ESOS Phase 2 compliance: How to get the most benefit from your ESOS audits?

Guidance and tips on how to maximise the benefits of ESOS Phase 2 compliance and the associated ESOS audits.

Quick overview

The Energy Savings Opportunity Scheme (ESOS) is a mandatory compliance scheme in the UK, derived from Article 8 of the EU Energy Efficiency Directive.

The ESOS compliance period lasts for four years and as the last compliance deadline was 5 December 2015, the new compliance period will be 6 December 2015 to 5 December 2019.

The qualification date for ESOS Phase 2 is 31 December 2018.

The reference period for the Phase 2 window began January 2018, so the timing is perfect to act now!

Compliance with ESOS Phase 2 must be completed and reported to the Environment Agency by 5 December 2019.

The submission date for proof of ESOS Phase 2 compliance is 5 December 2019.

ESOS requires that your total energy consumption be audited which includes all input energy used in buildings, industrial processes and transport. After you have calculated your total energy consumption, you must identify assets and activities that amount to at least 90% of your total energy consumption.

These are your areas of significant energy consumption and comprise the assets and activities you will audit or ensure are covered by an alternative route to compliance. This means you can exclude up to 10% of your total energy consumption from any audit or alternative compliance measures.

Does your organisation qualify for ESOS Phase 2?

ESOS applies to UK organisations and their corporate groups that are large enough to meet the qualification criteria.

The qualification thresholds are:

any UK company that either:

employs 250 or more people, or

has an annual turnover in excess of 50 million euro (£44,845,000), and an annual balance sheet total in excess of 43 million euro (£38,566,700), or

an overseas company with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK)

The above Bank of England exchange rate from Euros to Sterling was confirmed for ESOS Phase 2 qualification on 31 December 2018.

There are four potential routes to ESOS compliance;

ESOS Energy Audit

ISO 50001 Certification

Display Energy Certificates

Green Deal Assessments

If an organisation has a valid UKAS accredited ISO 50001 (Energy Management System) which covers the full scope of ESOS, then that will suffice as ESOS compliance, but in the absence of this ESOS energy audits will be needed as the next best and most common route to compliance.

Quality data is key!

The better and more recent the data, the more insight you will gain from your audits and the more reliable your energy saving recommendations will be.

For your total energy calculation

You require 12 consecutive months of data that includes the qualification date of 31 December 2018, but not the compliance date.

For your audits

You require 12 consecutive months of data not starting more than 24 months before your audit and starting not more than a year before the compliance period nor extending beyond the compliance date.

This data cannot have been used in a previous phase of the scheme. To put this into perspective, if you conducted your ESOS audits in October 2018, you can use 12 consecutive months energy consumption data from November 2016 onward.

As data is key, its beneficial to use the most recent data available, as this will in most cases provide a more realistic reflection of your total energy consumption.

Going back to the example above, it would be beneficial to use the energy consumption data from October 2017 to Sept 2018. This approach will significantly reduce the time associated with data collection and collation, as the energy consumption from October to December 2018 need to be added to the consumption from January 2018 to September 2018 to provide your total energy consumption.

Lessons learnt from ESOS Phase 1?

Complying with a new regulation is always problematic, with participants being on a steep learning curve to understand both the qualification rules, and the actions they are required to take.

The surge of demand also impacted the availability of external support, particularly from organisations and individuals with a proven track record of delivering high quality work.

Analysis of the findings from the Environment Agency enforcement action has highlighted the areas causing the most difficulty which are summarised below;

The Environment Agency has found that in England there were around 500 organisations that qualified for ESOS in the first phase but had not engaged with the scheme. This has resulted in over 300 Enforcement Notices being sent out.

The Environment Agency received 2,800 notifications from participants stating that they were going to be submitting their Compliance Notifications late.

Civil penalty proceedings have commenced against several non-compliant organisations.

More than 90% of audited participants were deemed to be compliant or compliant with remedial actions required.

Of these, a full three-quarters of audited participants needed to undertake remedial actions in order to become compliant.

What are the benefits of acting now on ESOS Phase 2?

As well as avoiding enforcement action or the need for subsequent remedial actions, early action can help unlock the financial savings brought by greater energy efficiency.

Well qualified and experienced ESOS lead Assessors are in short supply, and the closer we get to the compliance date the higher the demand for quality ESOS lead Assessors will become - Booking your Lead Assessor now will mean you can lock-in more competitive prices and avoid future bottlenecks in resources.

Early action will avoid the resource bottlenecks and other challenges that occurred during ESOS Phase 1, such as missing deadlines, Enforcement Notices, poor quality and non-compliant ESOS audit reports and penalties

Agreeing realistic timeframes and providing your staff with sufficient time for data collection and collation.

The earlier energy savings opportunities are identified, the sooner energy saving projects can be implemented and your organisation can start benefitting from significantly reduced energy bills!

How Smart GreenTech Solutions can help?

Our ESOS lead assessors are CIBSE accredited energy efficiency consultants with extensive experience of conducting energy efficiency audits, identifying and developing practical and cost-effective energy reduction opportunities.

Our ESOS lead assessors are all accredited by the Energy Institute as Chartered Energy Managers and registered on the Energy Institutes Register of Professional Energy Consultants - RPEC.

We pride ourselves in providing a professional and personalised service, and our lead assessors will work with you to determine your ESOS gap analysis, develop a structured approach to suit your business requirements, conduct the ESOS audits and provide you with an ESOS compliant report and evidence pack which fully complies with the requirements of your scheme administrator.

ESOS can be very time consuming and frustrating for your staff responsible for collecting and collating the required data, but our dedicated ESOS lead assessor will work with you from the start to full ESOS compliance to remove as much as possible of these so that you can focus on your business.

Get in Touch!

If you would like to discuss your ESOS Phase 2 requirements in more detail or how our TM44 Inspections can reduce your energy consumption, then please feel free to contact us on 03300 881451.