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Strengthening the Energy Saving Opportunity Scheme (ESOS): Government Response

Strengthening the Energy Saving Opportunity Scheme (ESOS): Government Response

On 28 July 2022, the Department of Environment, Food and Rural Affairs (DEFRA) responded to the Energy Saving Opportunity Scheme Consultation which closed on the 28 September 2021. You can read about what the consultation proposal encompassed in our full news story published at the time of consultation launch here.

DEFRA consulted on proposals to strengthen and improve the Energy Savings Opportunity Scheme (ESOS). The main aims of this consultation were to:

  • To increase the number of ESOS participants that take action to reduce energy use by raising the quality of their ESOS audit
  • To increase the carbon and cost savings from ESOS by increasing the number and scope of ESOS recommendations taken up by participants
  • To ensure that ESOS recommendations are consistent with the UK’s net zero commitments

The full consultation response from DEFRA can be accessed here and we have provided a summary below of the salient decisions for the scheme that will directly impact obligated companies.

  • The Government has made the decision to delay some of the proposed changes until phase 4, that would significantly affect site audits already completed in phase 3. The government will however be implementing changes in phase 3, that may require additional site audits to be completed due to change to the de-minimis thresholds. There are also changes to the report requirements and the information submitted to the Environment Agency. If you are a Comply Direct Phase 3 ESOS customer your account manager will be in touch to explain how these changes may impact your compliance shortly.
  • ESOS Reporting will become more standardised, with additional requirements expected for Phase 3. These are mainly around group structure, qualification, and routes to compliance.
  • The government intend to change the de minimis from 10% down to 5%, this is to allow organisations to identify further ways to reduce energy consumption (this is subject to Parliamentary approval). This change will apply for Phase 3 and may in some cases require more site audits to be conducted than would have been the case for Phase 2.
  • The government will consider an energy consumption (MWh) threshold for any individual group, site, process, or fuel type to be excluded within the de-minimis exemption from phase 4 onwards. For phase 3 the government will provide good practice guidance on suggested thresholds however these will not be mandatory yet.
  • Half-hourly energy use data from smart meters will allow ESOS assessors to effectively identify inefficiencies in energy use. Any organisation with a smart meter will be able to request free access to up to 12 months of their historic half-hourly (electricity) or hourly (gas) energy use data from their energy supplier or nominate a third party to do this on their behalf. From 1 December 2022, energy suppliers will have 10 days to respond to such requests.
  • The government will introduce a requirement that ESOS reports use an existing auditing standard such as ISO 50002 or EN 16247 from Phase 4 onwards.
  • The government will take more action in ensuring ESOS lead assessors are appropriately trained and monitored. This will include considering a suitable means of displaying and evidencing information on lead assessors’ skills and experience.
  • The government will consider bringing the qualification date forward in future phases to encourage ESOS participants to start their site audits and assessments sooner.
  • In phase 4 of ESOS the government will refocus ESOS to cover both energy efficiency and net zero. Phase 4 will see the introduction of a net zero assessment, which will identify potential risks to the business of moving to net zero. At this stage the government suggest that the net zero section will feature alongside the energy efficiency recommendations.
  • The government will consider whether some ESOS recommendations might include adaptations to climate change impacts such as overheating or flood resilience, and whether these should be specifically flagged in the net zero methodology for ESOS.
  • Obligated organisations will have to set forward looking targets and action plans, progress on this will have to be reported annually via the energy efficiency section in SECR reports. From Phase 4 a requirement will be introduced which specifies that if a goal has not been met the participant must explain why.
  • The government will take forward the requirement for additional data to be collected for the purposes of monitoring and enforcement.
  • From phase 4 onwards the government will change the ESOS balance sheet and turnover thresholds to align with SECR. Organizations that meet one of the 3 SECR thresholds will be obligated to comply.
  • Other changes include, a site sampling methodology document, which will not be mandatory for Phase 3; the introduction of reporting of an energy intensity metric (already a requirement of SECR); removal of rarely used compliance routes such as Green Deal Assessments
  • The response leaves the door open for further consultations on: widening ESOS participation (including more organizations in the thresholds); and making ESOS recommendations mandatory.

If you would like to speak with a member of our team about ESOS or would like any further information, please do not hesitate to get in touch with our solutions team at solutions@complydirect.com.