Esos - Energy savings opportunity scheme

1. Energy Savings Opportunity Scheme
(ESOS)
Understanding, Implementing and
Complying with ESOS
Jo Scully – Environment Agency ESOS Project Manager
Facilities Management and Property Summit – Global Business Events
Celtic Manor, Newport. 30 April 2015

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What is ESOS?
Energy Savings Opportunity Scheme (ESOS)
New UK regulation to comply with Article 8 (4) of the
European Energy Efficiency Directive
Requires all large undertakings in the UK to do energy
efficiency audits by 5 December 2015 and thereafter at
least once every four years
~10,000 UK organisations

3. Key Dates
Qualification Date 31/12/14
Don’t need to register or tell us you qualify
Compliance Date 05/12/2015
Tell us you have complied online via webpage
And every 4 years thereafter
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4. 4
What are ‘large undertakings’?
Large undertaking is organisation that is:
 Registered in the UK and
 has at least 250 employees; or
 has an annual turnover in excess of 50 million euro
(£38,937,777), and an annual balance sheet total in excess
of 43 million euro (£33,486,489)
 An overseas company with a UK registered
establishment which has 250 or more UK
employees (paying income tax in the UK)
 Is part of a corporate group which includes an
undertaking which meets the above criteria

5. Employees
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Employees = anyone with a contract of employment
regardless of hours
find the number of persons employed under contracts of service by the
company for each month of the financial year (whether for the whole month
or part of it)
add together the monthly totals
divide by the number of months in the financial year
It’s not the number on the 31 Dec, it’s the number based
on the average for the accounts ending on or in the 12
months preceding that date.

6. Balance Sheet Total
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“The aggregate of the amounts shown as
assets in the company’s balance sheet”
(that is before deducting both current and
long-term liabilities).
Where an undertaking is not required under the Companies Act 2006 to produce
individual accounts they must estimate the annual turnover and annual balance
sheet total for the undertaking for a 12 month period including the qualification
date, to determine their balance sheet total.
From accounts required under Section 394
or 395 of the Companies Act 2006 (Duty to
prepare individual accounts or Individual
Accounts: application accounting
framework)

7. Organisational Status
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“Where, in any accounting period, an undertaking is a large
undertaking (or a small or medium undertaking), it retains that
status until it falls within the definition of a small or medium
undertaking (or a large undertaking, as the case may be) for
two consecutive accounting periods.”
2010 2011 2012 2013 2014 In ESOS?
Company A Over threshold
   No
Under
threshold  
Company B Over threshold
   Yes
Under
threshold  

8. Disaggregation and aggregation
Groups can allow subsidiaries (or groups of
subsidiaries) to participate separately
‘disaggregate’
Keep written agreement
More than 1 highest UK parent = separate
participants
Unless they choose to participate together ‘aggregate’
Keep written agreement
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9. Who isn’t in ESOS
Organisations subject to insolvency procedures
Organisations defined as a contracting authority
in the Public Contracts Regulations 2006
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10. 10
Requirements
1. Conduct ESOS assessment
 Where not fully covered by ISO50001 certification
1. Conduct energy audits
 Where not covered by ISO50001 certification, Green Deal
Assessments (GDAs) or Display Energy Certificates (DECs)
(partial or full coverage)
1. Identify energy savings opportunities
2. Use a lead assessor to either do or review points 1 to 3 above
(unless fully covered by ISO50001)
3. Get a director to sign off that they have seen the recommendations
of the work
4. Notify the Environment Agency of ESOS compliance

11. 1. Conduct an ESOS assessment
Identify total energy consumption (buildings, installations, transport)
Common units (either cost or energy measurement unit)
For a 12 month reference period covering the qualification date
90% of your total energy consumption = Areas of Significant Energy
Consumption
Determine coverage by ISO50001, GDAs, DECs, existing audits
which meet the ESOS criteria
Determine additional ESOS audits that need to be undertaken prior to
5/12/2015
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12. 2. Conduct ESOS audits
Compliant audits:
Use12 months’ verifiable data
Analyse your energy consumption and energy efficiency
Identify practicable ways in which you can improve energy efficiency
Recommend cost effective ‘energy saving opportunities’
Identify the estimated costs and benefits of the ‘energy saving
opportunities’ recommended
Where 12 months data is not used or consumption profiling is not
undertaken justification must be provided.
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13. 3. Identifying savings opportunities
from ESOS audits
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Use life-cycle cost analysis to determine cost
effectiveness rather than simple pay back
period where possible
Identify recommendations within your control
No requirement in the regulations to
implement the identified savings

14. 4. ESOS Lead assessors
Individuals that belong to an ‘approved
register’ = lead assessors
Approved bodies/registers on ESOS webpage
Lead assessors can be internal or external
Lead assessor reviews the assessment
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15. 5. Director Sign off
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Show recommendations of the assessment to
a board level director
2 directors if lead assessor is internal
No specific format required
Director confirms they have reviewed the
findings

16. 6. Notifying the EA
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Online notification form accessed from ESOS
page on GOV.UK
Provide basic organisation details – not
energy data or improvements identified
Needs to be submitted by 5 Dec 2015 to be
compliant.

17. Keep an evidence pack
Cost Effective Energy Savings Opportunities
Identified
Details of your ESOS assessment and audits
(where applicable)
Certifications for alternative compliance routes
Details of any areas where you are not fully
compliant with the rules
Record of your lead assessor review and director
sign off17
There is no
prescribed
format for this

18. Site visits
It is not necessary to visit every site.
Regardless of the number of site visits,
organisations need to ensure they have
collected and analysed data for all their areas
of significant energy consumption.
% of site visits required is not prescribed in
legislation or guidance; it is up to your
organisation and lead assessor to agree what
is appropriate for your organisation.
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20. ESOS WEBPAGE:
https://www.gov.uk/energy-savings-opportunity-scheme-esos
ESOS Guidance:
https://www.gov.uk/government/uploads/system/uploads/attachmen
ESOS Regulations:
http://www.legislation.gov.uk/uksi/2014/1643/contents/made
ESOS Helpdesk
esos@environment-agency.gov.uk
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21. Further Detail on ESOS

22. Changes to structure after
qualification
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Changes to organisation size/structure etc after the
qualification date do not affect qualification.
Once you are in you are in for the compliance period
Any organisation sold by a qualifying organisation
between 31 Dec 2014 and 5 Dec 2015 needs to comply
with ESOS (either with old owner, new owner or on its
own)

23. Trust Provisions
Supply contract agreement is crucial to the
determination of whether the trust assets
are in ESOS.
Is the supply contract with an undertaking
that qualifies for ESOS?
Yes – the asset supplies will be in ESOS (see the
guidance)
No – the asset supplies will not be in ESOS.
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24. Data time periods
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Total energy consumption data
12 months data covering 31/12/14
Supplies for all assets covering a specified 12 month period
Can use £ or common energy unit
Purpose: To determine which assets will need to be covered by audits or
alternative routes to compliance
Data for audits
12 months data starting from as far back as 6 Dec 2010
Audits can have been undertaken between 6 Dec 2011 and 5 Dec 2015
Assets don’t need to have been audited at the same time
begin no more than 24 months before the start of the energy audit
Use energy units for analysis
Purpose: To determine energy savings opportunities

25. Areas of significant energy
consumption and audits
Flexibility about which energy is in the 90%
Could exclude all of one fuel type; or
Certain assets/activities; or
A combination
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26. Verifiable data
Data you can prove
Invoices, meter readings, stock records, AMR readings
If you can’t obtain verifiable data of energy
use or spend you should:
explain why in your evidence pack
use a reasonable estimate derived through calculation
(based on other verifiable data, if possible), and show
how you got this figure
keep records in your evidence pack
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27. Alternative compliance routes
DEC/GDA/ISO 50001 coverage mean that
you don’t have to meet articles 26 and 27 of
the regs
Energy use covered by one of these three schemes is
fully compliant
You don’t have to do a cost benefit analysis for the
energy saving opportunities for that energy use (great if
you want to though!)
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28. Unconsumed supplies
Unconsumed supply rule can apply if
Energy is supplied by a participant to another organisation
The energy can be measured or reasonably estimated.
Ultimately we want the organisation with the
control of the energy look for energy saving
opportunities
Doesn’t matter who does the audit as long as it
covers all ESOS supplies
– (i.e. 2 or more qualifying participants could be compliant using
the same audit. They just reference the energy saving
opportunities relevant to them in their evidence pack)
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29. Transport
Should include fuel used in:
company cars on business use
fleet vehicles which you operate on business use
personal cars on business use
private jets, fleet aircraft, trains, ships, or drilling platforms which you
operate
Fuel not included:
Fuel associated with train travel/flights/taxi journeys of your
employees where you do not operate the train/aircraft/taxi
Fuel associated with transportation of goods where you subcontract a
firm or self employed individual to undertake this work for you (this
fuel would be included in the subcontractor's total energy
consumption calculation if they have qualified).
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30. Lead Assessors
If you are an energy manager we would
encourage you to become a lead assessor
Lead assessors must review participant’s
ESOS compliance
Participant is liable for compliance
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Non-compliance ESOS Regulation Penalties
Failure to notify Regulation 43 A fixed penalty of up to £5,000
An additional £500 for each working day starting on the day after service of the
penalty notice until the notification is completed, subject to a maximum of 80 days
Publication
Failure to maintain
records
Regulation 44 A fixed penalty of up to £5,000
The cost to the compliance body for undertaking sufficient auditing activity to confirm
that an organisation has complied with ESOS
Publication
The penalty notice may specify steps to remedy the breach.
Failure to undertake an
energy audit
Regulation 45 A fixed penalty of up to £50,000
An additional £500 for each working day starting on the day after service of the
compliance notice, until the breach is remedied, subject to a maximum of 80 days
Publication
The penalty notice may specify a requirement to undertake an ESOS Assessment.
Failure to comply with a
compliance notice, an
enforcement notice or a
penalty notice
Regulation 46 A fixed penalty of up to £5,000
An additional £500 for each working day starting on the day after service of the
penalty notice, until the breach is remedied, subject to a maximum of 80 days
Publication
False or misleading
statement
Regulation 47 A fixed penalty of up to £50,000
Publication