Turn ESOS Phase 3 compliance into a net zero opportunity
In a recent article for Energy Manager Magazine, we explore how compliance with The Energy Savings Opportunity Scheme (ESOS) Phase 3, offers a valuable opportunity for businesses to measure and assess energy use and carbon emissions, and can help organisations implement practical and measurable steps to reach net zero.
Prepare for ESOS Phase 3
Introduced in 2015, ESOS is a mandatory energy assessment scheme administered by the Environment Agency. It aims to encourage greater energy efficiency. ESOS requires eligible businesses to complete energy audits and identify energy-saving opportunities every four years. We are now in the compliance period for Phase 3 of the scheme, which means businesses must submit their ESOS audits and recommendations by the deadline of 5th December 2023. Eligible businesses are those with more than 250 employees, an annual turnover exceeding £44 million and a balance sheet of more than £37.9 million. The qualification date for Phase 3 was 31st December 2022.
Changes to reporting requirements
Some important changes have been introduced for Phase 3 of ESOS, following a consultation by the Environment Agency. These changes aim to eliminate some of the problems experienced during Phase 2, improve the quality and consistency of audits, and ensure the scheme supports the UK’s net zero ambitions.
The principle changes for Phase 3 include:
- A reduction in the percentage of total energy consumption that can be excluded from audits (referred to as the de minimis). Previously, while businesses had to report on 100% of their energy use, they only needed to audit significant energy consumption representing 90% of total consumption. That meant 10% of consumption was excluded from the audits. This de minimis percentage has now been reduced to 5% – so businesses must audit and identify energy-saving measures for at least 95% of their total energy consumption.
- A requirement to include an overall energy intensity metric in the ESOS report. This must be expressed in terms of kWh/m2 for buildings, kWh/unit produced for industrial facilities and kWh/mile travelled for transport.
- A standardised template enabling businesses to consistently report summary information, such as energy consumption and route to compliance.
- A requirement for participants to set targets or action plans following the Phase 3 deadline. Businesses will be required to report against these targets in Phase 4. Annual progress reports will be required, bringing the scheme into line with Streamlined Energy and Carbon Reporting (SECR). Previously, businesses were required to identify energy-saving opportunities as part of ESOS compliance but were not legally obliged to implement them.
- A requirement to share ESOS reports with all subsidiaries.
Assess your energy consumption
As in Phases 1 and 2, companies must provide information about energy usage and expenditure across all buildings, industrial processes and transport, covering all electricity, gas, vehicle fuel, heat supplies and self-generated energy consumption. To comply with Phase 3, the data used as the basis for your reporting must cover at least 12 consecutive months any time between 1st January 2022 and 4th December 2023. ESOS audits must be reviewed by a board-level director and approved by an ESOS Lead Assessor.
From compliance to net zero opportunity
The audits required to comply with ESOS enable you to gather vital data on energy consumption and identify ways to reduce energy use and carbon emissions. These reports and data can help you to assess your carbon footprint, implement effective net zero strategies and, over time, monitor progress towards your net zero goal.
Besides carrying out regular audits, there are other ways to achieve ESOS compliance, which provide wider benefits for your business. One of these is ISO 50001 certification. ISO 50001 is the internationally recognised standard for energy management systems (EnMS). If your business is fully certified to ISO 50001, it will automatically comply with ESOS. What’s more, ISO 50001 is a long-term cost and resource-efficient way to meet the requirements of many other regulations, such as SECR and CCA – without the need to appoint separate specialists to comply with each scheme. It provides a framework for establishing best practices in energy management and for creating a net zero roadmap.
Specialist support for compliance and net zero planning
While the Phase 3 deadline of 5th December 2023 may seem a long way off, experience from previous ESOS phases shows that it can take up to six months to plan, collect and audit all necessary data. If you haven’t already begun the compliance process, it’s important to start now.
Equans is an experienced Lead Assessor for ESOS and can fulfil all of your auditing requirements, as well as providing expertise and resources to implement any energy-saving or net zero measures. If you choose the ISO 50001 route to compliance, we have the expertise to guide you through the process of accreditation, from gap analysis to policy development and process change – helping you achieve long-term cost, energy and carbon savings.
Get in touch
Contact our Compliance Services Team to discuss your ESOS Phase 3 auditing, energy-saving and net zero carbon requirements.
Everything you need to know about The Energy Savings Opportunity Scheme (ESOS)
Find out more about the scheme and how Equans can help you comply with ESOS and realise the savings identified.
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