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ESOS: After the deadline, what next?

23rd February 2016

Our Technical Director Chris Hocknell is an ESOS Lead Assessor.  Chris has shared some of the lessons learned and easiest wins from recent ESOS assessments:

The Energy Savings Opportunity Scheme (ESOS) is the mandatory energy assessment that applies to “large undertakings”, regardless of sector, employing 250 people or more or with an annual turnover of in excess of 50 million euros.

The assessment requires companies to calculate their total energy consumption across buildings, industrial processes and transport. Companies must identify areas of significant energy consumption; appoint a lead assessor to carry out or review the ESOS assessment and notify the Environment Agency. There is a requirement to keep records as assessments need to be submitted every 4 years. Companies can satisfy the requirements without an energy audit if all significant energy consumption is covered by ISO 50001, Green Deal Assessments  (GDA) or Display Energy Certificates (DEC).

The first submission deadline of 5 December came and went, with only 4000 companies submitting their assessments.  The deadline was extended to 29 January – but there are an estimated 3000 companies still to comply.

These firms are facing enforcement action (and naming and shaming); the Environment Agency can impose a fine of £5000, with fines of £500 for each day (for up to 80 days) the company remains in breach.   Failure to carry out an energy audit carries a penalty of up to £50,000, and up to £500 for each working day the responsible undertaking remains in breach.

The audit is not expensive, or the information too elusive, so why have so many companies not complied?

The ESOS responsibility has often fallen to the Facilities Manager. In our experience, there is definitely a wide spectrum of interest in, and progress on, sustainability. Moreover, we have carried out ESOS assessments for several financial, accounting and insurance companies. Any energy saving measures that require even an hour of down time in any form is not an acceptable business risk – and this means some measures are out of scope.

A good energy-saving measure may save approximately up to £10,000 per year and take only 1-2 years to pay back. It’s easy to see why it’s not the top of the ‘to do’ list for a 50 million euro turnover business, with an equivalent of £100,000 turnover per day. It’s not that energy efficiency doesn’t matter or they don’t care – it’s that saving energy is just not a high enough priority for some companies, particularly in turbulent economic times.

Compare this with the savings available from switching energy supplier – something easily accomplished without any business disruption. We noted that a lot of the firms had been with the same energy supplier and on the same supply contract for a considerable number of years. These clients viewed energy more as a fixed overhead than a variable cost to be reviewed on a regular basis.  One client was paying a kWh rate 30% higher than the market rate. Another client has saved a significant £36,000 per year just by switching supplier.

Our audits highlighted that a mismatch between occupation patterns and BMS settings was a major source of energy consumption that some remedial “good housekeeping” could address.  It was often found that stated occupancy hours were incorrect, and we typically observed longer periods. When reviewing the energy consumption profiles, they were significantly different to what was expected based on the occupancy hours.

A number of the site visits revealed that the buildings’ plant were operating out of hours, in effect conditioning empty spaces overnight. This meant that the BMS systems were set up incorrectly or thermostatic functions were overriding programmable functions.

Energy efficiency typically doesn’t work economically as an isolated measure (except in very aged/poor quality buildings). The key is to view these upgrades as ‘marginal cost’ or replacement items; meaning that a fixture/equipment is replaced when it fails or breaks to allow for cost effectiveness, the extra over costs for ‘efficient’ kit versus ‘non-efficient’ is relatively small, which shortens the payback period significantly. As such, having a robust and binding sustainable procurement policy is absolutely imperative for companies to capitalise on the incremental improvements over time, again with no disruption to core activities.

Our experience highlighted a fundamental point in that many firms currently approach their understanding of energy consumption from one direction: Companies tend to appraise all aspects of the HVAC and electrical consumption as a first point of call, before having an in-depth understanding of the drivers from the building fabric and crucially, behavioural aspects demonstrated by the building users. Viewing these factors holistically, and in reverse order, underpins the most economic, efficient and sustainable approach to energy consumption – and the most advanced companies are benefiting from this approach, well beyond the ESOS audit.

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