Business Law & Compliance

ESOS regulation: Putting your energy to the best use as a business

4 min read

06 September 2015

The deadline for new EU energy legislation is fast approaching – but are you ready? Here, we provide important guidance on getting it right.

The EU Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for UK companies to help improve energy savings to cut costs and benefit the environment.

For those firms that qualify for ESOS, large undertakings employing over 250 people and with an annual turnover over £38m, they must carry out assessments every four years auditing the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures.

Companies must have carried out their first ESOS assessment and notified the Environment Agency by 5 December 2015. The next assessment must then be carried out by 5 December 2019.

Although this is a scheme for larger firms there are certainly lessons to be learned by small and medium sized businesses as well.

How to comply:

If you qualify for ESOS and your organisation is fully covered by ISO 50001 you don’t need to carry out an ESOS assessment. You just need to notify the Environment Agency that you are compliant with ESOS.

If you qualify for ESOS but your organisation is not fully covered by ISO 5000, you need to carry out an ESOS assessment.

What an assessment/audit entails:

You need to appoint a lead assessor to carry out and oversee or review your energy audits and overall assessments. They can be employees or external contractors as long as they are members of an approved professional body such as the Association of Energy Engineers or the Energy Managers Association.

You have to calculate your total energy consumption – this is the energy consumed by buildings, industrial processes and transport. Then identify your areas of significant energy consumption – this is the energy used by activities carried out by your organisation that account for at least 90 per cent of your total energy consumption. You must analyse any variations in energy use to identify inefficiencies and energy saving opportunities.

The government’s advice is that energy saving opportunities should be reasonably practicable and cost effective to implement. Recommendations should include the estimated costs and benefits of implementation.

However there is no regulatory requirement for participants to implement the energy saving opportunities identified. This is for each organisation to determine themselves.

Organisations with multiple sites or assets that are identical or very similar, can take a proportionate approach and apply the energy saving opportunities identified in their site visits to their wider portfolio.

The lead assessor and participant organisation should determine a suitable site visit sampling approach to reflect the energy consumption patterns of their assets and activities. This is not prescribed in legislation or guidance; it is up to your organisation and lead assessor to agree this.

Read more about energy:

Penalties for non-compliance: 

Your environmental regulator is responsible for compliance and enforcement activities. Your registered office or principal place of activity (in the absence of a registered office) determines your regulator.

  • England – Environment Agency
  • Northern Ireland – Northern Ireland Environment Agency
  • Scotland – Scottish Environment Protection Agency
  • Wales – Natural Resources Wales
  • Offshore – DECC Offshore Oil & Gas Environment and Decommissioning

The regulator may issue civil sanctions including financial penalties if an organisation does not meet the scheme’s obligations.