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DMA Group Register for the Energy Savings Opportunity Scheme by 6th August

Register for the Energy Savings Opportunity Scheme
by 6th August

The deadline is fast-approaching to apply for the Energy Savings Opportunity Scheme (ESOS). The deadline to apply was 5th June 2024, but the government won’t take any action if a notice of compliance is submitted by 6th August. This blog will talk you through everything you need to know to apply.

What is ESOS?

First developed in 2014, the ESOS Regulations are a phased government programme that incentivises companies within the UK to implement energy savings measures. The regulations were updated in 2023. ESOS is a separate scheme to the Streamlined Energy and Carbon Report (SECR), but many organisations under ESOS will also have SECR obligations.

We are currently on phase three of the scheme, which runs until 2027. The most recent phase of ESOS (phase two) ended in July 2022. Phase two lead to annual savings of 1.65 TWh from buildings, 1.51 TWh for industrial processes and 0.52 TWh from transport. It’s estimated that phase three will save an additional 28 TWh across all participants, saving approximately £1.12b in energy bills.

Do we need to apply to ESOS?

You must apply to phase three of the scheme if on 31st December 2022:

  • You have a registered organisation within the UK; including partnerships, limited liability partnerships, and most charities.
  • You employ 250 people or more.
  • You have an annual turnover greater than £44m and an annual balance sheet of £38m.

SMEs and public sector bodies are currently exempt from applying, but they may be included in phase four in line with SECR. Universities may also have to apply for phase three, depending on whether they get more than half their funding from private sources.

Should your profit or employee number fluctuate around the criteria, please get in touch with Gov.UK, who can advise whether you need to apply. They will make this decision based on the past performance of the organisation.

Companies who are eligible must apply by 6th August 2024 – you cannot wait until a future phase to ‘opt in’.

What happens if we don’t apply for ESOS?

If an organisation fails to register by the above deadline, it could be liable for a fixed penalty of up to £5,000 , plus an additional fine of up to £500 per day for every day missed. Additional fines may also apply. Organisations who miss the deadline will also get listed on the Gov.UK website.

The good news is that a full assessment is not required by 6th August 2024. By this date, only a compliance notification is required.

If you qualify for ESOS, and aren’t registered on the online portal, please get in touch with Gov.UK as soon as possible.

How do we submit a compliance notification for ESOS?

To apply for the ESOS scheme and submit the compliance notification, click here. The ESOS assessment below may need to be completed first in order to add the relevant information. If you submit a notification of compliance that meets the regulatory requirements by 6 August 2024, the Environment Agency will not take enforcement action.

Prior to sending the compliance notification, you need a board level director or someone in a management position from one organisation in the participant group. They need to approve both the ESOS assessment and the content of the compliance notification.

The notification of compliance will include:

  • your organisation and contact details
  • the group structure of the organisation
  • the director signing off the notification
  • the lead assessor (where you were required to appoint one)
  • other people involved in compliance activities
  • notification of estimates and other information about the assessment
  • high level energy consumption data (including energy intensity ratios) calculated as part of your ESOS assessment
  • summary information relating to energy saving measures identified through your ESOS assessment through
    • energy audits
    • alternative compliance routes
  • summary information relating to energy savings achieved since the previous compliance date

Your ESOS compliance notification won’t require you to include any of tthe following, unless you are audited by your compliance body:

  • the details of any audits
  • the details of energy saving opportunities you’ve identified
  • a copy of your ESOS report

How do we carry out an ESOS assessment?

Organisations must then carry out an ESOS assessment if they haven’t already. We’ll break down each of the points below, and more information can be found by clicking here.

1. Calculate your total energy consumption
This is the energy used by any of the businesses’ assets. This should include:

  • Buildings
  • Industrial processes
  • Transport

2. Identify your areas of significant energy consumption

To meet compliance standards, your organisation must account for the energy used by its assets and activities. This should comprise at least 95% of the total energy consumption, either through an energy audit or other approved methods.

3. Calculate your energy intensity ratios

An energy intensity ratio is a metric that connects an organization’s energy consumption to a relevant activity indicator. By completing the assessment, businesses will see how energy efficiency compares to future entries.

You must calculate energy intensity ratios for:

  • buildings
  • transport
  • industrial processes
  • other energy uses

The legal requirement is that the indicator for each organisational purpose is:

  • quantifiable
  • associated with the assets or activities that relate to the specific business aim

More information on calculating energy intensity ratios can be found here.

If you use a method that isn’t stated in the above link, you must explain the approach taken in the compliance notification and the evidence pack (see below).

4. Decide on your route(s) to compliance and appoint a lead assessor

To ensure compliance, you must choose at least one compliance and make sure it covers all areas of significant or total consumption.

To comply with ISO 50001, energy certificates and/or green deal assessments must be issued after 5 December 2019, and remain valid until either the original compliance date of December 5, 2023, or the extended compliance date of 5 June  2024.

Unless all of your energy supplies are covered by ISO 50001 or your total energy consumption is less than 40,000 kWh, all participants must have their ESOS assessment signed off by an ESOS lead assessor.

A representative from the organisation (lead assessor) must sign in and create an account on the notification system and fill in the required information. Businesses can add external assessors to the account, but the lead assessors must hold the account.

The lead assessor must hold at least one of the following qualifications:

  • Public Buildings Energy Assessor Level 3
  • Air Conditioning Energy Assessor Level 3 or 4
  • Non-Domestic Green Deal Advisor L4
  • Non-Domestic Energy Assessor Level 3, 4, 5
  • ISO 500001 Lead Auditor
  • Low Carbon Consultant

5. Carry out any necessary ESOS energy audits

An ESOS compliant energy audit must meet these criteria:

  • The audit must be based on 12 months’ verifiable data, beginning no early than 6 December 2018
  • It must analyse the business’ energy consumption and energy efficiency
  • The completed audit must show energy saving opportunities
  • Site visits must be included

There are nine requirements needed within the audit:

  1. Auditing areas of significant energy consumption
  2. Minimum energy audit requirements
  3. Energy consumption data
  4. Site visits
  5. Analysis of energy consumption and energy consumption profiles
  6. Identifying energy saving opportunities
  7. Identifying costs and benefits
  8. Categorising energy saving opportunities
  9. Information relevant to implementing energy savings opportunities

ISO 14001 certified organisations may wish to use their certified environmental management system (EMS) to support ESOS compliance.

Click here for a more in-depth guide to the audits.

6. Complete the ESOS report and share with the corporate group

You are required to complete an ESOS report detailing your ESOS assessment (audit or alternative compliance route), unless you have zero energy supplies.

The ESOS report records your assessment and includes information about the compliance route used, its coverage, the identified energy saving opportunities, and the energy savings achieved since the last ESOS compliance date.

If your organisation is part of a corporate group, you must share relevant information from the ESOS report with all members of the corporate group, as specified in the Energy Savings Opportunities Scheme (Amendment) Regulations 2023.

7. Evidence pack

You need to keep an evidence pack, which will show of how you have complied with ESOS in an evidence pack.

For full details of what you must include in your evidence pack, please see the full guidance.

What happens after we submit an ESOS assessment?

Once an ESOS assessment has been carried out, annual progress updates must be submitted. Every organisation must submit the initial ESOS action on 5th December 2024. Two annual progress updates are then due on 5th December 2025 and 5th December 2026.

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