Guest Blog: Wayne Mitchell – ESOS: Burden or opportunity?

Reading about the forthcoming Energy Savings Opportunity Scheme (ESOS) reminded me of a quote from Winston Churchill – “The pessimist sees difficulty in every opportunity. The optimist sees the opportunity […]

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By Priyanka Shrestha

Reading about the forthcoming Energy Savings Opportunity Scheme (ESOS) reminded me of a quote from Winston Churchill – “The pessimist sees difficulty in every opportunity. The optimist sees the opportunity in every difficulty.”

On the one hand, this new piece of mandatory legislation, introduced as part of the EU Energy Efficiency Directive, adds yet more bureaucracy to an already over-burdened sector. Yet, the audit that ESOS entails is designed to highlight how large enterprises can save money on their energy bills – so has the potential to have a positive impact on their bottom line.

£300m cost-savings in 2016

Indeed, the government estimates that ESOS will help large enterprises save around £300 million in energy costs in 2016, while the Carbon Trust believes it could be two or three times this amount as long as businesses implement the efficiency measures highlighted.

And herein lies the rub. ESOS requires all qualifying organisations to conduct an energy efficiency audit by December 2015 – but there is no obligation to carry out any of the measures identified. This is entirely optional.

That said, you could argue that if someone pointed out how you could save money, surely only a fool would ignore the advice. But when a business is busy focusing on its core activities, finding the time and resources to implement energy efficiency measures can be challenging.

Requirement for board-level involvement

The cost of conducting an ESOS audit isn’t cheap – estimates suggest around £21,000 for an initial audit and this has to be repeated every four years by a qualified assessor. All energy use by an organisation – in buildings, industrial processes and transport – will have to be calculated and all “significant” areas of energy consumption audited (with a 10% de minimis).

The ESOS assessment and subsequent notification to the Environment Agency must then be signed off at Director level, clearly underlying the intention to raise the profile of energy consumption within organisations.

ESOS in brief

• All large enterprises will be required to participate, excluding the Public Sector.
• SMEs are exempt, defined as employing fewer than 250 people and with annual turnover no greater than €50 milion.
• Charities that do not fit the SME definition must participate.
• A corporate group can qualify for exemption if all its businesses fall into the SME category.
• The date for assessing if your business fits the qualifying criteria is 31 December 2014.
• Submission of the first ESOS assessment is required by 5 December 2015.
• Data gathered for ISO 50001, Display Energy Certificates and Green Deal assessments can be used, as long as it falls into the relevant compliance period.
• As with the CRC Scheme, the Environment Agency will administer ESOS.
• There will be no requirement for mandatory disclosure of ESOS results but the EA will ask for voluntary information to publish.
• If you don’t comply when required to do so, there are fines ranging from £5,000 to £50,000.

So there you have it. If you want to ensure ESOS is a positive opportunity for your business (and frankly, why wouldn’t you?) then please remember we can help. Our team of energy-saving experts are able to advise on a complete efficiency strategy for your business, including specifics regarding return on investment and funding options where building retrofits or equipment upgrades are required.

Wayne Mitchell is the I&C Markets Director at RWE npower.

This is a sponsored article.