Posted by: Ian Hopping
The Energy Efficiency Directive is a piece of legislation passed last year that requires EU member states to introduce measures to promote energy efficiency. The aim was to help the EU meet its ‘20% by 2020’ energy efficiency target.
One such measure is the Energy Savings Opportunity Scheme (ESOS), a mandatory scheme for large organisations to carry out an energy audit once every four years to identify cost effective energy measures. A large organisation is currently defined as employing at least 250 people in the UK, or an annual turnover in excess of €50m and a balance sheet exceeding €43m. To comply with the regulations organisations need to appoint an ESOS qualified lead assessor who will:
- Measure total energy consumption for buildings, industrial processes and transport.
- Identify areas of significant consumption.
- Identify and recommend savings opportunities, including the estimated Return on Investment (ROI).
- Report compliance to the Environment Agency.
Although the ESOS audit is mandatory, with fines of up to £50000 for businesses that fail to meet the deadline, there is absolutely no imperative to act on the recommendations! Whether an organisation chooses to implement any of the savings opportunities identified is entirely their own decision.
With the December 5th deadline for submission looming ever closer the Environment Agency recently announced that under 200 qualifying companies have so far submitted their audit and that they were sending reminder notices to 14000 businesses. This would appear to suggest that many organisations view ESOS as just another time-consuming and costly bureaucratic exercise with significant costs, both financially and in terms of time and resources, however ESOS should not be viewed as a negative.
Organisations that are prepared to focus on the ‘O’ for Opportunity and view ESOS as a strategic initiative to reduce costs and improve processes have huge potential to save money year after year. For many businesses this will be the first time they have ever fully assessed their energy use. There’s an old adage, ‘You cannot manage what you cannot measure’. The data and recommendations provided will allow businesses to understand the measures they can take to reduce their consumption, and therefore their energy bills. Companies that fail to conduct the audit, or act upon its findings, will only be wasting their own profits.
Embracing the changes and integrating ESOS with a wider energy procurement strategy will reap the greatest dividends. Organisations that are prepared to implement the ESOS recommendations will derive far greater benefit long term. Qualifying companies will be required to go through the process again in 2019, potentially with a requirement to implement the recommendations, so there is little to be gained by putting off energy saving measures now. Having an energy management strategy in place enables a business to reduce its costs, operate more efficiently and demonstrate to customers that it is serious about Corporate Social Responsibility.
At the moment ESOS is a requirement solely for larger organisations, but it highlights the benefits of analysing a company’s expenditure and putting into practice the opportunities identified. The principle of ‘You cannot manage what you cannot measure’ applies to businesses of all sizes and the financial benefits can be significant.