Compliance Deadline to Phase 2 of ESOS is Underway

01 November 2018

The first round of the Energy Savings Opportunity Scheme (ESOS) is now a distant memory for those who complied ahead of the 5th December 2015 compliance deadline. Indeed, given that ESOS operates in a four-year cycle, many businesses will already have switched their attention to Phase 2.

This second phase is currently well under way and continues to state that it is mandatory for large UK organizations to measure their energy consumption and carry out energy audits. Companies operating in other EU Member States, may also need to comply with local ESOS-equivalents in those territories.

ESOS is the UK’s response to Article 8 of the EU Energy Efficiency Directive (EED). The ESOS regulation introduces mandatory requirements on large businesses within the UK, which must be carried out once every four years. The deadline for compliance with ESOS Phase 1 was the 5th December 2015, whilst the deadline for Phase 2 is 5th December 2019. Just over one year from now.

The ESOS qualification criteria can be complex. ESOS obligations capture all large organisations, which are defined as those that meet one, or both, of the two criteria:

Employs in excess of 250 staff
Has an annual turnover in excess of €50m and an annual balance sheet of €43m.

If your organization is part of a corporate group, which includes another UK undertaking that meets the qualification criteria, then you will need to comply, regardless of size. However, public bodies are excluded from the scope of ESOS.

The size and turnover of your organization is judged as of 31st December 2018 – the ESOS qualification date. If you are close to either of these criteria, then you may need to look back over previous accounting periods with the status of your organization determined by whether you have maintained this size for at least two consecutive reporting periods.

Research has found, however, that three quarters of businesses failed to install at least one measure identified during Phase 1 and that for many businesses ESOS became no more than a ‘box-ticking’ exercise with no tangible benefit to the organization itself.

ISO 50001: An alternative route to ESOS compliance

ISO 50001 outlines how a business should develop and maintain an Energy Management System (EnMS) and is known as one of the most cost-effective methods of energy and cost reduction.

ISO 50001 certification will improve your energy efficiency, enhance your sustainability and credibility when tendering for contracts, demonstrates your organization’s commitment to corporate responsibility and could result in monetary benefits. It can also help you reduce greenhouse gas emissions and meet any EU ETS, EPBD and CRC commitments you may have. In addition, accredited sites are exempt from the Energy Savings Opportunity Scheme (ESOS) (as long as at least 90% of your total energy use is covered).

Some organizations are considering ISO 50001 for ESOS Phase 2 in 2019 to implement a robust energy management system and make future ESOS compliance easier.

Although the ISO certification has typically proven more expensive than an ESOS assessment, significant energy savings translate directly to enhanced profits for the certified organization.