Making the best of ESOS – the clue is in the name…

Compliance with ESOS is a legal requirement to carry out periodic (three-yearly) energy audits applicable to businesses with either more 250 employees or annual turnover more than £44 million.

The scheme requires obligated businesses to assess and report on total energy consumption over a suitable 12 month reference period, the total in this context including building, process and transport-related energy uses. Energy auditing then needs to be carried out, covering sites / activities that account for 95% of the total annual. The overarching aim is to identify and promote the adoption of practical energy saving measures.

The UK has now seen two rounds of the ESOS scheme, but has it made the impact that was originally intended by the underpinning EU legislation?

At Ramboll, our experience suggests that many businesses still perceive ESOS as purely a compliance exercise – a legal requirement – not a chance to exploit the ‘opportunity’ that lies at the heart of the scheme. This includes many larger manufacturing businesses where energy efficiency improvements can generate very substantial financial and carbon saving returns.

So ESOS energy audits become a tick box exercise, doing little to create added value and bring real benefit to the business. We suggest a different approach.

ESOS is by definition an opportunity – if you’re obligated to pay for energy audits, then make sure they deliver results. We would urge any business still to plan and execute their ESOS audit programme to consider the following:

• Don’t pay to run over old ground – focus auditors on identifying new opportunities, or further developing aspects not fully investigated in detail by previous ESOS rounds.
• Use professional engineers – there are literally thousands of companies providing energy audit services, from energy retailers, to architects, environmental and engineering consultancies. We strongly recommend using suitably qualified, experienced and professionally accredited energy engineers, ideally with first-hand experience of manufacturing processes.
• Target your audit resource where they are likely to add most value – e.g. ageing plant, processes known to be relatively inefficient, and/or equipment where replacements / upgrades are already planned. An external audit report can help to add weight to your internal business case for improvements you already have in mind.
• Design audits to provide targeted information in support of future funding opportunities - A good example of this is the UK Government’s Industrial Energy Transformation Fund (IETF), a £500 million funding scheme for industrial energy efficiency and decarbonisation projects. The IETF (SIETF in Scotland) can provide up to 50% grant intervention for the development and capital costs of your energy efficiency projects. Use your ESOS programme to identify and characterise suitable opportunities eligible for IETF support. Ramboll is supporting several IETF projects deploying heat recovery and high temperature heat pump applications.

The compliance deadline for current round of ESOS submissions is the 5th June 2024. There’s still time to comply, and Ramboll can help. We would urge any businesses that hasn’t already done so to think carefully about defining some clear priorities for ESOS to really make it work in a way that pays long-term dividends and adds value to your bottom line.