Revamping ESOS: addressing limitations

Originally developed as an EU directive, ESOS (Energy Savings Opportunity Scheme) is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria. 

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Organisations that qualify must carry out an ESOS assessment over a four-year cycle and submit this to the Environment Agency by a specified deadline. Although there is currently no requirement to implement the recommended actions, non-compliance with the audit process can lead to fines. 

However, the scheme has been designed as a one-size-fits-all approach, which means it has limitations for most industrial businesses. The mandate for compliance covers turnover and the number of staff within such diverse industries as serving coffee and processing natural gas. Consequently, energy reduction schemes would look entirely different for each company. 

Embracing net zero

ESOS is a great opportunity to raise the profile of energy and sustainability in large businesses, some of which will have already implemented several projects within that remit. Industry-wide reporting can give businesses an overview of what is being done elsewhere and the potential benefits that it brings.

Since 2014, little has changed in the scheme; however, many major industrial businesses have embraced net-zero targets and, in some cases, established whole departments to tackle the various associated issues. 

The audit process itself is where the limitations of the scheme arise, and though individual auditors may be fully conversant in the industry they are working with, they are confined by a standard-issue checklist. This cannot be replicated in the detailed documentation and measures covered by a specialist energy assessor.

Lack of adaptation

The lack of adaptation has led to some participants branding the measures as unrealistic, poor quality, poorly cost, and irrelevant to their particular business. Presenting your quantifiable solutions alongside the ESOS report to the board may help secure funding for action where previously limited resources had been a factor. 

Another aspect of ESOS to consider is that should the government introduce mandatory policies to implement the recommended measures, businesses may find themselves in a very difficult position. This is a real possibility for the next cycle of assessment, which concludes in 2027. This approach may work for some but for a company with proposed or already established decarbonisation projects, it is a huge inconvenience detracting from the value of the measures already – or shortly to be – implemented. 

The volatility of energy costs over recent years and uncertainty in the market add to the issue of implementing energy-saving measures, making it difficult to quantify and project possible savings. Of particular importance in such broad schemes is the payback time, and although this is never pinpointed accurately, it has become virtually impossible to predict.

Still, training more auditors in greater depth to evaluate market trends will be necessary to give them a more grounded approach and enable them to design more tailored solutions with scope for more accurate predictions. 

A different way of doing things

Could a different approach work – one that’s impartial and data-led, that measures more than just energy consumption in different areas of the business? An approach that, as well as measured and reported, is also designed to reach the best possible outcome and could assist in the implementation of those measures, both physically and financially. To illustrate, in a project with an energy-intensive business, On-Site Energy recently identified a potential energy saving of over 53% where the ESOS audit found only 6%. 

David Kipling, CEO of On-Site Energy explained: “We often see total dismissal of the auditor’s recommended measures by participants. Auditors can frustrate businesses by working against their energy-saving priorities and making recommendations structured against ongoing business costs. 

“The ESOS process as it stands is failing to meet business-specific industry needs. It devalues the detailed thought process that energy specialists can provide by implementing a checklist-style, one-size-fits-all approach.” 

An impartial, data-led approach that addresses electrical and thermal energy requirements will always be more persuasive than a subjective opinion. It’s unrealistic to think that the same energy usage and cost optimisations that work for an office building can be applied to a chemical manufacturing plant.  

Decarbonisation is a long-term project that businesses are taking seriously, but ESOS is a limited approach that needs to be overhauled to reflect the diverse priorities of different industries.