ESOS audit and net zero - npower Business Solutions

Following a consultation looking at ways to strengthen the Energy Savings Opportunity Scheme (ESOS) last year, the Department for Business, Energy & Industrial Strategy (BEIS) has finally published its response.

It contains new criteria that will impact the many thousands of UK businesses who have to participate in the mandatory Energy Savings Opportunity Scheme (ESOS).

The aim is to make ESOS a more effective tool to support companies in reducing both energy and carbon emissions while working towards the UK’s net zero goals.

With the deadline for Phase 3 of ESOS fast approaching, this could mean that some companies who’ve already started data gathering or energy audits will need to make some changes to comply (of which more below).

Others will need to be aware of the rule changes before they start the process to ensure their ESOS submission meets the new requirements.

However, the more major amendments will not come into force until Phase 4 (2026).

What’s changing now?

Although a number of changes to ESOS will be introduced for Phase 3, the detail for some is yet to be released.

According to BEIS: “We expect to provide guidance to allow adequate time for implementation of any new requirements coming into force for Phase 3, subject to the timing of parliamentary scrutiny.”

What we know is as follows:

• Reporting is to become standardised to help improve the audit quality, via the use of a new ESOS template. BEIS says it will produce this with stakeholder input and will then make it available “in time to allow participants to make the necessary changes to reporting”.
• The de minimis exemption is to reduce from 10% to 5% of total energy consumption, to help participants “realise more significant energy saving benefits from areas of the organisation that may not previously have been considered”.
• Where available, analysis using half-hourly energy data should now be included in reporting.
• Reporting will also need to include an overall energy intensity metric within the overview section – so we’re looking at kWh/m2 for buildings, kWh/unit output for industry, and kWh/miles travelled for transport.
• And there will be a requirement for further data to be collected for the purpose of compliance monitoring and enforcement, although the exact details are yet to be confirmed.• Participants also need to generate a target or action plan to be submitted after Phase 3, which they will then be required to report on during Phase 4.
• Finally, mandatory thresholds will be introduced for site sampling. And while guidance on this will be provided for Phase 3 audits, compulsory implementation will be delayed until Phase 4 (more on this below).

BEIS acknowledges that for companies who’ve already started work on ESOS, these changes may mean some reports need to be “redrafted to meet revised requirements”. But it says: “we do not expect this to be a significant undertaking”. Let’s hope they are correct.

Changes to come for Phase 4

The plan is to reframe the next Phase 4 of ESOS to include a greater net zero focus. This could include a requirement to identify emission reduction trajectories as well as potential risks to organisations in moving to net zero.

This means that ESOS Assessors will need to have experience not only in energy audits and reporting but also in carbon reduction strategies.

So far, BEIS has indicated that Phase 4 will also include:

• More rigorous site sampling which is likely to include a minimum threshold for both the number of buildings audited and the percentage of total energy consumption sampled.
• Reports that meet either ISO 50002 or EN 16247 auditing standards (currently this is only recommended for Phase 3).
• Display Energy Certificates (DEC) and Green Deal Assessments will be removed as a route to compliance.
• For organisations that do not also have to comply with Streamlined Energy and Carbon Reporting (SECR), a reporting function on the ESOS web portal will be developed to allow for annual progress reporting. This will include a requirement to explain why any identified energy-saving goals have not been met.
• ESOS qualification criteria will align with the balance sheet and turnover thresholds of SECR, so widening the scheme to apply to more organisations.
• As with SECR, it will become mandatory for data such as minimum energy or carbon reduction targets and net zero assessments to be made public.
• There is the potential to ensure ESOS Lead Assessors are appropriately skilled and monitored. But it’s not clear yet if this will be implemented.

Requirement to appoint an ESOS Lead Assessor

As for all ESOS submissions, businesses need to appoint an ESOS Lead Assessor to review data, energy audit results, and final ESOS assessment, and sign it all off.*

Even if you’ve done it before, complying with ESOS can be time-consuming for whoever’s charged with the task. Even more so now with these changes.

If you need help, as qualified ESOS Lead Assessors with energy and carbon-saving experience, our team at E.ON Control Solutions can fulfill any one or all ESOS requirements on your behalf.

This includes analysing all the necessary consumption data for your buildings, industrial processes, and your business transport; conducting on-site audits to identify energy savings, and then producing and verifying your ESOS assessment and final report.

As for every ESOS participant, you will still have to ensure a board member reviews and signs off your final submission.

Turning recommendations into savings

To really ensure you make the most of this opportunity, we can also advise on the actual implementation of the energy saving measures identified – including the likely cost/consumption/carbon savings as well as return on any significant investment (e.g. a new Building Energy Management System, LED lighting upgrade or the installation of onsite generation).

This will also support the new reporting requirements for Phase 4.

If you’d like to know more or have any questions about ESOS, do get in touch by emailing national.sales@eon-controls.com. But please don’t leave it to the last minute – our ESOS Assessors are already busy and will find it harder to accommodate requests as we get closer to the submission deadline.

Quick ESOS recap

Finally, in case you need it, here is a quick overview of the ESOS basics:

• Most large enterprises now have to comply with ESOS.
• The current qualification criteria covers organisations employing 250 or more UK-based employees – or having an annual turnover exceeding €50-million sterling equivalent and an annual balance sheet exceeding €43-million. But this will change for the next phase (Phase 4).
• The Phase 3 'qualification' date (i.e. determining if your organisation meets the criteria) is 31 December 2022.
• Participating companies then have to present 12 months of data (which must include the 31 December qualification date) and the final ESOS report has to be submitted by 5 December 2023.
• For any company that’s already participated in ESOS phase 1 and/or 2, using the same timescale as previous years makes the most sense.

*Unless you have an ISO 50001-certified Energy Management System in place at the compliance date. More on this here

Read our essential guide to net zero funding to find out more about how npower Business Solutions explores renewable funding opportunities and green energy grants to help your business take its next steps towards net zero.