We are pleased to provide an update on the UK government's Energy Savings Opportunity Scheme (ESOS), currently in its third phase. The final submission deadline has been extended to 5 June 2024. This extension provides businesses with additional time to comply with the enhanced requirements of this phase. Below is an overview of the key aspects of ESOS Phase 3 and its implications for your business.
Understanding ESOS Phase 3:
ESOS is a compulsory initiative for large UK businesses, aimed at reporting energy use and identifying opportunities for improving energy efficiency. The primary focus of ESOS is on energy consumption over which the organization has direct control or influence. We are currently in Phase 3, a critical period for businesses to actively manage and assess their energy consumption.
Eligibility for ESOS Phase 3:
Businesses classified as a "large undertaking" on 31 December 2022 are subject to ESOS Phase 3. This includes businesses with 250 or more employees, or a turnover exceeding £44 million and a balance sheet total over £38 million. Businesses that have undergone changes in size since the specified date are still included. If your business was eligible for Phase 2 but does not meet the criteria for Phase 3, you are required to notify the Environment Agency through a DNQ (Do Not Qualify) notification.
Key Steps for Ensuring ESOS Compliance:
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Appointment of a Lead Assessor: It is essential to appoint a qualified lead assessor to manage your ESOS reporting. As the deadline nears, the availability of qualified assessors may become limited.
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Monitoring of Energy Consumption: You have to measure your total energy consumption but can choose to report on 95% (your significant energy consumption). Regarding the selection of the reference period, it is required to choose a span of 12 consecutive months for each category of consumption. Interestingly, these periods do not have to coincide, offering a degree of flexibility in your reporting approach.
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For total energy consumption, the reference period must encompass the key date of 31 December 2022 and conclude before the compliance deadline of 5 June 2024. The allowable timeframe for this period begins on 1 January 2022 and extends to 4 June 2024. This flexibility enables organizations to select a 12-month period within this range that best suits their reporting schedule.
In terms of significant energy consumption, the options for the reference period are more expansive. Any consecutive 12-month period between 6 December 2019 (marking the commencement of Phase 3) and 5 June 2024 is acceptable. However, it is crucial to ensure that the data utilised is no more than 24 months old at the time of the audit. For instance, if conducting an audit on 1 February 2024, the data must be from 1 February 2022 or later.
Many organizations find it advantageous to align the reference periods for both total and significant energy consumption. This approach simplifies the reporting process, akin to utilizing a unified strategy for multiple objectives.
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Calculation of Total Energy Consumption: Determine the total energy usage of your business in the UK during the reference period, including all sources from transportation to office utilities.
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Consideration of 'De Minimis' Exemptions: While you may exclude up to 5% of your total energy consumption, this is not mandatory. The decision should align with your business strategy.
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Analysis of Energy Intensity Ratios: Assess your energy consumption across different sectors, such as buildings and transport, to understand your energy use patterns.
Post-Data Collection Steps:
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Report Preparation: Compile a report analyzing your energy consumption and potential efficiency opportunities, which must be endorsed by your lead assessor and a director at the board level.
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Development of an Action Plan: Create a strategy post-audit to reduce energy use over the next four years, outlining anticipated energy savings.
Upcoming Deadlines and Opportunities:
The portal for submitting ESOS compliance notifications is expected to be operational by the 5 June 2024 deadline. In the interim, businesses should focus on the other compliance requirements and may consider sharing their audit findings with stakeholders or publicly on their website.
The deadline for submitting the action plan is 5 December 2024. This presents an opportunity for businesses to not only comply with regulatory requirements but to also implement significant energy-saving measures.
We understand that navigating through the ESOS process can be complex. Our role is to assist you in effectively managing this process, ensuring that your energy reporting is both comprehensive and compliant. If you have any questions or require further guidance, please feel free to reach out for support.