So, you have heard that organisations are required to prepare an mandatory ESOS and that companies and Limited Liability Partnerships are required to have an energy audit.
It can be difficult to understand the ESOS requirements, so this article has the key answers to take away some of that complexity by helping you to understand the supporting legislation and guidance, who are required to report, what does it consist of & how can you complete your ESOS compliance and notification process.
So, lets take a brief look at what legislation support the Energy Saving Opportunities Scheme, who is required to comply with its requirements, what is required including the notification process, who are the regulators & what can we expect in Phase 3 of ESOS later this year.
Supporting Legislation
First, what is the legislation requires the audit and reporting of energy usage including energy savings opportunities.
The Energy Savings Opportunity Scheme is required under The Energy Savings Opportunity Scheme Regulations 2014.
The original Regulation has been amended by two further Regulations: The Energy Savings Opportunity Scheme (Amendment) Regulations 2015, which corrects some correct drafting errors in the original 2014 Regulations.
The Energy Savings Opportunity Scheme (Amendment) (EU Exit) Regulations 2018, which address failures in retained EU law to operate effectively arising from the withdrawal of the UK from the European Union, such as the use of ISO 50001:2018 and the Euro thresholds used in the original 2014 Regulations.
Who is required to comply with ESOS Regulations?
This ESOS Regulations applies to all large Limited Liability Partnerships (LLP) and large companies.
Here, it is important to understand, what is meant by “large” for companies and LLPs.
The reference Qualification Date for the current Phase 3 is 31 December 2022, which is the date for determining whether you meet one of the above criteria on or in the prior-12 months and will need to comply with the ESOS requirements.
Additionally, any company required to comply with the ESOS Regulations within a corporate group is likely to render all the UK-registered companies as being required to comply with the ESOS Regulations.
Currently, there have been just under 8,000 organisations that participated in ESOS during Phase 2 between 2015 and 2019.
What is required?
A typical process for completing a compliant ESOS energy Audit would be to measure your total energy consumption and identify areas of significant energy consumption.
The choice of the available routes to compliance should be considered, which I will deal with shortly, and these must include the areas of significant energy consumption are covered within the chosen route to compliance followed by appointing an ESOS Lead Assessor, which can be an internal or external person. The resultant ESOS Report and findings is required to be reviewed by one or more board level directors (or for LLPs, by a Partner) followed by a notification of ESOS compliance online.
In terms of choosing a route to compliance, there are four options, through accredited ISO 50001:2018 certification, Display Energy Certificates (DECs), Green Deal Assessments (GDAs) or an ESOS compliant energy audit completed by a qualified ESOS Lead Assessor.
In the case of the accredited ISO 50001:2018 certification, Display Energy Certificates (DECs) and Green Deal Assessments (GDAs), they must cover all the organisation’s energy use otherwise an ESOS compliant energy audit is required to cover the remaining energy use.
A compliant ESOS energy audit will require the determination of the total and significant energy consumption (SEC) and the identification or energy savings opportunity
What must be reported?
So, what must be reported.
The Environment Agency as the UK Scheme Administrator for ESOS provide a portal for entering the notification to confirm compliance with the ESOS Requirements.
The notification does not require any specific details to be submitted. So, for example for the compliant ESOS energy audit route, it is not a requirement to submit the significant energy consumption or energy saving opportunities or for the ISO 50001 certification, details from the certification body’s audits or the certificate.
Additionally, there are optional questions to assist the Environment Agency to understand the operation of the ESOS Regulations.
The notification must be submitted to the Environment Agency by the deadline specified for each specific phase. Currently, for Phase 3 covering the compliance period from 6 December 2019 to 5 December 2023, the Compliance Date, the final date for the notification to be submitted, is 5 December 2023.
Who regulates the ESOS Regulations?
The Environment Agency acts as the UK Scheme Administrator for the ESOS Regulations and is responsible for guidance, communications, helpdesk and collection of notifications of compliance throughout the UK.
The regulators are individually responsible for checking compliance and enforcement activities in relation to qualifying participants based on the location of the organisation’s registered office.
If you need more information, the Environment Agency has published its online guidance on “Complying with the Energy Savings Opportunity Scheme”, which provides information on the routes to compliance with specific emphasis on the compliant ESOS energy audit process.
And the future…
The most anticipated difference between Phase 2 and Phase 3 may not be in the requirements themselves, but how they are enforced. A number of organisations received enforcement notices for non-compliance with Phase 2 were offered an extension, in recognition of COVID-19 impact. By the end of 2023, it is hoped that UK businesses will no longer be struggling as a result of the pandemic, and this may mean stricter enforcement of the deadlines.
However, bigger changes may be a foot with the UK Government, already consulting with business in Autumn 2021 on the incorporation of carbon emissions as a reporting requirement and for the energy savings opportunities to incorporate the carbon savings as well.
The outcome of the UK Government’s consultation is not known at the time of the video in April 2022 but it is anticipated that the results and any changes to the ESOS Regulations would take place within the next six months to allow organisations to take the new requirements into account in their preparation for their compliance with the ESOS Phase 3 requirements.
If you want more direct support and help in developing, preparing, and completing your ESOS Energy Audit as well as submitting your ESOS Notification to the Environment Agency, our environmental and sustainability consultancy, onePlanet Solutions has been tracking its development and, already guided and supported over ten companies through the ESOS process including a track record in preparing and notification of ESOS Energy Audits and Assessments. If you need this direct guidance and assistance, please contact us for our SECR services, which are delivered with independence, integrity and confidentially.
I hope that this episode has given you an insight into the requirements of the ESOS Regulations and how they may apply to your organisation. Any questions on this article, please leave a comment below.
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