In our second examination of ESOS, Maxine Perella gets advice on how to generate the maximum benefits from scheme audits
The August issue of the environmentalist reported that the Environment Agency had received just 85 compliance notifications for the energy savings opportunity scheme (ESOS), indicating that most eligible firms had yet to embark on the energy audits that ESOS requires.
However, awareness of ESOS obligations appears to be growing, with external lead assessors reporting a sharp rise in enquiries. “The level of interest has gone up 1,500% in the past few months,” says Darryl Mattocks, managing director of Enistic and a qualified lead assessor. That said, he anticipates a scramble as autumn approaches. “For some companies, there is a lot of work to do and not a lot of time. Typically, compliance will take two to four months to organise. For other companies, it could be a lot more. Plus, there is a limited number of lead assessors to work with, so not only is there limited time to get things done, there will be increasing pressure on finding a lead assessor with the time to do the job.”
Lucy Candlin, an IEMA-registered independent leader assessor, says the pressure can be reduced by using technical experts to conduct the audits: “This means the lead assessor has more time to work across a number of clients, focusing on the compliance aspects; technical experts used in this way do not have to be registered.”
Not just a tick-box exercise
Given the time constraints, there is a danger some companies could treat ESOS as a hurried tick-box exercise – especially as there is no legal requirement to implement any of the energy saving opportunities identified in the assessments. That would be a mistake, according to experts.
George Richards, business and innovation manager at JRP Solutions, says the right approach is to view the scheme as a catalyst for change. “First and foremost, it’s a mindset. ESOS should be a viewed as an opportunity, rather than a threat or a cost burden. For the majority of businesses, particularly those that are energy-intensive or have complex processes and with a significant energy spend, it will deliver good value.”
Dr Steve Fawkes, an independent energy analyst, advises firms to get the most out of their ESOS assessment by using it to fully evaluate energy efficiency potential. “By that I mean go beyond the standard energy audit, which would be compliant, but probably not lead to much action,” he says. “I would encourage top-level decision makers to demand that the audits evaluate all the benefits, including the non-energy benefits such as productivity, health and employee satisfaction. This requires a much more integrated and wide-ranging approach than the traditional energy audit.”
Identifying and calculating both the total and significant areas of energy consumption across the business for auditing purposes is key. As a practical starting point, Fawkes says firms should start collecting energy consumption and cost data from billing meters, and consumption data from any sub-meters installed. “Collect machine, HVAC [heating, ventilating and air conditioning] and lighting plant data, and estimated run times,” he adds.
Knowledge gap
Qualified lead assessors should be capable of facilitating any necessary data requirements, but there are concerns – especially among those organisations that have more complex energy needs – that some assessors may lack the necessary skills and specialist knowledge.
Jesse Putzel, senior sustainability manager at construction firm BAM, says companies should be looking for a provider that is most likely to understand their business. “For construction, we believe we know our business better than anyone, so it doesn’t make sense to have someone carry out lots of audits for us. We’ve already done that work to a large extent. We’ve chosen an organisation we trust and developed a spec with them that won’t cost the earth, but will develop value. In speaking with peers, we’ve already heard about many assessors charging exorbitant fees.”
Putzel adds that, although BAM could have appointed an in-house lead assessor, it was felt a third party could deliver better value. “We believe this lends weight and, as we’re using existing activities to demonstrate compliance, we want a ‘critical friend’ approach to identify areas for improvement.”
Fawkes says companies should be questioning the level of relevant experience an assessor has in their particular sector or technology area, but equally recognise any parallel sector experience that may
be helpful. “Deep experience within a sector is important as it can result in knowledge of the industry sector best practice,” he notes.
However, Candlin argues that, although sector experience is important, the audit team needs to contain a range of skills and knowledge. “For large or complex organisations, the technical skills required to conduct relevant and effective energy audits across processes, industrial equipment, transport, buildings and behaviours may well not rest with one person or one consultancy,” she says. “The lead assessor needs to evaluate what is required and bring together a team with the necessary skills. Compliance across all requirements may be as much, or even more, important.”
Trusted support
Like BAM, investment firm Aberdeen Asset Management has also chosen an external lead assessor it trusts to provide ESOS support for both its real estate investment assets and its corporate-occupied assets.
“We do not have the necessary technical skills internally, and as such outsourcing this requirement was logical,” says Dan Grandage, Aberdeen Asset Management’s head of responsible property investment. “We appointed WSP group to assist [the company] with this process as we have an existing relationship with them, and they are already working closely with us on the implementation of our energy management programme and our wider ISO 14001 environmental management system.
“What we are looking for is someone that can add value to our activities and genuinely understand both our business activities and how buildings are designed and operated.”
Grandage says it has taken about 12 months to identify and collect the data needed for the energy audit but, because it was undertaken as part of a wider energy management initiative, the requirements were not that onerous. However, Aberdeen Asset Management has encountered some specific data challenges believed to be typical of the wider investment industry. “The first challenge was to understand the organisational structure of our funds – both real estate and other investment vehicles – and establish which funds meet the qualification tests, and then who would undertake the compliance activities – Aberdeen Asset Management or our clients,” Grandage says.
Another issue, which also affects asset management firms such as Aberdeen, is that ESOS not only captures real estate funds, but other investment vehicles that do not have an associated energy supply. “Having to make a notification for ESOS for an entity that does not consume energy does seem an unnecessary administrative burden,” Grandage says. He believes this could be avoided by making some minor changes in the guidance, and would be consistent with the approach taken elsewhere in the EU.
BAM identified data as a key issue in 2008, when it started assessing its carbon footprint. Since 2010, the company has rolled out remote metering across its sites, enabling it to gain visibility of energy consumption and to target energy waste. The latter is a significant issue in the construction industry.
“I think the ongoing challenge for us is the issue of identifying the ‘lifecycle cost’ element as there is no real baseline to work from in construction – it’s all based on assumptions or comparisons with previous projects,” says Putzel. “We’ve developed power planning, where we predict the demand of a project before we start, so this helps. We’ve also monitored specific plant and equipment, and then run trials to test innovations. However, traditional lifecycle costing, in the way ESOS would have you do it, probably isn’t right for us. We’ll be working with our assessor to address this.”
Business benefits
A criticism commonly thrown at ESOS is that it is a light-touch regulation. Although it might empower energy managers to put forward a stronger business case for investing in energy efficiency, ultimately many businesses remain unconvinced that they would benefit from the process.
“We have to recognise the facts,” says energy analyst Fawkes. “Energy efficiency is boring. Cost saving is important, but not as important or as attractive as revenue generation. Companies are facing many demands on their capital.”
Richards says he can empathise to a degree with the scepticism. “For some businesses, ESOS will deliver little or no value. I think that’s unfortunate,” he says. “However, for the majority of businesses, from our experience, it’s quite the opposite. What ESOS will do is identify a suite of improvement opportunities and they should then feed into an overall plan or strategy. For me, this isn’t about legislation; this is about making companies engage, focus and think about energy.”
Sandra Norval, head of environment at Govia Thameslink Railway, sees ESOS primarily as a tool to try to kickstart the laggards in the field of improving energy efficiency. “It will do that for some but, without the incentive to act, there will be some that just tick the box by getting audits done and leave it at that,” she warns. “The frustrating thing is that potentially there will be great ideas that could deliver significant energy savings that will just left in a filing cabinet.”
Govia, a joint venture between transport companies the Go-Ahead Group and Keolis operates four UK rail franchises – GTR, Southern, Southeastern and London Midland. It opted for the ISO 50001 route to ESOS compliance. 50001 is the international energy management standard and in effective includes all the requirements of ESOS. Although it is too late to obtain certification before the December deadline, 50001 should be an option for the future. “I would have advocated the 50001 option,” Norval says. “For me, it offers the best business benefits. It’s all very well paying for audits but, as there is no requirement to take the identified actions [of ESOS], it’s unlikely that the best use of the findings will be made in all cases.”
Reflecting on her organisation’s journey so far, she adds: “The ultimate lesson is that 50001 is a tool when you look at it on the page but, when you read into the essence of its intentions, it is actually about culture. That is the biggest difference from ESOS. The energy savings opportunity scheme ticks boxes; 50001 enables change.”
The energy management standard is not for every organisation, however. The standard is regarded as the more resource intensive option and, depending on the business activity, it may not be perceived as adding any extra real value when considered alongside ESOS. It is likely that most eligible businesses will be undertaking ESOS assessments – at least during the first phase – and should hopefully benefit from the structured approach it offers.
“It’s really up to the organisation to approach ESOS positively,” Putzel observes. “I think it’s right that it has a light touch, but it could probably do with a few more teeth – like being required to publish whether or not you’ve taken action on recommendations. As a company that has already done a lot, albeit with an opportunity to do more, I’m glad that we’re not overburdened with very prescriptive rules.”
Grandage echoes this view: “It would be a waste of time and resource if the opportunities identified are not followed through where they are cost-effective and practicable. In our experience, the potential energy savings identified more than outweigh the cost of compliance.”
The Environment Agency ESOS helpdesk can be contacted at [email protected].
A list of IEMA members who are qualified as lead assessors is available at lexisurl.com/iema103002.
ESOS – getting ahead of the curve
Companies that intend to make the most of their energy savings opportunity scheme (ESOS) assessment by acting on the recommendations suggested may benefit from a new digital platform called The Curve. Developed by sustainability thinktank The Crowd, this interactive database allows organisations to share their carbon and energy investment data so they can benchmark technologies and solutions against each other, and assess which ones are likely to offer a good return on investment.
By logging on to The Curve, users can identify other businesses that have made similar investments to those their organisation is considering. They can also compare their own energy investment programme with that of their peers, and learn from what others are doing. Analysis of the data, which is submitted anonymously, maps trends across 12 types of technology areas, such as energy spend, payback threshold, star rating and supplier recommendation.
The Curve also highlights added benefits, such as brand enhancement and employee engagement.
For more information about The Curve, visit thecurve.me
