UK: UK Energy Savings Opportunity Scheme

WHAT IS THE ENERGY SAVINGS OPPORTUNITY SCHEME?

The Energy Savings Opportunity Scheme, or ESOS, is a new, mandatory energy assessment and efficiency scheme in the UK that implements parts of the EU Energy Efficiency Directive (2012/27/EU). ESOS requires participants to carry out energy savings assessments every four years that audit energy used by their buildings, industrial processes and transport, as applicable, in order to identify cost-effective energy saving measures. The UK Department of Energy and Climate Change expects about 9,400 participants in the first phase of the scheme, which ends in 2015. Thereafter, ESOS will run in four-year phases.

ESOS is not exclusive of, and may overlap with, other notable energy use/greenhouse gas reduction schemes in the UK, in particular the CRC Energy Efficiency Scheme, Climate Change Agreements and the EU Emissions Trading System. Broadly speaking, ESOS places a greater emphasis on the identification of energy saving opportunities than these other schemes. In addition, the energy use covered by ESOS is likely to be broader than these schemes for many participants.

WHO IS CAUGHT BY THE SCHEME?

ESOS will apply to all entities that are "large undertakings." Large undertakings are, among others, corporate bodies or partnerships organised in the UK and carrying on trade or business that either:

  • employ at least 250 people; or
  • have an annual turnover over €50 million AND an annual balance sheet over €43 million.

For the first phase, these are measured during the financial year ending at, or in the 12 months immediately preceding, 31 December 2014, which is known as the "qualification date."

Owners, managers and partners count as employees for purposes of assessing whether an undertaking exceeds the 250 people threshold. There are additional rules about how to count employees in light of changes to headcount during the financial year.

Corporate Groups

Corporate groups must comply with ESOS if at least one UK group member meets the definition of a large undertaking. In this event, the entire UK operations of the corporate group will be required to participate (the energy usage of overseas undertakings in a group is outside scope). To determine the extent of a participant's corporate group for ESOS, companies must apply the UK Companies Act 2006 definitions of parent undertaking and subsidiary undertaking to the participant's corporate structure.

The default expectation is that the highest partner undertaking organised in the UK will take the lead responsibility for compliance on the group's behalf. However, ESOS allows flexibility for group members to "disaggregate," meaning that, for example, subsidiaries may participate in ESOS separately from other members of the wider corporate group. Participants must notify the Environment Agency, the regulator that administers ESOS, of any disaggregation when they notify of compliance with the scheme.

Changes in Organisational Structure and Their Impact on Qualification for the Scheme

Any organisation that qualifies for ESOS on the qualification date (31 December 2014 for the first phase) will need to comply with ESOS, including organisations that qualify via their group on the qualification date but leave this group prior to the compliance date (which, as explained below, is 5 December 2015 for the first phase). Such an undertaking, or group thereof, can do this in any one of the following ways:

  • Agreeing in writing with its previous highest parent that it will participate in ESOS along with this previous group.
  • Agreeing in writing with its new highest parent that it will participate in ESOS as part of its new group.
  • Participating separately from either its previous or new group and notifying the Environment Agency of its compliance independently.

WHAT MUST GROUP COMPANIES DO IF THEY ARE REQUIRED TO PARTICIPATE IN ESOS?

Measure Their Total Energy Consumption

ESOS participants are required to measure their total energy consumption across any 12-month period of their choice that overlaps with the qualification date, which for the first phase is 31 December 2014. This is known as the "reference period." ESOS's scope covers energy consumed in all of the following - depending on certain criteria:

  • buildings
  • industrial processes
  • transport

There are detailed rules about what participants must consider as part of their energy consumption. In general terms, energy that is supplied to and consumed by the participants is in scope. Energy includes combustible fuels, heat, renewable energy and electricity.

Changes in Organisational Structure and Their Impact on Measuring Total Energy Consumption

The energy use in the reference period from assets or activities that are sold or discontinued by a participant group after the qualification date (31 December 2014 for the first phase) but before the compliance date (5 December 2015 for the first phase) does not need to be included in the group's total energy consumption.

Similarly, the energy use in the reference period of assets or activities purchased or commenced after the qualification date but before the compliance date does not need to be included in the group's total energy consumption.

Identify Their Areas of Significant Energy Consumption, which will be Subject to a New ESOS Audit Unless Exempted

Within a phase, all areas of a participant group's "significant" energy consumption must be covered either by (i) an energy audit commissioned specifically for ESOS or (ii) an alternative route to compliance. In this regard, significant means the energy use that accounts for at least 90% of the group's total energy consumption.

There are four alternative routes to compliance. As long as 90% of a participant group's total energy consumption is covered, the group can use a mix of approaches to achieve ESOS compliance:

  • Energy management systems certified under ISO 50001
  • "Display Energy Certificates" and accompanying advisory reports
  • "Green Deal" assessments
  • Energy audits undertaken during the audit period under other schemes, such as the Carbon Trust Standard or Logistics Carbon Reduction Scheme, as long as those audits meet the minimum standards of an ESOS audit

There are detailed requirements on what ESOS audits must contain. Broadly, they must be based on 12 months' verifiable data, analyse the group's energy consumption and efficiency, and identify energy saving opportunities.

Appoint a Lead Assessor to Carry Out, Oversee or Approve the Energy Audit(s)

The participant group must appoint a "lead assessor" to carry out, oversee or approve an energy audit commissioned for ESOS compliance. Lead assessors can also review audits carried out pursuant to the alternate routes to compliance, in order to confirm they meet the minimum ESOS standards.

Lead assessors may be either in-house experts or external consultants, as long as they are members of professional registers approved by the Environment Agency.

Report ESOS Compliance to the Environment Agency

The participant group must notify the Environment Agency that it has completed the required ESOS assessment on or before the "compliance date," which for the first phase is 5 December 2015. The notification is done on a prescribed form. There is no pre-registration of qualification required under ESOS.

The participant group must keep internal records of how it has complied with ESOS in an evidence pack, although there is no set format for this.

WHAT HAPPENS IF A COMPANY DOES NOT COMPLY?

The relevant regulator, including the Environment Agency, is empowered to issue enforcement notices and civil sanctions (including civil penalties) to non-complying ESOS participants. The regulator will also be empowered to publicly name non-compliant entities on its website and describe the nature of the breach and the amount of penalty imposed on them.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.