ESOS - On your marks

7th August 2015


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Author

Timothy Jones

Peter Brown asks where companies should be as they gear up to comply with the energy savings opportunity scheme

Most companies that need to declare their compliance with the energy savings opportunity scheme (ESOS) have yet to do so. About 7,000 large businesses in the UK are covered by the scheme and, as the environmentalist went to press, the Environment Agency had received compliance notifications from just 85, suggesting that many will be scrambling over the next few months to meet the December deadline.

Getting ready

ESOS covers companies with more than 250 employees; or that have a turnover of at least €50 million and a balance sheet exceeding €43 million; or those that are part of a corporate group where one part in the UK exceeds those thresholds. The scheme requires eligible UK businesses to review their energy consumption.

Simon Clouston, technical director at consultancy WSP, says his firm has been fielding ESOS enquiries from businesses since late 2014, although most of his clients are still in the early stages of what can be a complex, time-consuming process.“Even with clients that started early in the year, they’ve still got a lot to do,” says Clouston. “For some of our larger clients with multiple sites to audit, their audits are booked in all the way to September and October.”

Wendy Buckley, director at consultancy Carbon Footprint, believes that the December deadline is the reason why some businesses have held back. She says: “It’s natural if a date is at the end of the year for people to think they can leave it until September but this will cut things really tight. Our evidence suggests it can take three to four months for a mid-sized company to complete their ESOS process – with the caveat that it can vary widely depending on the size and complexity of the organisation.”

Both Buckley and Clouston recommend that their clients plan to complete their audit programme at least a month before the deadline to allow enough time to validate the data, correct any errors and obtain executive sign-off.

Before a company can look at the detail of its energy use, some fundamental questions need to be answered. The first involves understanding which parts of the business need to comply. Jo Scully, project manager for ESOS at the Environment Agency, which is administering the scheme, says queries to the organisation’s helpdesk often concern confusion over which operations fall under ESOS. UK operations may need to respond if their overseas parent company meets the qualifying criteria. And if multiple companies within a corporate group qualify, it is crucial they understand which entity has ultimate responsibility for compliance in order to avoid missing or duplicating any work. Scully urges anyone with questions of this nature to contact the agency.

The routes to compliance

By now, businesses should have decided their route to compliance. ESOS allows companies to comply under the ISO 50001 certification for energy management or by using previous energy assessments, such as display energy certificates (DEC) or green deal assessments, or by carrying out new ESOS-compliant energy audits.

Scully expects most companies to comply using either the 50001 standard or new ESOS audits, and Clouston confirms that few of the businesses he has worked with are planning to use existing assessment data. He says: “With lots of organisations, when they look at the scope of what is required by ESOS, they’re not convinced their previous audits have the coverage they need, so they decide to carry out new ones to be sure they’ll comply.”

50001 offers companies a robust, comprehensive approach to energy management. Unlike ESOS, it embeds a system for implementing energy savings continuously (see Hanson UK opts for 50001, p.14). However, firms that have yet to start the certification process are unlikely to complete it before December.

Judith Turner, EMS and energy technical manager at LRQA, is working with clients complying under both 50001 and the new ESOS energy audits. She recommends that, for those organisations unable to achieve 50001 certification this year, it is still worth considering as a longer-term compliance solution. “I would suggest looking beyond the December deadline and think about embedding a 50001 system to implement the energy-saving opportunities that come about from the ESOS audits,” she says. “That way, when the ESOS compliance obligation comes around again in four years, they’ll comply automatically under the energy management standard.”

Step by step

Most companies will be running new audits. The essential first stage is to gather the data for the total energy calculation (TEC) that will define the scope of the audit programme, which must cover 90% of an organisation’s energy usage.

Depending on the size of the company, the number of sites it operates and the accuracy of its existing data, this can be time-consuming. Scully hopes that any large company will have completed its TEC already and be at the planning stage, if not yet carrying out its onsite audits. Buckley urges companies to take the time to run careful desk-based auditing of their data before they go onsite. “The ESOS guidance is very clear on this,” she says. “Do things in the right order, follow the logical flow and you won’t audit the wrong things and need to rework.”

Companies need accurate energy data to plan an audit programme alongside their chosen ESOS lead assessor. Whether they train an employee for that role or enlist external support, time is running out to secure lead assessor services. Clouston points out that the procurement process for consultants can take several months and predicts a squeeze on the availability of qualified lead assessors later in the year: “If they’re not very busy already, they’ll be getting very busy very soon.”

Turner agrees: “You can see on the Environment Agency’s register whether an individual assessor or an organisation has experience in your sector. That’s key. You really want someone who understands your business and your industry so they can identify the key energy saving opportunities.”

Buckley reminds businesses that they can also consider sending an employee on an energy assessor course and still use an external ESOS lead assessor to sign off. “We feel that’s really helpful because there’s an opportunity to learn about what you’re doing,” she says. “If you pass all your ESOS activities and energy auditing to somebody else you may never gain those skills in house. When it comes to implementing energy reductions beyond the compliance point it’s easier if you’ve been on that learning journey yourself.”

For companies that do use an external assessor, Buckley cautions against taking too much of a backseat. “With your ESOS lead assessor, the clue is in the title – they’re there to lead what you’re doing, not do everything for you,” she says. “If your lead assessor wants to do absolutely everything for you I would question that, and ask if that was really in your best interest in the long term because you’re not going to gain any of that expertise yourself.”

Almost done

Companies well into the auditing stage report that ESOS is for the most part relatively straightforward. GE employs about 17,000 people in the UK and operates 60 industrial sites as well as 40 offices, but Peter Tayar-Watson, the company’s senior EHS expert for Europe, says that ESOS fitted well with the company’s existing energy management initiatives. “We approached ESOS almost as ‘CRC-plus’,” he says, referring to GE’s existing arrangements to comply with the carbon reduction commitment scheme. With many of the data gathering processes already in place for the CRC, GE had to make only minor adjustments to its energy reduction approach.

Tayar-Watson also emphasises the flexibility of ESOS. He explained that, by working alongside its lead assessor, GE could reduce the number of sites that required full auditing. If the company was soon to leave a site, or could show that there were no feasible additional energy savings to be made, it would supply a DEC or run a simpler audit instead.

“Companies shouldn’t be afraid of explaining to the Environment Agency why it might not make sense to run an audit on a particular site or activity,” Tayar-Watson says. “The overall focus is on energy saving so, if there are no energy saving opportunities and you can agree that rationale with your lead assessor, you might be able to avoid doing some ESOS audits and save some time and money.”

Scully confirms that the agency is not interested in forcing people to audit sites where they can show the energy saving opportunities are negligible.

Dan Grandage, head of responsible property investment at Aberdeen Asset Management, agrees that businesses must focus on the potential benefits of ESOS. As part of an energy management programme, this year his company is undertaking about 80 ESOS audits on its own properties and on some occupied by the clients whose funds it manages.

“Part of our objective with these audits is making sure that any actions are tracked,” Grandage says. “We will upload all the recommendations into an online tool where we can assign responsibility to property managers and track them over time to make sure that an energy saving opportunity that has been identified is followed through. To just run the audits as a simple one-off would be a missed opportunity.”

Grandage is already starting to see the benefits of the ESOS audit process. “We have found assets with existing audits that didn’t meet the ESOS requirements,” he says. “If anything this will improve the quality of the assessments we run.” In some cases, the ESOS audit programme is paying for itself. “We have had some buildings where ESOS has allowed us to identify some substantial energy savings.”

Tayar-Watson confirms similar findings at GE. “We’ve found our opportunities to save far outweigh the cost of doing these audits, or even of implementing an ISO management system,” he says. “If you’re challenged by your manager to just tick the box for ESOS, explain that, if you do more than the minimum to comply, you will more than pay back the investment.”

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.


Hanson UK opts for 50001

For Martin Crow, head of environment at building materials firm Hanson UK, the international energy management standard, ISO 50001, offers the most effective route to compliance with the energy savings opportunity scheme (ESOS).

Hanson has rolled out an integrated management system (IMS) covering health and safety, environment and quality assurance. This system has ISO 14000 certification, so 50001 mapped neatly on to it.

Crow and his team carried out a gap analysis to determine where the scope of the IMS needed to be adjusted to achieve 50001 certification. “The big difference between this approach and ESOS audits is that 50001 really drives the improvements into the business,” he says. “If you go down the ESOS audit route, you’ll identify energy savings but it doesn’t necessarily put those into an action plan as part of an integrated management system.”

Certification has forced Hanson to focus on the areas of its energy usage where the biggest reductions can be made and has the added value of embedding a long-term approach to energy management in the business. “We’re already thinking about how to develop the system and how to make sure everyone’s engaging with it,” Crow says. “The December ESOS deadline has now almost ceased to be relevant to us because this is an ongoing process, and that’s really what we wanted out of it.”

He recommends any organisation serious about its energy management to consider 50001, if not for this year then for the future: “For anyone with an established management system in place I’d certainly advocate it, even if it’s beyond December. I suspect people would find the hurdles aren’t as great as they think. Certainly we found that a lot of what we were already doing – 14001 certification, tracking against sustainability targets, and reporting for the EU emissions trading system and carbon reduction commitment scheme – has put us in good shape for getting 50001.”

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