Energy Savings Opportunity Scheme (ESOS) changes

21st September 2022


The Department for Business, Energy and Industrial Strategy recently consulted on proposals to strengthen and improve the Energy Savings Opportunity Scheme (ESOS), and has published its response and decisions.

IEMA attended the consultation workshop and submitted a written response (bit.ly/Strengthen_ESOS). What are the implications?

A slight shift in direction

ESOS’s core function has not changed significantly. The change is a reduced focus on pure costs and a strengthened link to net-zero and greenhouse gas emissions. A lead assessor will still work with qualifying organisations to help them understand their energy use and make energy-saving recommendations.

Turnover and balance criteria

There is no longer a need to convert between Euros and GBP, and the criteria are now set at a turnover above £44m and a balance sheet total above £38m. From Phase 4, the thresholds will align with those for Streamlined Energy and Carbon Reporting (SECR).

Sharing of reports

If the assessment is managed at parent company level for all subsidiaries, there will be a requirement for the report to be shared with subsidiaries.

Timeframes

No immediate changes are envisaged, although the qualification date for Phase 4 onwards may be brought forward.

Compliance routes

Display Energy Certificates and Green Deal Assessments will no longer be compliance routes from Phase 4, and organisations that have not yet started Phase 3 are discouraged from using them. ISO 50001 will require consideration of net zero if used as a compliance route.

New templates

From Phase 3, there will be a requirement for commonly reported data, compliance information and recommendations to be standardised within a template. Phase 4 will introduce a checklist to confirm that the report has used an existing standard such as ISO 50002 or EN 16247.

Additional data

The de minimis exemption, which allows organisations to exclude small categories of energy use from assessment, will fall from 10% of total energy consumption to 5%, with the potential for an absolute threshold to be introduced.

Phase 4 will introduce changes to how organisations with multiple sites sample.

It is likely that use of half-hourly data will be linked to reporting requirements once it becomes readily available.

Audit reports will be required to provide commentary on data collection, monitoring, the setting of controls and staff training. This will be voluntary in Phase 3 and mandatory in Phase 4.

The work, skills and ongoing training and selection process for lead assessors will also be reviewed.

Focus on net zero

ESOS has a focus on energy saving measures that would also result in cost savings. However, an emphasis on short-term cost-saving can be at odds with longer term investment decisions that put organisations on a pathway to net zero. Therefore, there will be a requirement for recommendations to align with net-zero goals as far as possible. Recommendations will be presented alongside one another so that, overall, they prioritise long-term net-zero goals over short-term cost efficiencies.

Use of intensity ratios will be introduced from Phase 3 to line up with SECR; this can include kWh per m2, unit output per miles travelled, and so on.

PAS 51215 is being reviewed to cover additional competencies for assessors to meet these new requirements.

More detailed recommendations

Future reports will contain more guidance on audit recommendations. Not all lead assessors are qualified to make investment-grade recommendations, and this is an area for review.

Setting and delivering on targets

More weight will be put on delivering against targets and action plans set in the assessment report. Participants will have to provide annual progress updates as a voluntary requirement from Phase 3, and as a mandatory requirement from Phase 4. Assessments will have to include consideration of progress against targets.

Public disclosure of data

Some of the data to be reported will be subject to public disclosure. This is likely to include targets and action plans, and high-level audit data.

Widening the scope?

The consultation sought views on including more participants in the scheme, and it was noted that the cost burden needed to be balanced against potential savings. Further government engagement on any widening of scope will take place before changes are made.

Thanks to our ESOS trainer Chris Wilson for reviewing this article prior to publication.

Image credit | Shutterstock

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