The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment and energy saving identification scheme for large undertakings (and their corporate groups).
Your business will be affected, if on the 31st December 2022 you meet either one or both of the conditions below:
- You employ 250 people or more
- You have an annual turnover greater than £44m and a balance sheet exceeding £38m
- You are part of a corporate group which includes a UK based large undertaking
Key ESOS Requirements:
- You need to measure your total energy consumption.
- Conduct a proportionate number of energy audits to identify cost effective energy efficiency recommendations.
- Report compliance to the Environment Agency.
Who is exempt from ESOS?
- SME’s, franchisees and public sector bodies are not required to participate in ESOS, however they could still benefit from voluntarily meeting the ESOS requirements.
What does an Energy Audit include?
- You will need to consider your organisations entire energy usage – buildings, transport and both industrial and commercial processes.
- Once the overall energy consumption has been identified, 10% (de minimis) can be excluded*.
- You can demonstrate you’ve made a compliant ESOS assessment using, ISO150001, DEC’s, Green Deal Assessments, ESOS energy audit.
- An ESOS audit must be carried out or overseen by a recognised Lead Assessor and reviewed by a board level Director.
*subject to change – see below
Is there a deadline?
- Yes, for the 3rd Compliance Period audits and ESOS activity needs to be completed by 5th December 2023.
Is the Scheme Enforced?
- Yes, there are various penalties that can be applied.
- Depending upon the type of breach these can range from defaulting companies being publicly listed, through fixed penalties ranging from £5,000 to £50,000, with a further £500/ day for late submissions.
What are the benefits of ESOS?
- Identify cost effective energy savings
- Reduce carbon emissions
- Enhance profitability and competitiveness
Further to a recent consultation conducted by BEIS on ‘Strengthening the Energy Savings Opportunity Scheme’, please see below proposed changes to the scheme:
- a standardised template for including compliance information in the ESOS report, generally comprising ESOS information the participant should already have available
- the reduction of the 10% de minimis exemption to up to 5%
- the addition of an energy intensity metric in ESOS reports
- requirement to share ESOS reports with subsidiaries
- requirement for ESOS reports to provide more information on next steps for implementing recommendations
- requirement for participants to set a target or action plan following the Phase 3 compliance deadline, on which they will be required to report against for Phase 4
- collection of additional data for compliance monitoring and enforcement
The document also sets out a summary of feedback received on 2 further options, which will inform developments in future phases:
- extending the scope of the scheme to include medium-sized businesses, not already part of a corporate group containing a large business
- mandating action on audit recommendations
The above is subject to the necessary Parliamentary scrutiny and scheduling including seeking views from the devolved administrations.