Energy

Energy Savings Opportunity Scheme (ESOS)

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK. ESOS compliance applies to large UK undertakings and their corporate groups that meet the qualification criteria. Large organisations are required to assess and report their energy usage every 4 years as well as to find ways to reduce their energy consumption. ESOS has now entered Phase 3 after the successful completion of ESOS Phases 1 & 2; UK businesses have until December 2023 to comply with ESOS Phase 3. The UK government estimates that the benefit of ESOS compliance to the UK after Phases 1 & 2 is approximately £1.6 billion.

Who must comply with ESOS?

A company must comply with ESOS if their organisation or any UK undertakings within their organisation group qualifies as a ‘large undertaking’ on the qualification date (31st December 2022).

A ‘large undertaking’ is defined as any UK undertaking that meets either one or more of the conditions below:

  • It employs 250 or more people
  • It has an annual turnover in excess of £44m and an annual balance sheet total in excess of £38m
  • An overseas (non-UK registered) company with over 250 employees in the UK

A company must also take part in ESOS if their undertaking is part of a worldwide corporate group which includes another UK undertaking that meets the above conditions.

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Deadlines for ESOS Compliance

Organisations that qualify for ESOS must carry out energy assessments every 4 years. These assessments are audits of the energy used by a company’s buildings, industrial processes, and transport to identify cost-effective energy-saving measures.

Key Dates:

  • The deadline for the third compliance period (ESOS Phase 3) is the 5th of December 2023.
  • The qualification date for the third compliance period is 31st December 2022.
  • The four-year compliance phase runs from the 6th of December 2019 – the 5th of December 2023.

Organisations must notify the Environment Agency by a set deadline that they have complied with their ESOS obligations

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Deadlines for ESOS Compliance

Organisations that qualify for ESOS must carry out energy assessments every 4 years. These assessments are audits of the energy used by a company’s buildings, industrial processes, and transport to identify cost-effective energy-saving measures.

Key Dates:

  • The deadline for the third compliance period (ESOS Phase 3) is the 5th of December 2023.
  • The qualification date for the third compliance period is 31st December 2022.
  • The four-year compliance phase runs from the 6th of December 2019 – the 5th of December 2023.

Organisations must notify the Environment Agency by a set deadline that they have complied with their ESOS obligations

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ESOS Assessment

Understanding the energy expenditure profile associated with your company’s operations provides you with substantial insight into efficiency optimization opportunities.

Meeting mandated compliance will highlight potential areas of improvement within your organisation both in terms of energy efficiency development as well as carbon mitigation. Mandatory on-site audits enable McGrady Clarke to evaluate costed and non-costed recommendations that can result in potential monetary and energy savings. These audits enable our consultants to evaluate the Scope 1 and Scope 2 emissions associated with your company’s operations, creating opportunities for the implementation of wider Net Zero strategies.

McGrady Clarke is a 360° solutions provider able to deliver energy and carbon-saving projects alongside our network of partners. Our team of project managers and energy specialists will support your company at every stage, from initial feasibility to deployment of solutions. By providing these solutions, we deliver the maximum results in the ESOS process.

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Our ESOS Process

We will follow the process below:

Data Assimilation

  • Evaluate the suitability of data selected for continuous 12 months’ total energy consumption.
  • Carry out site audits to gain the necessary knowledge of significant energy consumption profiles and the different ways in which energy is used in operational activities.
  • Identify reasonably practicable and cost-effective energy-saving opportunities.
  • Liaise with relevant individuals to gain an understanding of key processes, systems, and controls in place over the preparation of selected data.

Data Verification

  • Perform energy unit conversion factor calculations for output accuracy.
  • Liaise with respective energy suppliers to verify the 12-months energy consumption data.
  • Calculation of energy used by activities that account for at least 90% of total energy consumption.
  • Perform analytical reviews of potential energy-saving opportunities.
  • Assess the cost-effectiveness of potential energy-saving opportunities by comparing the reduction in energy spent and the cost of implementing the measure.

Our ESOS Process

We will follow the process below:

Data Assimilation

  • Evaluate the suitability of data selected for continuous 12 months’ total energy consumption.
  • Carry out site audits to gain the necessary knowledge of significant energy consumption profiles and the different ways in which energy is used in operational activities.
  • Identify reasonably practicable and cost-effective energy-saving opportunities.
  • Liaise with relevant individuals to gain an understanding of key processes, systems, and controls in place over the preparation of selected data.

Data Verification

  • Perform energy unit conversion factor calculations for output accuracy.
  • Liaise with respective energy suppliers to verify the 12-months energy consumption data.
  • Calculation of energy used by activities that account for at least 90% of total energy consumption.
  • Perform analytical reviews of potential energy-saving opportunities.
  • Assess the cost-effectiveness of potential energy-saving opportunities by comparing the reduction in energy spent and the cost of implementing the measure.

Report Generation

  • Compile analysed data, significant energy consumers and energy saving opportunities into a tangible report.
  • Provide an evidence pack that outlines the methodologies and data used for the calculation of significant energy consumers.

Notification of Compliance

  • On completion of the ESOS assessment, it is signed off by an ESOS lead assessor. The Environment Agency is then notified of the compliance.

Delivery of Solutions

  • Our ESOS project managers work with clients to deliver energy-saving projects. This ensures you gain the most benefit from using a consultant during the ESOS process.
FAQ's

How does the scheme work?

The ESOS assessment must cover all of an organisation’s UK operations over a twelve-month period. It requires participants to do the following:

  1. Measure total energy consumption across buildings, transport, and industrial activities.
  2. Conduct the following energy audits to identify cost-effective energy efficiency recommendations.
    • An ESOS-compliant energy audit
    • A Display Energy Certificate
    • A Green Deal Assessment or
    • A certified ISO 500001 Energy Management System
  3. Report compliance to the Environment Agency

Companies must notify the Environment Agency of compliance before the end of the compliance period. The assessment must be reviewed by a board-level director and approved by a lead assessor.

Who does not qualify for ESOS?

A company is not required to participate in ESOS if:

  • The organisation is not defined as a public body
  • The undertaking is subject to an insolvency procedure
  • The organisation does not meet the qualification criteria

Can ESOS be carried out voluntarily?

If you do not qualify for ESOS but wish to undertake an ESOS assessment to identify ways to reduce energy consumption and to demonstrate your commitment to energy efficiency, you can voluntarily notify that you have complied with the requirements of ESOS through the ESOS notification process. You can then have your details published by the Environment Agency as part of the list of ESOS-compliant organisations.

Our experienced energy auditors at McGrady Clarke can help you meet ESOS compliance voluntarily by carrying out detailed ESOS energy audits across your sites.

What has changed for ESOS Phase 3?

  • Introduced a standardised template for including compliance information in the ESOS report
    • This will generally comprise ESOS information that participants will already have available, e.g. corporate group structure, reasons for qualifying for ESOS, details of the audit
    • The template is not available yet and will be developed with stakeholders 
  • A reduction of the 10% de minimis exemption to up to 5%
    • Helps organisations to identify further ways to reduce energy consumption, encourage greater coverage of the scheme and improve data quality
  • Introduced an energy intensity metric in ESOS reports
    • Reports need to include an overall energy intensity metric within the overview section of the report (kWh/m2 for buildings, kWh/unit output for industry, kWh/miles travelled for transport)
    • Better aligns ESOS and SECR
  • A requirement to share ESOS reports with subsidiaries
    • A review of the scheme found poor dissemination of information to subsidiaries from parent organisations, which became a barrier to action on energy efficiency
  • A requirement for ESOS reports providing more information on the next steps for implementing recommendations
  • A requirement for participants to set a target or action plan following the Phase 3 compliance deadline
    • Participants will need to report progress annually via the energy efficiency section narrative in SECR reports, or via the ESOS web portal
    • Meeting this target or completing an action plan will not be mandatory for the  Phase 3 compliance deadline, but from Phase 4 onwards a requirement will be introduced that if the goal has not been met, the participant must explain why
  • Collection of additional data for compliance monitoring and enforcement
    • Including data on corporate structure, details of energy consumption and emissions, energy intensity metrics

What were the aims of the ESOS improvements?

  • To increase the number of ESOS participants that take action to reduce energy use, by raising the quality of their ESOS audit
  • To increase the carbon and cost savings from ESOS by increasing the number and scope of ESOS recommendations taken up by participants
  • To ensure that ESOS recommendations stay consistent with the UK’s Net Zero commitments

Why choose McGrady Clarke for your ESOS Assessments?

Our Energy Auditors pinpoint anomalies in energy usage through analysis of site-specific operations and consumption trends. Using industry best practices, our on-site audits identify and quantify energy efficiency measures in line with ESOS and ISO 50001 guidelines. We follow BS EN 16427 and ISO 50002 to deliver our audits, ensuring the highest qualities are maintained. 

At McGrady Clarke, we view ESOS as an opportunity to assist our clients in expanding their environmental capabilities and strengthening their green credentials beyond minimum compliance.  We offer our clients the opportunity to realise the long-term benefits and cost savings related to energy and carbon reductions.

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