will be required to get businesses on a trajectory to meet net zero targets. Longer term investments might include zero carbon technologies, electric vehicles, and clean heat. As such, the idea of introducing a net zero element into energy audits is currently under review. The consultation is open until the end of September and changes are likely to come into force during the current phase (Phase 3), which runs until 2023.
Net zero aside, ESOS in its current form has faced criticism over the fact that some businesses view ESOS purely as a compliance exercise; perceptions of the varying quality of assessors; the lack of standardisation of the ESOS report; and the fact that implementation of recommendations is not mandatory. Beefing up ESOS to address net zero could make businesses take it more seriously and improve the uptake of recommendations.
The proposed changes include mandating organisations to:
- Carry out an assessment of which current energy-using processes and activities need to be addressed to become net zero by 2050.
- Outline current technologies used, and then identify what the low and/or zero carbon options are for each technology, the potential for investment and cost-effectiveness in the shorter or longer term, and when a suitable upgrade could take place.
- Publicly disclose high-level information from their ESOS report on a central website and set a target or action plan which they are required to report against. This would allow organisations to compare their performance with similar participants, allow third parties to compare ESOS data, improve the quality of audits and increase transparency.
Other suggestions include:
- Support for additional de-carbonisation through GHG management ‘substitution’ approaches.
- Extending ESOS to cover a larger range of enterprises (either to all medium-sized enterprises, or to a subset of medium-sized enterprises).
- Improving the standard of ESOS auditors, by reviewing the current process in becoming a qualified Lead Assessor and ensuring Lead Assessors are appropriately trained.
- Standardising auditing methods and information required; tighten requirements around site sampling, use of de minimis exemptions, and use of energy data.
- Ensuring reports include metrics that allow participants to better judge their energy performance and include more focus on energy management and behaviour change.
- Better alignment of ESOS with Streamlined Energy and Carbon Reporting by changing the ESOS qualification thresholds to match SECR. Businesses would be in scope of ESOS if they meet at least two of the following criteria: at least 250 employees, a balance sheet of £18 million or turnover of £36 million. This may mean that some businesses will be under the scope of ESOS for the first time.
Net zero is a logical extension of ESOS; it will raise awareness of important measures of which your business may have previously been unaware; it enhances energy managers’ business case when going to their boards; and assessors feel confident that this is both feasible and deliverable.
HOW CAN I SAVE ON COMPLIANCE, CERTIFICATION AND NET ZERO STRATEGY COSTS?
Although the deadline for Phase 3 ESOS is December 2023, in our experience LEED assessors are in high demand the closer you get to the deadline. Looking at ESOS early gives you time to plan sites visits, especially if you have multiple and complex sites. Given that a net zero site audit can include the ESOS requirements, combine ESOS, net zero and potential ISO 50001 programmes to save on costs. Call us today so we can discuss how to streamline and save on compliance and net zero strategy development.
