First launched in 2014, the Energy Savings Opportunity Scheme (ESOS) is a government initiative designed to encourage organisations to engage with energy efficiency measures. The scheme is administered by the Environment Agency and is mandatory to organisations in the UK that meet qualification criteria.
The scheme operates in phases that each last four years – if your organisation qualifies, then you must carry out ESOS assessments every four years. The deadline to submit your notification of compliance for ESOS Phase 3 is 5th June 2024.
The assessment is an audit of the energy used by your organisation’s buildings, industrial processes and transport. The overarching purpose of the ESOS audit is to help pinpoint more cost-effective measures to save energy and achieve carbon and cost savings, significantly benefiting your organisation in the long run.
How do I know if my organisation qualifies for ESOS?
If your organisation met the below definition of a large UK undertaking on 31 December 2022, then it qualifies for ESOS and you must carry out the assessment:
For Phase 3, a large undertaking is defined as, any UK company that either:
- employs 250 or more people, or
- has an annual turnover in excess of £44 million, and an annual balance sheet total in excess of £38 million.
It’s also important to note that corporate groups qualify for ESOS if at least one UK group member meets the definition of a large undertaking. In this instance, the highest UK parent typically acts as the ‘responsible undertaking’, ensuring that the group complies. The group can, of course, agree for one of the other organisations within the group to take on this role.
There is further guidance about qualification requirements, should your organisation fall very close to the threshold or have undergone significant changes in size in recent years.
If your organisation is the UK establishment of an overseas company, then you will need to take part, should any other part of the global corporate group activities in the UK meet ESOS qualifying criteria.
What does ESOS reporting entail?
The government outlines five key steps to follow when submitting your ESOS assessment:
1. Calculate your total energy consumption
This is the total energy used by assets held or activities carried out by your organisation or group, including the energy consumed by all buildings, industrial processes and transport used.
2. Identify your areas of significant energy consumption
This refers to the energy used by assets held, or activities carried out by your organisation, accounting for at least 95% of your total energy consumption. To do this, you will need to:
- Find out whether ISO 50001 (Energy Management System Certification), DECs (Display Energy Certificate) or GDAs (Green Deal Advice) cover any of your areas of significant energy consumption.
- Identify whether ESOS-compliant energy audits have been, or need to be, carried out for the areas of significant energy consumption not covered by ISO 50001, some by DECs or GDAs.
You can use a mix of these approaches (ESOS energy audit, ISO 50001, DECs, or GDAs), as long as 95% of your total energy consumption is covered.
3. Appoint a lead assessor
Your ESOS assessment must be signed off by an ESOS lead assessor. Your organisation is responsible for selecting a lead assessor with the necessary skills and experience to help your business comply with ESOS. There are a number of government-approved assessors, who you could work with:
- Association of Energy Engineers
- The Chartered Institution of Building Service Engineers
- Elmhurst Energy Systems
- Energy Institute
- Energy Managers Association
- Institution of Chemical Engineers
- Institute of Environmental Management and Assessment
4. Notify the Environment Agency
Once you have completed the ESOS assessment and ensured your organisation’s compliance with obligations, you must submit a notification of compliance using the online system, when it goes live. In the notification, you will include details about your organisation, how it has complied with ESOS, energy consumption information, and any opportunities for energy saving that arose. You can find a full checklist of the information required by the Environment Agency here.
5. Keep records
Keep an evidence pack of how your organisation has complied with ESOS. This is a vital step in proving your compliance and truly backing up your notification to the Environment Agency. Our team will work alongside you to ensure that your records are up-to-date and accurate.
When do I need to complete my ESOS assessment?
The deadline to submit your notification of compliance has been extended from 5th December 2023, to 5th June 2024 – the qualification thresholds and dates remain the same (organisations classed as large undertakings on 31st December 2022).
We want to help our clients meet their ESOS reporting obligations in a timely and efficient manner – for a discussion around the requirements, please do not hesitate to reach out to our team!