At the end of the Energy Savings Opportunity Scheme (ESOS) extended deadline on January 29th 2016, less than 60% of the circa. 10,000 ESOS-eligible businesses in the UK were compliant with the Energy Savings Opportunity Scheme Regulations (2014 No. 1643).
The Environment Agency had received 5,948 notifications of compliance and 1,000 notifications of intent to comply leaving more than 3,000 businesses unaccounted for. Two days before the January deadline, the Environment Agency received 1,015 notifications of compliance in a late compliance surge. This still leaves thousands of organisations at risk of enforcement action.
The maximum penalty for failing to comply with the scheme prior to the deadline is up to £50,000 and then up to £500 for each subsequent working day the organisation remains in breach of the ESOS scheme for a maximum of 80 working days. This type of action is normally only used in the most serious of cases. For the first compliance period (July 2014 to December 2015) and for new entrants in future compliance periods, the Environment Agency would normally allow up to three months to remedy the failure before issuing any fines. The ultimate deadline for compliance is April 29th 2016.
The ESOS scheme aims to provide the private sector with the opportunity to save money by improving energy efficiency. After carrying out an ESOS audit, compliant organisations should now be in possession of data that will allow them to start to accumulate savings in the areas identified by ESOS. It is estimated that the average annual savings on energy costs in the areas identified by ESOS is approximately 20% – this will improve energy efficiency and management.
There are a number of ways to ensure that your organisation gets a maximum return on investment in ESOS:
- Identify and prioritise energy saving opportunities. Your ESOS assessor will have identified these and the opportunities should be found in the evidence pack. There are a few things to consider when choosing which opportunities to implement:
- How would the chosen energy saving opportunity work with other operational priorities?
- Can and how would you monitor and measure the impact?
- Will these opportunities impact profitably on the business and will it help to win more business?
- Will there be an impact on the business’ reputation?
- Your ESOS assessor should also build a business case that the organisation can use to put forward a compelling argument to management for the adoption of the chosen opportunities. This will include an easily understood financial plan for the opportunity, a view of ease of implementation, an assessment of the project’s risks and a breakdown of the additional benefits the project will offer. The level of detail required will depend on the opportunity being implemented. By relating the business case to strategic considerations of the business, companies will be able to define the business need and underline the value of the investment for their organisation.
- Convince the decision makers by selling the benefits generated by implementing the opportunities identified.
- Implement the opportunity in the most cost-effective way. For complex opportunities, the implantation process may require you to do the following:
- Identify suppliers and choose the most suitable
- Choose appropriate equipment
- Find an installer (if necessary)
- Secure finance
- Undertake the installation process
- Adapt processes and conduct training for the appropriate operation of the equipment.
- Monitor and verify the results – organisations should measure and be able to substantiate claimed savings in order to prove the success of the scheme. Organisations should also be mindful about the type of processes and technology they put in place to measure results and ensure that they can report incremental changes and also be able to understand why or why not they are achieving results. This will secure support and funding for future schemes. Organisations will also be able to identify, report and fix any problems early on and track overall performance against objectives.
It is advised that organisations develop a project plan at the outset to help communicate to project stakeholders when they can expect to start to see the benefits outlined in the initial business case and it will also allow the organisation to plan a contingency period in case of any unforeseen delays that may arise. Organisations should also ensure that appropriate due diligence is carried out during the scoping, project planning and procurement stages in order to mitigate any risks that may be encountered.
Implementing the no-cost or low-cost opportunities first will typically help you to achieve ‘quick wins’ that will result in immediate savings for the organisation and stimulate further interest in energy saving initiatives. Most recommendations from the ESOS audit will come under one of the three following categories:
- Behavioural change programmes, e.g. implementing ISO 50001, the energy management system standard. ISO 50001 is a means of compliance and if 70% of the organisation’s total energy is covered and the audits comply with Annex VI of the Directive (2012/27/EU), then organisations will be compliant with ESOS. At the end of 2014, 6,778 organisations had achieved ISO 50001 certification. Achieving this certification will help you to verify that your energy management is best practice and will also help towards future ESOS compliance.
- Implementing low/no cost technical improvements, these could include any of the following:
- Heat Recovery
- Leak detection
- Space heater controls
- Review and monitoring of water and energy billing and associated charges
- Capex projects – this may include the new /replacement/modification of the plant. For example, introduction of renewables, on-site generation or off-grid solutions.
Implementing recommendations from the ESOS audit will start your organisation on the road to becoming more energy efficient, which will garner more benefits for the organisation in the long run.