The Government has recently issued its response to last year’s consultation on the Energy Savings Opportunity Scheme (ESOS), together with regulations to enact the scheme and guidance for participants.  ESOS is being introduced as a result of Article 8(4) of the EU Energy Efficiency Directive which requires all non-SMEs to conduct energy audits by 5 December 2015 and every four years thereafter.  The official estimate, based on affected businesses reducing their energy consumption by a modest 0.7%, is that the net benefit to the UK over 16 years will be £1.6 billion.

Who is affected

ESOS applies to the private sector only.  Your business will have to comply if it is an undertaking carrying out business activity in the UK and at least one of the following applies:

  • it has 250 or more staff;
  • it has fewer than 250 staff but has an annual turnover exceeding €50m and a balance sheet exceeding €43m; or
  • it is part of a corporate group which includes an undertaking that meets either of the above criteria.

The timetable

ESOS runs in four year phases – any business/group that meets the above criteria on the qualification date for each phase has to participate in that phase.  The qualification date for Phase 1 is 31 December this year and participants have until fulfil their obligations by 5 December 2015.   All private sector organisations should therefore consider their size and group structure as at the end of this year and then, if they fall within the scope of ESOS, take steps to comply with the new requirements by the deadline.

ESOS obligations

There are four main obligations.  In each phase ESOS participants must:

  • measure all their energy use for a continuous twelve month period;
  • conduct audits covering all their main areas of energy consumption;
  • report the fact that they have complied with the above by the compliance date; and
  • maintain an ESOS evidence pack providing a full record of their compliance.

So far as it is reasonably practicable, an energy audit report must provide recommendations for any cost-effective energy efficiency measures that can be undertaken, and quantify the estimated costs and benefits. There is no compulsion on the business to implement the recommendations but a director or equivalent has to confirm that they have been considered.

ESOS audits have to be (at the least) reviewed by a lead assessor whose name appears on an approved register indicating that he/she is suitably qualified and experienced.  An in-house lead assessor can be used, if available.  The BSI has just published a Publicly Available Specification on the competence of lead energy assessors.

There are alternative routes to compliance which will be relevant, in some circumstances, for businesses that operate certified energy management systems, or have had Green Deal assessments carried out, or Display Energy Certificates issued.  Also, ESOS-compliant audits that have been conducted since 6 December 2011 will count towards the Phase 1 requirements, so it may not be necessary to audit all of a business’s main areas of energy consumption between now and December 2015.

Similarities with CRC

Many of the rules of ESOS bear some similarity with the CRC Energy Efficiency Scheme, which also runs in phases with a qualification date for each phase, but there are important differences.  This is particularly the case in the detailed rules concerning joint ventures, trusts, foreign-owned companies and group disaggregation.  Two important differences that will affect many ESOS participants are that transport energy usage has to be included, but landlords will be pleased to hear that they are not responsible under ESOS for metered supplies to their tenants.

What this means

The Government expects that 9,400 large enterprises will have to comply with ESOS.  Many of these will already be carrying out regular energy audits across the key areas of their business, recognising that improving energy efficiency makes financial sense even in sectors that are not energy-intensive.  For these companies, the burden of compliance should not be too great.  The remainder have until early December next year to do what is necessary.  A good first step is to determine the boundary of the ESOS participant organisation by examining its corporate structure and then gather energy data for a 12 month period, remembering that the rules are different from those applying to the CRC scheme.  A tool such as Sustainability Sure is invaluable for such a task, and it will facilitate sharing the data with the ESOS assessor when the time comes too.

Find out more about Sustainability Sure by contacting +44 (0)844 245 9958 or email