The ESOS Deadline is Fast Approaching for the UK

In the UK, around 120 business have notified the Environment Agency that they are fully compliant with the new energy efficiency regulations. It is estimated that approximately 10,000 businesses in the UK fall under the government’s ESOS scheme with which they need to comply. Any business that has not completed an audit by the 5^th December 2015 deadline risks a fine of up to £50,000.

If your company is one of the 10,000 businesses that has not declared itself compliant with the new ESOS regulations or are unsure whether you fall under the criteria they should follow these steps:

Qualification

The ESOS (Energy Savings Opportunity Scheme) applies to large undertakings as defined in the Companies Act 2006 as:

• A corporate body or partnership
• An unincorporated association on a trade or business, with or without a view to profit

Your organisation must take part in ESOS if it qualifies as a large undertaking on the qualification date for the first compliance period of 31 December 2014. A large undertaking can be further defines as an UK undertaking that meets either one or both of the following conditions:

• It employs 250 people or more
• It has an annual turnover in excess of €50 million (£38,937,777), and an annual balance sheet total in excess of €43 million (£33,486,489)

If your organisation is part of a corporate group which includes another UK undertaking that meets either of these conditions, then you must also take part in ESOS. You will need to consider your organisation’s corporate legal structure when assessing if your organisation qualifies.

Examples of undertakings that can qualify to ESOS include:

• Limited companies
• Public companies
• Trusts
• Partnerships
• Private equity companies or limited liability partnerships
• Unincorporated associations
• Not-for-profit bodies
• Universities which get more than half their funding from private sources

Please note that these qualifications are based on the status of your organisation on 31^st December 2014, and every four years after that for each subsequent compliance period. If your organisation qualifies you must participate in ESOS and notify compliance to the Environment Agency by the last date of each compliance period.

Routes to Compliance

Once you have identified that your organisation qualifies for ESOS, there are a number of routes companies can choose between to demonstrate that they are compliant with the ESOS Regulations:

1. ISO 50001 certification (accredited) (90% of energy use)
2. Display Energy Certificates (DECs) (90% of energy use)
3. Green Deal Assessments (GDAs) (90% of energy use)
4. ESOS compliant energy audits (90% of energy use)

Your organisation will be responsible for the following activities:

• Compliance with ESOS
• Appointing a lead assessor
• Highlighting any audit work that has already been done and which you wish to have reviewed by a lead assessor for the purposes of ESOS compliance
• Agreeing the work that the lead assessor is undertaking
• Getting directors or senior managers to sign off – ensures that they have reviewed the audit findings or recommendations

Your lead assessor must review your ESOS assessment to consider whether it meets the requirements of the scheme. This will involve:

• Reviewing the calculation of total energy consumption
• Reviewing the determination of the assets and activities in your significant energy consumption (90% of the total energy consumption)
• Confirming that the necessary certifications and evidence exist for any alternative routes to compliance
• Reviewing that the audits undertaken meet the minimum criteria for ESOS

Your lead assessor can then either:

1. Carry out your ESOS assessment and audits themselves

OR

2. Check that the assessment and audits done by people who aren’t lead assessors meet the requirements.

Audits must comply with Annex VI of Directive 2012/27/EU and must be signed off by one director when the lead assessor is external to the organisation and by two directors when the lead assessor is internal.

Firms are not under any obligation to act on any of the energy-saving recommendations made in the audits. The UK government hopes that the process will inspire businesses to realise the projected financial and carbon savings. It is estimated that the ESOS scheme could lead to £1.6bn net benefits to the UK, with the majority of these being directly felt by businesses as a result of energy savings.

Sources

Legislation

Complying with ESOS (Guidance)

Carbon Trust

Info on ESOS uptake