The Energy Saving Opportunities Scheme (ESOS) is a mandatory energy assessment scheme for organisations in the United Kingdom that are regarded as a ‘large undertaking’.

The scheme was established to implement Article 8(4, 5 and 6) of the EU Energy Efficiency Directive (2012/27/EU). We are now in the second compliance phase of the Regulations and the rules for Phase II of ESOS will continue to apply regardless of the terms of exit from the EU in 2019.

What’s involved in ESOS?

In simple terms, an ESOS assessment requires participants to do three things:

1. Measure your total energy consumption

Qualifying businesses are required to calculate their total energy consumption, including all the energy used in buildings, industrial processes and transport.

2. Conduct energy audits to identify cost-effective energy efficiency recommendations

After the total energy consumption is calculated, businesses must identify assets and activities that amount to at least 90% of the total energy consumption and include recommendations for cost-effective energy efficiency improvements.

A lead assessor will need to be appointed to check that the assessment meets ESOS requirements. The lead assessor must be a member of an approved ESOS lead assessor register.

The assessment must then be signed off by senior management

3. Report compliance to the scheme administrator

The first compliance phase ended in 2015.

We are now in the second phase, where Organisations that qualify are required to notify the Scheme Administrator (Environment Agency) by 5 December 2019 that they have complied with their ESOS obligations.

Who does ESOS apply to?

ESOS applies to large UK undertakings 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.

A large undertaking is an organisation that carries out a trade or business which either:

• employs at least 250 people;
• employs less than 250 people but has an annual turnover in excess of 50 million euros and an annual balance sheet total in excess of 43 million euros. If your accounts are quoted in pounds sterling, you should use the Bank of England exchange rate between the euro and pound sterling at close of business on the qualification date which is an annual turnover in excess of £44,845,000 and an annual balance sheet total in excess of £38,566,700.

If you have an ISO50001 Energy Management System (certified by an approved certification body) covering all your energy use this shall be sufficient to constitute an ESOS Assessment. However, you will still need to notify the Scheme Administrator of your compliance.

Does my business qualify?

Your organisation qualifies if, on 31 December 2018, 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.

If you are very close to the qualification threshold or have substantially increased or decreased in size in recent years read the full ESOS guidance, which includes additional information on how to assess if you qualify.

Organisations that qualify for ESOS must carry out ESOS assessments every four years. These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures.

What are the penalties for non-compliance?

As the regulator for businesses registered in Scotland, we have the power to issue civil sanctions, including financial penalties, if an organisation does not meet the scheme’s obligations.

Implementing energy saving opportunities

ESOS legislation was developed to help large businesses recognise the business and financial benefits of implementing energy saving measures. Compliance with ESOS should not be seen as a regulatory ‘tick box’ exercise, but an opportunity to reduce risks while improving efficiency and profitability by implementing energy saving improvements.

SEPA’s Regulatory Strategy,  One Planet Prosperity , outlines our new statutory purpose to play a role in sustainable economic growth for Scotland. Our aim is to encourage more businesses to go beyond compliance by recognising the opportunities for profitability through resource efficiency and innovation.

It is not a mandatory requirement to implement the energy saving measures identified through your ESOS compliance audit process, instead, it is anticipated that the assessment will provide a strong, business case for action and implementation of the most feasible options. However, it is recognised that you may still need additional support to take these actions forward.

These organisations provide a wide range of support and information on resource efficiency for businesses, most of which is free. A summary of the support already available is provided below:

Further information

• Energy Technology List
• Microgeneration Certification Scheme (MCS)
• Resource Efficient Scotland suppliers database

Contact us

If you have any questions or require any further information or advice on any aspect of ESOS, please contact us.

Related items

• Comply with the Energy Savings Opportunity Scheme (ESOS) guidance
• Further information about ESOS
• ESOS videos
• Lead Assessor webinar