The qualification date for phase 3 of the Energy Savings Opportunity Scheme (ESOS) is 31 December 2022 and for now, the criteria are the same as for previous phases.
That means if your business employs more than 250 people or has an annual turnover in excess of £44 million, you must participate in ESOS. This involves completing an ESOS assessment, unless your organisation is fully covered by ISO 50001.
Time to start phase 3 audits
The advice for businesses that will comply with phase 3 is to begin the process of auditing now. There is no need to wait for the qualification date, giving you plenty of time to fulfil your obligations ahead of the 5 December 2023 deadline. By acting now, participating businesses will also be contributing to the UK’s net zero commitment through reducing emissions.
Feedback from phase 2
The Environment Agency – the regulator for ESOS – hopes that by encouraging early take-up of auditing and energy-saving assessments for phase 3, it will avoid some of the problems seen during phase 2.
The regulator is currently carrying out an audit of phase 2 evidence packs. To date, only 32% of evidence packs have been fully compliant, with 5% being non-compliant. The remaining 63% are only partially compliant and require some level of remedial action.
The areas requiring remedial action identified from this audit include:
- Organisation structure – businesses need to ensure they include all subsidiary or parent company sites and data in their submissions.
- Total energy consumption and significant areas of energy – all sources of energy consumption need to be calculated, including energy used in buildings, assets and transport. Those parts of the business responsible for more than 90% of total energy consumption must be identified as significant areas of energy use.
- Sampling approach and quality of ESOS energy audit – a suitable sampling method needs to be adopted for site surveys. Surveys are required for areas of the business consuming more than 90% of energy, but not every site or vehicle needs to be surveyed. Representative sites can be used, and energy consumption extrapolated for all other sites in the same category.
- Energy saving opportunities – specific opportunities for energy saving, such as upgrading lighting to LED or replacing boilers, need to be identified, costed and reported in the format set out by the Environment Agency.
Consultation aims to strengthen the scheme
Significant changes may be on the way for phase 3 of ESOS, which could see the scheme extended to include medium-sized enterprises, as well as introducing net zero carbon assessments into the audits to drive decarbonisation activity.
The consultation is ongoing and will be open until 28 September 2021. Contributions to the consultation are welcome, focusing on a number of proposals for strengthening the scheme.
As well as widening the qualification criteria and improving the quality of reporting, the proposals include looking at ways to ensure ESOS recommendations are consistent with the UK’s net zero commitments. This could mean introducing plans and targets that will support participants in meeting their carbon reduction goals, encouraging them to look at longer term strategic considerations for investment in plant, buildings and equipment to lower carbon emissions and considering how their operations need to change in order to become net zero. Net zero benchmarks and trajectories are also being considered for organisations to track their performance.
Other potential changes being considered as part of the consultation include requiring participants to publicly disclose their high-level recommendations and mandating that energy-saving recommendations are implemented.
Ready to deliver a new-look ESOS
The audits and assessments required to achieve ESOS compliance provide a valuable opportunity for businesses to gather data and insights on energy and carbon performance. Our advice is to view ESOS compliance not as simply a tick-box exercise, but as an opportunity to identify and implement effective measures to reduce energy use, costs and carbon emissions – and create the foundations for a deliverable net zero carbon roadmap.
As an experienced lead assessor for ESOS, ENGIE can fulfil all of the auditing requirements, as well as providing the expertise and resources needed to implement any energy-saving measures identified. Not only that, ENGIE also offers all the net zero targeting and assessment expertise required to fulfil any new carbon-saving measures that may be introduced following the consultation.
If you would like to respond to the ESOS consultation and its proposals, please visit https://www.gov.uk/government/consultations/strengthening-the-energy-savings-opportunity-scheme-esos
For more information about the ESOS auditing, energy-saving or net zero carbon services offered by ENGIE, please visit engie.co.uk/esos or contact [email protected]