The Energy Savings Opportunity Scheme: are you ready?

The Energy Savings Opportunity Scheme (ESOS) explained.

What is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a compulsory assessment scheme requiring certain organisations and businesses to carry out energy audits to identify energy saving opportunities. These green assessments cover buildings, transport and other areas of a business, such as industrial processes.

Who is affected?

It applies to large UK undertakings and their corporate groups. This can extend to some public sector and not for profit bodies such as universities, depending on how they are funded. Affected organisations are those with:

  • 250 or more employees.
  • Fewer than 250 employees but with an annual turnover exceeding 50 million euro (roughly £37 million) and an annual balance sheet in excess of 43 million euro (approximately £32 million).
  • An overseas company with an established registered office in the UK that has 250 or more UK employees.

An audit is not required where the total energy consumption is covered by a certified ISO50001.

What is involved?

The above organisations will need to carry out an ESOS assessment. This involves:

  • Reviewing energy consumption and completing an audit to identify real energy saving opportunities.
  • Calculating and measuring the organisation’s total energy consumption. 
  • Identifying areas of "significant" energy consumption. "Significant" means activities and assets that amount to at least 90 per cent of an organisation’s total energy consumption. 
  • Notifying the Environment Agency (EA) that the organisation has complied with its ESOS obligations.

Completion of energy audits and the identification of energy saving opportunities across a business must be carried out and reported to the EA by 5 December 2015 and every four years thereafter.

The Environment Agency can waive penalties for late notification provided that organisations notify them by 29 January 2016 and inform the Agency via the online portal before 5 December 2015. The deadline for achieving ISO 50001 has been extended to 30 June 2016.

What are the consequences?

  • One of the above obligations is to identify the cost of an organisation’s energy consumption. While there is no legal requirement to carry out the recommendations in any energy audit, it may well highlight to an organisation’s senior management how much that body is spending on energy, if they are not already aware. Further consideration may therefore be given by organisations to energy saving initiatives. 
  • Non-compliance with ESOS by 5 December 2015 can lead to fines of up to £50,000 with potential additional fines for each day of non-compliance. An organisation’s non-compliance can also be published. 
  • Tenants may need to be gathering information. For example, for multi-let buildings where tenants pay a fixed amount for energy, tenants will need details of their consumption for their specific area.
  • For landlords supplying energy to tenants for example under a lease, if this energy is measured, landlords will not need to include this energy in their ESOS calculation. If it is not measured, landlords will need to include it. Energy provided by landlords to common or shared areas in buildings will need to be included in the assessment.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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