ESOS GUIDE

A Guide to ESOS UK Legislation – New Regulations

July 2014

1.0 Introduction Article 8 of the EU Energy Efficiency Directive requires all member states to introduce a programme of regular energy audits for “non-SMEs”, defined below. In the UK this is being done under ESOS which will have an initial qualification date of 31st December 2014. Organisations will be required to assess whether they meet the qualifying criteria for ESOS at this date.

You will be in the scope of ESOS if, on the qualification date (31st December 2014 for the first phase of ESOS), you are:

 An undertaking which has 250 or more employees in the UK or  An undertaking which has fewer than 250 employees, but has an annual turnover exceeding €50m and a balance sheet exceeding €43m or

 Part of a corporate group which includes an undertaking which meets criteria (1) or (2) above. th

These organisations will require an initial audit by 5 December 2015, and thereafter at least every four years.

ESOS will operate in four-yearly compliance phases. Organisations in the UK must assess whether or not they are required to participate in ESOS on the qualification date of each phase.

ESOS Assessments will require participants to do three things:

 Measure their total energy consumption.  Conduct energy audits to identify cost-effective energy efficiency recommendations.  Report upon their compliance to the Environment Agency.

2.0 ESOS assessments ESOS assessments will aim to recommend cost-effective measures to save organisations energy and money. This would include the organisation identifying and measuring an energy intensity ratio and, as appropriate, considering the variation in energy use over time within key buildings, key industrial operations, and key transport activities.

The audit would provide clear information on potential energy savings by identifying and quantifying cost-effective energy savings opportunities.

Organisations within the scheme’s scope will need to identify an approved ESOS lead assessor to conduct the assessment, gather data on energy usage at an appropriate level of detail, and undertake the assessment. Sanctions will be imposed for any organisation that falls within the scheme’s scope that does not comply with the auditing process.

In order to reduce overlap and minimise the costs of compliance organisations can make use of energy data they have collected under schemes such as the Carbon Reduction Commitment (CRC), Climate Change Agreements, EU Emissions Trading System (EU ETS) and mandatory greenhouse gas reporting.

Under ESOS assessments you must determine your total energy consumption over a consecutive 12-month period known as the reference period, this reference period must overlap with the qualification date.

The end date of the reference period must also occur prior to the compliance date.

Over this 12-month period you must measure the total energy consumption across buildings, transport and industrial activities, ensuring at least 90% of your total energy consumption is subject to an ESOS compliant energy audit.

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3.0 Key Benefits The Government believe that the key benefits of ESOS will be:

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Cost savings for consumers and industry as a result of lower energy demand.

Emissions reductions; energy efficiency has a key role to play in the UK’s legally binding carbon targets.

Economic growth; by creating jobs in energy efficiency and driving technological innovation.

Managing demand; an energy efficient economy is less exposed to international energy market prices and volatility and will require less investment in future infrastructure.

The UK Government trust that the ESOS audits will capitalise on energy efficiency improvements made since the introduction of display energy certificates (DECs). Public sector offices with DECs reported a fall of energy intensity of 1 2% more than private sector offices between 2008 and 2009.

4.0 Responsibilities Table 1 shows the split of responsibilities between ESOS participants and their appointed Lead Assessor.

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Energy trends (June 2013) Special feature articles, Display Energy Certificates

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5.0 ISO 50001 Certification under international standard ISO 50001:2011 (energy management system, EnMS) is permitted as a compliance route under ESOS as an alternative to undertaking ESOS energy audits. ISO 50001 provides a framework of requirements for organisations to:

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Develop a policy for more efficient use of energy.

Fix targets and objectives to meet the policy.

Use data to better understand and make decisions about energy use.

Measure the results.

Review how well the policy works.

Facilitate continuous improvement in energy management.

Systematic downwards pressure on energy overheads.

6.0 Penalties Penalties will be enforced against any organisation that is required to participate in ESOS audits that is found to be non-compliant. The penalties will be:

 Non-compliance will be published online, including the name of the organisation, along with details of the amount of the penalty imposed.

 Failure to notify The Environment Agency of compliance will incur a fixed penalty of £5,000 and/or an additional penalty per day of £500 up to a maximum of 80 days.

 Failure to maintain adequate records: a fixed penalty of £5,000 and/or auditing costs to confirm previous compliance.  Failure to undertake an ESOS Assessment: a discretionary penalty and a fixed monthly penalty until steps towards compliance are taken. Failure to comply with any aspect of ESOS will be considered as failure to comply and will be fined by: o A penalty of up to £50,000 and/or; o An additional £500 per day, subject to a maximum 80 days.

Failure to comply with an enforcement, compliance or penalty notice will incur a fixed penalty of up to £5,000  and/or an additional £500 per day.  For making a statement which is false and misleading there will be a flexible penalty of up to £50,000 to take into account the nature of the offence.

7.0 Why Epsilon Our team provides independent advice to commercial and industrial customers on all energy matters. We employ Chartered Engineers who possess all the expertise necessary to ensure that energy efficiency and energy generation projects improve our clients bottom line profit and reduce carbon emissions.

Whether you want to improve the energy efficiency of your existing buildings or to invest in a renewable technology such as solar, wind or biomass, Epsilon bring a practical understanding of energy efficiency and generation along with independent strategic thinking and a sound business case to demonstrate the opportunities that energy efficiency represents.

We would be delighted to discuss ESOS with you and demonstrate how we can help you comply with the scheme requirements and also show how improved energy efficiency can bring benefits throughout your business.

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8.0 What Our Clients Say‌ Epsilon Chartered Energy Professionals were appointed as the lead assessors to undertake an ESOS assessment. It was a pleasure to work with Epsilon utilising their expertise and knowledge throughout the project. The company were always very professional and accommodating and the work was executed in accordance with the project timeline. Should we require to use an energy consultant in future we will certainly be considering Epsilon as a first option.

Mr Adam Perkins Facilities Coordinator & Procurement.

Interactive Data (Europe) ltd.

ESOS Compliance was very well taken care of with an excellent survey and subsequent report thereafter and produced in a very timely and professional manner. The costs involved in a very competitive market at the time were very much acceptable to our business. The ESOS report showed very clearly the objective evidence required to meet that standard along with further recommendations for continuous improvement which was very much welcomed.

Mr Tim Wood Director of Health & Safety.

Comex 2000 (UK) ltd.

Epsilon Chartered Energy Professionals carried out an audit and analysis of our energy consumption and suggested various energy savings opportunities as outlined on the ESOS assessment and prepared a report which was presented to the UK Environment Agency well before the deadline.

Throughout the whole process they have behaved in the most professional manner, always helpful and thoroughly knowledgeable of the requirements of the task in hand.

We have been fortunate to have Epsilon helping us through the process of preparing for ESOS. Ms Jazmin Short International Coordinating Department Evergreen Marine (UK) Ltd, London.

For further information please contact -

Michael Glanfield MEI MIET MCIBSE MSLL Director Epsilon Chartered Energy Professionals 7 Heather Lane | Abbeyfields | Douglas | Isle of Man. Email: info@epsiloniom.com Freephone:0800 779 7414