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With less than seven months until the compliance deadline for ESOS Phase 2, Lucy Davies of Elmhurst Energy Consultancy focuses on how companies should see the scheme as an opportunity to save energy and money.

Phase 2 of the Energy Savings Opportunity Scheme (ESOS) is now well underway with clear compliance steps to follow before the 5th December 2019 deadline.

So what should companies look for and what should they avoid?

ESOS was derived from the EU Directive on Energy Efficiency, and is now enshrined into UK Law.

Alongside other international and domestic frameworks, the scheme’s aim is to help businesses measure, manage and reduce their energy use, whilst improving their energy efficiency and long term sustainability.

ESOS in the law

In December 2015, the UK signed the Paris Agreement, which is an internationally binding agreement to do all we can to limit global warming to a 1.5°c rise or less by 2100. As of 2018, more than 33% of the UK’s emissions were attributed to the built environment, with a large proportion related to business energy use.

If we are to meet the target set by the Paris Agreement, we need to cut our energy use and emissions to nearly zero by 2050.

This will be an enormous task, especially for those companies who don’t even measure their energy use, because we all know that it is only what is measured that can be managed!

When companies are aware of their energy use and how to reduce it, the task will become much, much easier.

Realising the opportunity

Setting aside the legal obligations of complying with these mandatory frameworks, and looking beyond our moral obligations to operate more sustainably, we question whether businesses have considered the money that can be saved through reducing energy use.

There is a quote often used at industry events – ‘the cheapest energy is the energy we don’t use’. How true this statement is, and how much money could businesses save if they read into the title a little more – Energy Saving Opportunity Scheme?

When an ESOS Lead Assessor produces the report detailing the recommendations generated through the ESOS audit, businesses often look at the initial upfront capital investment costs and see only a financial burden, rather than an opportunity to save money.

It was revealed last year that UK businesses are spending £1.6 billion more than they need to on their energy use. Our consultants ask where that money could be better spent?

Some of the recommendations, known as the low hanging fruit, require little or no upfront costs so savings are realised almost immediately, including educating staff on how to minimise their energy use, turning off lights if there are no occupancy sensors, and not leaving electronic equipment on standby.

Other measures do require upfront costs but the savings achieved, once paid back, can be substantial, and help to embed long term sustainability into the business, rather than opting for a quick fix.

Don’t get fined!

ESOS does not apply to all businesses, only those meeting certain criteria, so approximately 8,000 companies are mandated to comply.

If your business is yet to start ESOS Phase 2, or you have not considered compliance to be a priority, I would urge you to consider it as much more than just a tick box exercise.

The whole audit is handled by an ESOS Lead Assessor, reducing your administrative burden; the audit highlights a range of energy and cost savings recommendations, reducing your financial burden and, equally as important, you avoid fines and publication for non – compliance.

The secret power of stakeholders

One main change I have witnessed in the few years I have worked in the industry is the importance leveraged on sustainability, from stakeholders, shareholders and investors.

They are more interested than ever in the environmental performance of businesses before they considered lending or investing.

The science delivered through the most recent IPCC report in 2018, and the recent report by the UK Committee on Climate Change, proved, without doubt, that global warming, and climate change, are happening at rates faster than even scientists could have foreseen, and although your business may not be realising its effects directly at the moment, indirectly all businesses will be affected.

Supply chains, insurance problems, scarce and unreliable resources are just some of the ways businesses will see their operations affected by climate change.

Compliance in 5 easy steps

So to finish with highlighting what companies actually need to do, here are the five steps to ESOS compliance and more importantly – how to realise the opportunity!

1.     Appoint a qualified ESOS Lead Assessor and undertake a scoping meeting

2.     Gather 12 months energy data

3.     Perform data analysis and site based audits

4.     Produce report with recommendations for reducing energy use and improving energy efficiency

5.     Submit notification of compliance to the Environment Agency

Lucy Davies is a Technical Energy Consultant with Elmhurst Energy Consultancy.