Government sets out plans to strengthen ESOS including public reporting

The government is seeking views on a proposed shake up of the Energy Savings Opportunity Scheme (ESOS), including public disclosure of data and widening the scope to medium sized businesses.

ESOS was introduced in 2014 and requires all large businesses to carry out an energy audit every four years. BEIS is consulting on scheme changes that would improve the quality of audits and increase uptake of energy efficiency measures. It also wants to better align ESOS with the UK’s net zero commitments.

Most of the changes proposed are being considered for the current cycle (ESOS Phase 3), which runs from 2019 – 2023.

Here’s our summary of the main proposals at a glance:

  • Setting stronger requirements for the content of ESOS reports. BEIS wants to reduce the current discrepancy in the quality of reports and move to a more standardised format. The goal is to steer the scheme away from being a “tick-box exercise”, and ensure reports provide useful information that drives uptake of energy efficiency.
  • Introducing a net zero element to the existing audit. This would require businesses to include an assessment of actions needed for them to achieve net zero by 2050. This may be within the existing report structure or added as a separate reporting element.
  • Public disclosure of ESOS data. The proposals would require businesses to disclose high level information from their ESOS report on a central website and to set a target or action plan to report against annually. There would be no penalty for not achieving the target/plan and it would not be a league table, but the site would allow comparison across various metrics such as progress against internal targets or energy management proficiency.
  • Better alignment with SECR. The government wants to reduce the administrative burden for companies that need to comply with both ESOS and Streamlined Energy and Carbon Reporting. It wants to change ESOS thresholds to match SECR, so that businesses would be in scope of ESOS if they meet at least two of the following criteria: they have at least 250 employees or have a balance sheet of £18 million or turnover of £36 million. Or (as currently the case under ESOS) are part of a group that contains a large business.
  • Removing Display Energy Certificates and Green Deal Assessments as ESOS compliance routes. BEIS is concerned that these may not meet some of the additional standards being proposed. It is still encouraging ISO 50001 as a route to compliance.
  • Reconsidering de minimis. Currently participants may exclude up to 10% of their total energy consumption through de minimis rules, but the consultation proposes reducing this to 5%. BEIS is also looking for feedback on whether this should be supported by an absolute annual energy consumption threshold for any individual group, site, process or fuel type to be excluded within the de minimis exemption, to avoid the situation where large sites or fleets are being excluded because of the size of the organisation they belong to.
  • Make site sampling methods clearer. BEIS proposes introducing a minimum threshold for both the number of sites sampled and the percentage of total energy consumption sampled. These could be set differently for types or sizes of site, similarly to the way in which thresholds are set for air conditioning inspections.
  • Inclusion of half hourly data in analysis. Half hourly energy data is a powerful tool in identifying energy waste, so BEIS wants to make it mandatory for ESOS reports to include analysis of half hourly data, where this is available.
  • Improved analysis of energy data. The consultation proposes that ESOS audits follow an existing standard such as ISO 50002 or EN 16247. It is also considering whether it would be appropriate to require reporting on an intensity metric at an individual site and/or subsidiary level – this would allow organisations to meaningfully compare the performance of similar sites.
  • Greater focus on energy management. BEIS is proposing that ESOS reports include recommendations which specifically cover energy management processes, behavioural change interventions and energy training requirements for staff.
  • Improving the quality of ESOS assessors. BEIS wants to review the current processes through which ESOS lead assessors are certified by professional bodies, and the processes that ensure they are appropriately qualified and continue to meet the required standards.
  • Addressing the compliance bottleneck. An ESOS evaluation identified that the high demand for assessors close to the compliance deadline led to problems with assessor availability, cost of assessments and report quality. BEIS is considering changing the qualification date or staggering phases for different sectors to address this.
  • Providing an ESOS recommendations template. BEIS suggests this would improve the presentation of ESOS recommendations and the information provided on next steps. It also wants to provide better guidance on next steps, to encourage uptake of recommendations.

BEIS is also seeking views and evidence on two additional options to improve the scheme. These would not take place in Phase 3, but could be implemented in the longer term:

  • Extending the scope of the scheme to include medium sized businesses. BEIS wants views on extending ESOS to all medium sized enterprises (MEs), or extending the rules to a subset MEs that would most likely benefit, such as high energy users or industrial sectors.
  • Mandating action on audit recommendations. This could be introduced in Phase 4, and BEIS is welcoming suggestions on how this could work.

The consultation runs until 28th September 2021. You can have your say on the website.

Download our free Compliance Pocket Guide, which includes a guide to ESOS Phase 3.