What is Energy Savings Opportunity Scheme (ESOS)?
Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for large organisations in the UK with 250 or more employees or have an annual turnover of more than €50 million and an annual balance sheet total of more than €43 million. Organisations under ESOS regulations have until the end of ESOS phase 3 to notify their compliance to the Environment Agency.
How to Comply with ESOS
ESOS compliance is not the same for all ESOS-qualified organisations, which can be classified into three categories: 1) those with ISO 50001 certification; 2) those with zero energy supplies; and 3) those without ISO 50001 certification and without zero energy supplies.
ISO 50001 Certification
If the organisation’s Energy Management System (EnMS) covers the energy use under ESOS and has been ISO 50001 certified by an accredited certification body, then they need to do the following to comply with ESOS:
- Ask a board level director to review the findings of the ISO 50001 certification and confirm that the organisation is indeed ISO 50001 compliant. The board level director should also state that the information to be included in the notification is correct.
- Notify the Environment Agency that, since the organisation has an ISO 50001 certified EnMS that covers their energy use under ESOS, then they are already compliant with the Energy Savings Opportunity Scheme.
Zero Energy Supplies
Zero energy supplies means that the organisation does not have any physical assets or employees using energy. For organisations that meet this requirement, they still need to comply with ESOS by doing the following:
- Ask a board level director to confirm that the organisation has no energy responsibility.
- Notify the Environment Agency that, since they have zero energy supplies, they are compliant with ESOS.
No ISO 50001 Certification
Organisations that do not have an EnMS, have an EnMS but it is not ISO 50001 certified, or have an ISO 50001 certified EnMS but it does not cover all of the energy use under ESOS, and have no zero energy supplies—they need to comply with ESOS by carrying out an ESOS assessment.
How to Carry Out an ESOS Assessment
Follow the 5 steps below to carry out an ESOS assessment:
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Appoint a Lead Assessor
The lead assessor must be a member of an approved professional body register. If no employee within your organisation is a lead assessor or is willing to be the lead assessor, then you can find an external lead assessor using the online registers of the approved professional bodies.
If you appoint an external lead assessor, a board level director of your organisation has to check and sign the overall ESOS assessment and the recommendations of compliance routes. If you appoint an internal lead assessor, then two board level directors need to do the checking and signing off.
Though the primary responsibility of a lead assessor is to review the ESOS assessment, they can also carry out the ESOS assessment themselves.
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Measure Total Energy Consumption
To measure total energy consumption, you need to ensure that you have verifiable data on the organisation’s energy usage of fuels, heat, electricity, and renewable energy. Verifiable data can include invoices, inventory records, and meter readings. If you do not have verifiable data, you will need to estimate data by using direct comparison, pro-rata extrapolation, or benchmarking.
The reference period for both types of data should be a consecutive 12 months, including December 31, 2022 and ending before December 5, 2023. Once you have sufficient data, calculate total energy consumption in either an energy unit or energy spend in pound sterling. You can use online calculators to measure fuel, heat, and electricity consumption. For renewable energy, you can use the SHARES tool provided by Eurostat, the statistical office of the European Union.
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Identify Areas of Significant Energy Consumption
Areas of significant energy consumption are assets and activities that amount to at least 90% of your total energy consumption. Though you may choose to not identify areas of significant energy consumption, the disadvantage of that choice is that your total energy consumption has to be included in your chosen ESOS compliance routes.
However, if you choose to identify those areas, you can exclude up to 10% of your total energy consumption (known as de minimis energy consumption) from your compliance routes. This up to 10% can be excluded on a group, site, asset/activity, or fuel basis.
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Choose Compliance Routes
There are four ways to show compliance with the Energy Savings Opportunity Scheme:
- ISO 50001 Certification
- Display Energy Certificates (DECs)
- Green Deal Assessments (GDAs)
- ESOS compliant energy audits
If a compliance route covers less than 90% of total energy consumption, then another must be applied to the remaining percentage. For example, if 50% is covered by ISO 5001 certification, you can conduct ESOS compliant energy audits on the 40% not covered by it.
DECs and GDAs can only be part of an ESOS assessment if they have been issued and carried out within the compliance period and are still valid on the compliance date. For ESOS phase 3, the compliance period is December 6, 2019 to December 5, 2023.
To be included in an ESOS assessment, data from an ESOS compliant energy audit must:
- include 12 consecutive months of energy use for an asset or activity;
- start on or after December 6, 2018 (1 year prior to the start of the compliance period);
- start no earlier than 2 years before the audit start date; and
- end on or before December 5, 2023 (the compliance date).
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Confirm ESOS Compliance
Present the findings of the ESOS assessment to a board level director (or two, if an internal lead assessor was appointed) and ask them to confirm the following in writing:
- They have reviewed the recommendations of the ESOS assessment and those of the compliance routes;
- They believe that the organisation is within the scope of ESOS and is compliant with the Energy Savings Opportunity Scheme; and
- They believe that the information provided in the organisation’s notification to the Environment Agency is correct.
Complete your ESOS assessment by notifying the Environment Agency.
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FAQs About ESOS
ESOS is still required for overseas companies that have a UK registered establishment with 250 or more employees and for Higher Education Institutions (HEI) that are large enough to meet ESOS qualification criteria and self-declare as private sector. Not-for-profit corporate bodies (i.e., large charities), universities that are mostly funded by private sources, and care homes not considered as public bodies all need to participate in ESOS, if they meet the qualifications.
To qualify for ESOS, you have to maintain the qualification criteria (either number of employees or annual turnover and balance sheet) for two consecutive accounting periods before December 31, 2022 (the qualification date for the 3rd compliance period or ESOS phase 3). Check the annual financial statements ending on or within the year before the qualification date and calculate the average monthly number of employees for that financial year.
You can also use this ESOS qualification checklist to find out if you’re qualified.
The difference between ESOS and Streamlined Energy Carbon Reporting (SECR) is that ESOS is limited to energy consumption while SECR covers other types of environmental impact including Greenhouse Gas (GHG) emissions, biodiversity/ecosystem services, and energy efficiency actions. ESOS and SECR are completely separate regulations, though their requirements can overlap. In some cases, organisations will have to comply with both ESOS and SECR.
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