If you have more than 250 UK employees or an annual turnover exceeding €50 million and a balance sheet total exceeding €43 million it is time to start planning how you will comply with the Energy Saving Opportunities Scheme (ESOS) regulations. Fines for non-compliance can be up to £90,000.
Does it really affect you?
Whilst the ‘are you in’ criteria might seem simple it is worth labouring the point as there are some subtle twists and turns that can make all the difference. Your position on 31 December 2018 (the qualifying date) is what matters.
Highest UK parent company
The facts/figures are assessed at the highest UK Parent Company level. So if ABC Ltd owns two companies that have say 100 and 200 employees each then ABC Ltd and all of the companies that it owns have to comply with ESOS.
If you have more than 250 UK employees
It is actually ‘full-time equivalent’ employees. For example, if you have a part-time employee who works for say 50% of the working week they count as 0.5 towards the total. But, if you have an employee who is working full time but only has a 6-month contract that includes 31 December 2018 they count as 1.
It is important to note that if you do not exceed the 250 employee criteria you are only in ESOS if you exceed BOTH of the financial criteria on 31 December 2018. This could be a tricky one if you are borderline as exchange rate movements could make all the difference.
What is ESOS?
ESOS was first introduced in 2014 and is part of a European objective to reduce energy consumption by 20% by 2020. It is a mandatory energy assessment scheme for all large UK organisations (as defined by the criteria above).
With the onset of Brexit, many companies are of the opinion that by the time the Phase 2 deadline comes around, the UK may well be out of the EU, therefore ESOS will no longer be implemented. The reality is, however, that until we leave the EU, large companies will still need to comply with the ESOS regulations and in fact, government ministers have confirmed that the “whole body” of the EU environmental laws will be carried over into UK law before Brexit happens.
The idea is that by forcing Directors of large businesses to review energy use and energy saving opportunities, energy savings will result and help the UK to meet its climate change targets. This was borne out by work we did during phase one of ESOS; we identified savings averaging 16.3% per client, many times more than what it cost to do.
The Phase 1 ESOS compliance deadline was in December 2015 and many companies (300 was the last reported figure in summer) are yet to comply. If you find yourself in this situation, you will probably have received a penalty notice from the Environment Agency (EA), the scheme administrators. Don’t panic… it’s not too late, just contact us to get compliant now!
As for Phase 2, businesses who meet the qualification criteria on 31 December 2018 will need to undertake an ESOS assessment and notify compliance to the EA by 05 December 2019.
So you are in ESOS – what next?
Well if your organisation’s energy use is fully covered by ISO 50001 you do not need to carry an ESOS assessment, you will just need to notify your compliance with this standard to the EA. If this isn’t the case, you will need to carry out an ESOS assessment which requires the following:
- Appoint a lead assessor:
- To carry out and oversee or review your energy audits and overall ESOS assessment.
- Calculate your total energy consumption:
- The energy used in 12 months by your organisation, including the energy consumed by buildings, industrial processes and transport – this can be any 12 month period but must include 31/12/2018.
- Identify and audit your areas of significant energy consumption:
- The energy used by your organisation that accounts for at least 90% of your total energy consumption needs to be assessed and audited in line with the ESOS guidance.
- Notify the Environment Agency:
- You need to submit your ESOS notification of compliance to the Environment Agency when you have undertaken an ESOS assessment and are compliant with your obligations.
- Keep records:
- You need to keep records of how you have complied with ESOS in an evidence pack. The EA do carry out randomly selected sites for audit.
Time is of the essence as starting the process now will make complying with the deadline much easier. Also, good quality Lead Assessors are in short supply, so we encourage you to act now to ensure you aren’t caught out and make sure you are compliant by the deadline.
Here at FEC Energy, we have two ESOS Lead Assessors, Oli Coe and Jon Swain, as well as a supporting team of engineers and data analysts. We can help with carrying out ESOS compliant energy audits, acting as a Lead Assessor (i.e. reviewing energy audits). But in most cases for our clients, we take care of the whole process.
Give Oli or Jon a call on 024 7669 8899 to discuss how we can help you further.