The Energy Savings Opportunity Scheme (ESOS) was established by the UK Goverment to implement Article 8 (4 to 6) of the EU Energy Efficiency Directive (2012/27/EU). The ESOS Regulations 2014 give effect to the scheme.
ESOS is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria. The Environment Agency is the UK scheme administrator. Organisations that qualify for ESOS must carry out an ESOS assessment every 4 years. These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures they can implement to reduce their energy demand. The entire audit process must be supervised by an accredited ESOS Lead Assessor.
Organisations must notify the Environment Agency by a set deadline that they have complied with their ESOS obligations. The deadline for the first compliance period, 5 December 2015, has now passed for organisations that qualified on 31 December 2014. However, organisations need to start planning now to meet their obligations for the next audit due in 2019 for organisations meeting the qualifying criteria on 31 December 2018.
Whether you have missed your first deadline or you are ready to begin preparing for the next, our lead assessors can guide you through the entire process. They will discuss your business with you to gain an in depth understanding of your operations before helping you plan your audit process. You will need to decide the information you are going to collect and how you intend to meet the requirements. Our team will offer advice and support to allow the entire process to be completed as efficiently as possible. After all, it's all about saving energy and we don't want you working harder than you have got to.
FAQ: Energy Savings Opportunity Scheme (ESOS)
The Energy Savings Opportunity Scheme Regulations 2014 define a public body as those bodies which must adhere to the UK public contract regulations. This definition also ensures organisations should not be simultaneously subject to both mandatory Display Energy Certificates and Energy Savings Opportunities Scheme (ESOS) assessments.
The Public Contract Regulations 2015 state:
“contracting authorities” means the State, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law, and includes central government authorities, but does not include Her Majesty in her private capacity;
“bodies governed by public law” means bodies that have all of the following characteristics:—
(a)they are established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character;
(b)they have legal personality; and
(c)they have any of the following characteristics:—
(i)they are financed, for the most part, by the State, regional or local authorities, or by other bodies governed by public law;
(ii)they are subject to management supervision by those authorities or bodies; or
(iii)they have an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law;
Scotland has additional public contracts regulations applying to organisations in Scotland. These may include additional organisations not included in England and Wales.
Public Body – Self Determination Questionnaire
If, as an organisation, you are unsure as to whether or not you are a “public body” you should seek you own legal advice. When considering if your not-for-profit or charity is subject to these regulations the key will normally be in deciding if you are a body “governed by public law”. The following steps may help your trustees/directors to decide:
- Are you listed in Schedule 1 of The Public Contracts Regulations 2015 (click to view) or Schedule 1 of The Freedom of Information Act 2000 (click to view), covered by The Public Contracts (Scotland) Regulations 2015 (click to view) as amended, a regional authority or a local authority (county, borough, district, town, parish councils etc.)? If your organisation is one of these then you are a “public body” and will require DECs on the premises you occupy if the floor area and public visitation requirements are also met and you will not be subject to ESOS. If you are not listed you should continue to step 2.
- Do you have a legal personality for the purposes of the regulations? In effect, are you a legal body other than an individual? Typical examples could include limited companies (including charitable companies), limited liability partnerships (LLP), community interest companies (CIC), charitable incorporated organisations (CIO), co-operative societies (Co-op), community benefit societies (BenCom) and financial mutuals. If your organisation is any of these you may be a “public body” and should continue to step 3. If not, you probably have no legal personality in this sense.
- Is your organisation established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character? A traditional business exists to make wealth (money) for distribution to its owners, investors and shareholders. In other words, it has industrial or commercial character and would not be considered a “public body” hence you may be subject to ESOS. In contrast, public bodies in this sense exist to meet the general needs of society or of communities. They often provide services like health, social care, education, child care and recreation etc on a not-for-profit basis. They typically use any profits they make from business activities to reinvest in the provision of these services. They may also have a legal “asset lock” preventing the distribution of any profits or assets to members or shareholders. If this applies you should continue to step 4.
- Does the majority of your finance come from the State, regional or local authorities or other bodies governed by public law? If the majority of your organisation’s funding comes from the government, regional authorities, local councils or other public bodies (likely to include grants from charities etc) then you are a “public body” and will be subject to Display Energy Certificates not ESOS. If not, continue to step 5.
- Are you subject to management supervision from the State (including central government departments), regional or local authorities or other bodies governed by public law? A simple way of determining this is to consider if you are free to run your organisation as you wish or whether you have to account for decisions that are made or actions taken to another organisation. For example, most organisations receiving public money have to report upon the activities funded directly or indirectly back to the funding organisation, i.e. they are subject to supervision to ensure the money is spent as intended. Registered Charities are subject to the supervision of the Charity Commission which is part of the State. Similarly NHS practices are subject to supervision from the Department of Health through NHS Trusts and schools, colleges and academies are subject to supervision by the Department of Education through OfSTED. If you are subject to management supervision then you are a “public body” and will be subject to Display Energy Certificates not ESOS. If not, continue to step 6. [NB: Educational establishments should remember that students are considered to be members of the public under these regulations.]
- Do you have an administrative, managerial or supervisory board with more than half its members appointed by the State (including central government departments), regional or local authorities or other bodies governed by public law? If your organisation does then it is a “public body” and will be subject to Display Energy Certificates not ESOS. If not, you are probably not a “public body” and so will be subject to the requirements of the Energy Savings Opportunities Scheme (ESOS) if you are a large undertaking on the qualifying date.
For your ESOS assessment you will need to:
Appoint a lead assessor
You need to appoint a Lead Assessor to carry out and oversee or review your energy audits and overall ESOS assessment. Lead Assessors can be employees or external contractors as long as they are members of an approved professional body register.
Calculate your total energy consumption
This is the energy used by assets held or activities carried out by your organisation or group. This includes the energy consumed by buildings, industrial processes and transport.
Identify your areas of significant energy consumption
This is the energy used by assets held, or activities carried out, by your organisation that account for at least 90% of your total energy consumption. Once you have completed this you need to:
- Find out whether ISO 50001, Display Energy Certificates (DECs) or Green Deal Assessments (GDAs) cover any of your areas of significant energy consumption.
- Identify whether ESOS compliant energy audits have been, or need to be, carried out for the areas of significant energy consumption not covered by ISO 50001, DECs or GDAs.
- As long as 90% of your total energy consumption is covered, you can use a mix of approaches with some of your energy consumption covered by ISO 50001; some by DECs or GDAs and some by ESOS energy audits. You will need to discuss your approach with your Lead Assessor.
Notify the Environment Agency
You need to submit your ESOS notification of compliance to the Environment Agency when you have undertaken an ESOS assessment and are compliant with your obligations.
The notification deadline was 5 December 2015 for the first cycle and every 4 years afterwards. If you miss a deadline then your must notify the Environment Agency and submit your notification as soon as possible.
You need to keep records of how you have complied with ESOS in an evidence pack. There is no set format for this but your Lead Assessor will be able to help you compile this.
If you qualify for ESOS and your organisation is fully covered by an ISO 50001 accreditation, you don’t need to carry out an ESOS assessment. You will already have looked at your environmental impact and how you can reduce your energy demand as part of the accreditation process. However, you will still need to notify the Environment Agency that you are compliant with ESOS.
If you qualify for ESOS, but your organisation is not fully covered by an ISO 50001 accreditation, you need to carry out an ESOS assessment. The assessment helps you work out what your organisation needs to do to comply with the ESOS regulations.
ESOS applies to large undertakings in the UK and their corporate groups. It mainly affects businesses but can also apply to not-for-profit bodies and any other non public sector undertakings that are large enough to meet the qualification criteria if they are engaged in any “trade or business activities”.
A large undertaking is, on the phase qualification date:
- any organisation which has 250 or more employees; or
- any organisation which has fewer than 250 employees, but has an annual turnover exceeding €50 million and a balance sheet exceeding €43 million.
For the purposes of ESOS, the term employees includes employees and other persons engaged in the business of the organisation such as owner-managers and partners. For a UK registered undertaking, this includes all employees contracted to the undertaking either in the UK or abroad. For a non-UK registered undertaking with a UK establishment it includes all those contracted to the undertaking who are subject to income tax in the UK. Please note, this is also the total number of employees regardless of the number of hours worked or contracted (not the number of full-time equivalent staff).
You must take part in ESOS if your undertaking is part of a corporate group which includes another UK undertaking or UK establishment which meets these criteria. Where a corporate group participates in ESOS, unless otherwise agreed, the highest UK parent will act as a ‘responsible undertaking’ and be responsible for ensuring the group as a whole complies. UK registered establishments of an overseas company will also need to take part in ESOS (regardless of their size) if any other part of their global corporate group activities in the UK meet the ESOS qualifying criteria.
Your organisation qualifies for the compliance period (phase) if, on the qualification date, it meets the ESOS definition of a large undertaking. Corporate groups qualify if at least one UK group member meets the ESOS definition of a large undertaking on this date. All qualifying organisations must submit their completed report to The Environment Agency by the compliance date or they may be subject to substantial penalties.
|Phase||Compliance Period||Qualification Date||Compliance Date|
|1||6th Dec 2011 to 5th Dec 2015||31 Dec 2014||5th Dec 2015|
|2||6th Dec 2015 to 5th Dec 2019||31 Dec 2018||5th Dec 2019|
|3||6th Dec 2019 to 5th Dec 2023||31 Dec 2022||5th Dec 2023|
|4||6th Dec 2023 to 5th Dec 2027||31 Dec 2026||5th Dec 2027|
If you are very close to the qualification threshold or have substantially increased or decreased in size in recent years you should read the full guidance to confirm if you qualify. For more information on organisations that do not need to comply see section 1.2 of the full ESOS guidance. Alternatively please feel free to contact us for a no obligation discussion with one of our ESOS Lead Assessors.
Public bodies are not included within the scope of ESOS as their energy efficiency is governed by a separate process involving regular Display Energy Certificates. To find out more – click here.