Time to switch on to ESOS Phase 2
The UK Government’s Energy Savings Opportunity Scheme (ESOS) has now entered phase 2. That means the relevant companies are required to be compliant by 5th December 2019. Before you stop reading in the comfort that you have plenty of time, we want to tell you why we’re advising companies that the time to start the process is now.
ESOS Phase One Recap
Those familiar with the scheme may still be recovering from the learning curve of the first phase. But for those of you who missed the excitement last time, ESOS is a mandatory energy assessment scheme which requires businesses to assess total energy consumption and identify energy efficiency opportunities.
Companies that qualify and, therefore must comply, are those with at least 250 employees, or a turnover in excess of €50 million (£38,937,777) and an annual balance sheet in excess of €43 million (£33,486,489). The scheme runs in four-yearly compliance phases, the first of which was 5th December 2015.
Why should I start ESOS Phase 2 now?
Phase 1 compliance does not mean you automatically comply
Just because you have complied with Phase 1 does not make you compliant with Phase 2. You must repeat the process to comply again and your data set must include a 12-month period. This period needs to include the qualification date of 31st December 2018 and end before the compliance date of 5th December 2019.
Nothing has changed from the initial phase; the process remains the same:
- Measure total energy consumption for buildings, industrial processes, plants and transport
- Perform an audit to identify energy efficiency opportunities or areas of significant energy consumption
- Get your assessment signed off by a official Lead Assessor and a board-level director
- Report compliance to the correct national scheme administrator (EA in England, SEPA in Scotland, NIEA Northern Ireland and NRW in Wales)
If you start now, your 12-month time-period of data will be in the compliant range and you’ll have peace of mind that you’ll be on track to comply.
You can maximise cost savings
The scheme is estimated to lead to £1.6bn net benefits to the UK mostly in the form of energy savings for businesses. Although it does not actually mandate that the efficiency opportunities identified are acted upon, there is substantial opportunity in doing so as most audits identify areas where significant savings can be made, and the sooner you take advantage of these, the sooner you can reap the rewards.
The cost to undertake the work for compliance to ESOS can vary quite significantly and will depend on the size and complexity of your organisation but will need to be taken into account.This is all the more reason to maximise the gains in energy efficiency so you can see a return on your compulsory investment and essentially minimise the cost burden that comes with compliance.
You will avoid the last-minute rush
Don’t let the deadline creep up on you. 70% of submissions received by the Environment Agency (EA) were completed in the last two weeks of Phase 1. December 2019 might feel far away but in the fast-paced world of business, it’s barely the blink of an eye.
In addition to this, waiting until it is almost too late is liable to increase the costs of undertaking the assessment and gaining compliance. During the initial phase a shortage of Lead Assessors in the market meant there was high demand and, therefore, higher charges the closer to the compliance date companies left it as the mad scramble to comply took hold.
You can better ensure you will be compliant
Around 2,800 organisations were late during the last phase and 75% of audited businesses had to undertake remedial actions to be fully compliant. Only 16% were technically compliant. By starting early, you can ensure you have the time to get it right and not risk the necessity of additional time and resource later.
The risk will also be that you miss the deadline to comply altogether and face the absolute worst-case scenario of up to £90k of fines, injunctions, civil action or prosecution.
It isn’t going away
Although this is legislation implementing an EU Directive, Brexit is unlikely to affect it anytime soon in case you are waiting to see what happens. The Great Repeal Bill when it revokes the European Communities Act will convert EU law into domestic law. So, ESOS will continue to be mandatory unless the UK government specifically decides to make changes. This is unlikely in the near future.
Any measures that are implemented off the back of ESOS can be fed into your other disclosures, and you will be able to embed the energy efficiency opportunities identified into your existing sustainability strategy to bolster your other sustainability disclosures and maximise your energy reduction achievements.
It might be worth considering ISO 50001 certification. This standard means automatic compliance with the ESOS legislation (provided this certification is valid at the compliance date). Timescales can be a little longer for this, but it requires going beyond merely opportunity identification mandated by ESOS and facilitates continual improvement. This means extra benefits in ongoing energy reduction and cost savings. As a globally recognised standard, it is also a great demonstration of your sustainability credentials to stakeholders (beyond just the UK) as you will show you are prepared to go beyond just the box ticking of compliance to a concerted and market-leading approach to energy management.
If you are ready to get started, we can support you with all parts of the process from energy measuring, auditing, Lead Assessment and even ISO 50001 certification. Feel free to get in contact for further information.