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ESOS Phase 2

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Elizabeth Steele Elizabeth Steele
Senior Consultant – Sustainable Energy Use Europe
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ESOS Phase 2
Is it that time already? Well, no, not quite. But there are benefits to planning ahead.
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  • Keywords: Sustainable use of energy

Many will recall that the Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the UK, established by the government to implement Article 8 of the EU Energy Efficiency Directive. Businesses that meet the qualification criteria must carry out ESOS assessments every four years. These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures.  

Compliance with phase 2 of the ESOS scheme is mandatory by 5 December 2019 for all UK organisations that, on 31 December 2018, have over 250 employees or an annual turnover over EUR 50 million and an annual balance sheet over EUR 43 million.

Any organisation meeting these qualifications must review at least 90% of their energy consumption through ISO 50001 certification, Display Energy Certificates, Green Deal assessments or ESOS compliant energy audits.

Despite political uncertainties ESOS Phase 2 is going ahead as planned. 

The recent Department for Business, Energy and Industrial Strategy (BEIS) consultation response on streamlined Energy and Carbon Reporting (SECR) provides an indication of the future direction of UK Government policy – including how they intend to enable businesses and industry to improve energy efficiency by at least 20% by 2030. The Government wants to give ESOS a higher profile, they have decided that participants under SECR will be required to provide a narrative commentary on energy efficiency action taken in the financial year, but will not be required to disclose ESOS recommendations and how they have been taken forward.

Why get started early?
Data used to determine the total energy consumption of your organisation must include the compliance date of 31st December 2018. This total energy consumption will determine where and what you need to audit. However, if you know certain sites or energy streams will need to be audited, you can carry out those audits now. The audits need at least one year of energy data, but this can be from any time from 6th December 2014 and 5 December 2019. This means organisations can start auditing now and finalise in early 2019. 

In Phase 1, many organisations delayed audits until close to the deadline, resulting in higher audit costs and missed deadlines. Over 2,500 organisations notified the UK Government that they would be late in submitting their Phase 1 compliance notification. Additionally, the Environment Agency stated in its ESOS newsletter in June 2017, that it had served over 300 enforcement notifications on ESOS Phase 1 and has begun civil penalty proceedings.

DNV GL recommends organisations begin their ESOS compliance plans as soon as is practical. Initial audits can take place before the compliance date. Only the assessment of your organisation’s total energy consumption needs to use data that includes 31 December 2018. 

In our view, it is worth taking the time to plan the assessment and identify energy savings, which may be larger and easier to implement than expected. The sooner the opportunities can be implemented, the sooner savings projects can be planned and benefits realised.

Also – if organisations plan their approach now, there is still time to implement an accredited ISO 50001 Energy Management System. Any portion of your business that is ISO 50001 certified will not need to conduct audits to be ESOS compliant.

Maximise value and go beyond simple compliance
It can be easy to think of ESOS compliance as a ‘tick box exercise’ and not a valuable tool. While complying is important, ESOS can also be an excellent opportunity to look at energy consumption strategically and plan for your organisation’s future. DNV GL offers more than simple compliance, we provide real value and cost savings opportunities. Our team is highly technical, with a wealth of energy efficiency experience across several sectors and industries. This means our audits will provide real savings opportunities tailored to your business—not a stock list of measures for every site. 

We also have a thorough understanding of the ESOS requirements and sampling allowances, which allows us to only audit the minimum number of sites to reduce compliance costs. 

DNV GL is a large multi-national consulting firm, which means we have auditors all over the EU. In addition to ESOS compliance in the UK, we can also help your organisation conduct Energy Efficiency Directive compliant audits in all EU member states, using our proprietary tool MEET8.

Our team ensures there is a consistent approach to all audits (UK or EU wide), which allows the results to be easily compared across an organisation’s portfolio.

If your company is looking at energy more widely, DNV GL can provide long term strategic support (roadmaps), energy storage and renewable assessments and Energy Management System ISO 50001 gap analysis and implementation support. Any portion of your business that is ISO 50001 certified will not need to conduct audits to be ESOS compliant.

Register here to find out more about how we can help.