Get Planning for ESOS Phase 3

The qualification date for the Energy Savings Opportunity Scheme (ESOS) Phase 3 was 31 December 2022. If your business qualifies, Advantage Utilities Founder & CEO, Andrew Grover, explains why it pays to ensure the right data is being captured, now, and how best to achieve this.

Although UK businesses don’t have all the answers to achieving net zero, energy efficiency is high on the commercial agenda right now, as a contributing factor to carbon reduction.

With the introduction of ESOS in 2014 and more recently, Streamlined Energy and Carbon Reporting (SECR), the UK government appears to be starting to turn the wheel on climate change.

For growing businesses, it may be the first time reporting on ESOS so here’s a quick recap of what exactly is involved. ESOS is a mandatory energy assessment scheme for ‘large’ organisations based in the UK.

A ‘large undertaking’ is, if:

• You have over 250 members of staff, or

• A turnover of over £44.1m, or

• An annual balance sheet of over 43 million Euros (£37.9m), or

• You are an overseas organisation with over 250 employees in the UK, or

• Your company is part of a larger organisation, which falls into any of the above.

Organisations that meet the qualification criteria have to audit and report on at least 90% of their energy usage to the Environment Agency (EA) every four years. This involves auditing buildings, industrial processes and transport to identify energy-saving measures. Now in Phase 3, the next ESOS deadline for submission is 5 December 2023.

Avoid late submission, fines and reputation damage

Planning early will help to avoid some of the challenges that forced many businesses to submit late reports. For those not complying the EA issues enforcement notices, but ultimately releases a list of non-compliant companies – essentially naming and shaming.

Whilst these businesses also face civil penalty proceedings and potential fines, it’s the damage to their reputation that can prove more concerning.

Capitalise on the commercial benefits of the ESOS process

It’s not all doom and gloom though. For many businesses embracing ESOS, the whole process brings multiple benefits including financial cost-savings through improved energy efficiency, and a structured pathway to achieving net zero – even if it is an on-going ‘journey’.

What’s more, from the Department for Business, Energy & Industrial Strategy Post Implementation Review details that there is “evidence of some cases where ESOS was perceived to have enhanced the reputation of organisations (16% of surveyed complier organisations agreed this was the case).”

Currently, ESOS doesn’t require businesses to implement the energy saving measures they identify but this is likely to change in the future when the government comes under pressure to meet its net zero goals.

What does an ESOS assessment involve?

For starters, a lead assessor must carry out and oversee or review your energy audits and overall ESOS assessment. The ESOS Lead Assessor is qualified to sign off a company’s ESOS report. Lead assessors can be employees or external contractors as long as they are members of an approved professional body register. Historically, the nearer you get to the deadline the more in demand these experts are so it pays to get ahead and appoint early.

If energy management and efficiency is already a focus and your business has ISO 50001 certification, this can be used instead. No ESOS assessment is required; you simply notify the EA you are compliant with ESOS.

Other schemes that an ESOS assessment will also take into account are Display Energy Certificates (DECs) and Green Deal Assessments (GDAs).

Capturing the right ESOS data

There are three main areas the lead assessor will focus on so making sure the right data is being collated within the business is a priority.

Firstly, the total energy consumption for your buildings, industrial processes and company transport needs to be calculated over a reference period of 12 consecutive months, including the qualification date. This can be measured in either an energy unit such as kWh or, financially in pounds – demonstrating how the calculation is achieved is important. One thing to note is that it can’t be reported in terms of CO2.

Dependent on the main purpose of your business, there will be significant areas of energy consumption. These need to be identified and are essentially, those assets or activities that make up at least 90% of your total energy usage. For Phase 3 submissions, these can be calculated using a year’s data between 6 December 2019 and 5 December 2023.

It may be that you take a sample of your sites across warehousing, office and manufacturing, for example, and visit one of each. The results can then be applied to other similar sites.

The final element is identifying opportunities for energy efficiency savings across the key areas in your business.

The advantages of using an external Lead Assessor

One of the biggest challenges for businesses is the collection of data. Appointing an external lead assessor from the outset, ideally an experienced carbon consultant will help to establish a solid energy data management system to build on going forward.

High-quality data to start with results in more detailed analysis, a thorough approach to compliance and the identification of energy saving projects that are right for your business. These often bring financial opportunities to capitalise on and this is where an external ESOS Lead Assessor, especially one with sector-specific knowledge comes into their own.

Seek out a lead assessor with a proven track record of producing carbon reduction strategies. Choose one that can actually assist with implementation as well as on-going reviews to ensure continuing energy saving improvements are made and the associated financial returns gained.

How might ESOS look moving forward?

Looking ahead, it seems like Phase 4 will happen, following a Post Implementation Review by the Department for Business, Energy & Industrial Strategy, which states that: “ESOS has been largely successful in providing organisations with information about their energy and fuel use and opportunities for cost effective energy efficiency measures.” Nearly all (90%) ESOS compliers surveyed in 2018 reported their organisations to have implemented or planned an energy efficiency improvement in at least one category.

In the future, the government may introduce the requirement to publish ESOS related reports, as happens with SECR, exposing companies publicly that are not taking action in relation to energy use.

And of course, ESOS only covers large UK businesses, so what about the smaller and medium sized companies – should the government be mandating energy audits at this level too?

Regardless, change is happening and it’s all about gathering the right energy data in the right way to ensure ESOS contributes to the success of your business.

Get ahead for your next ESOS assessment and visit www.advantageutilities.com