ESOS non-compliance: why it’s a lose-lose

If the government offered your business up to £20 cashback for every £100 you spent on energy, you would probably bite their hand off.  Yet that’s exactly the sort of ‘free money’ organisations are turning down when they fail to comply with the Energy Savings Opportunity Scheme (ESOS).

Not sure if your organisation qualifies for ESOS Phase Two? Try the online qualification checker to find out.

The potential benefits of the mandatory energy assessment scheme are huge. From more than 150 ESOS audits completed by Inprova Energy during phase one, our assessors identified energy savings opportunities ranging from 5 to 20%. This could amount to thousands of pounds worth of potential cost savings for typical sites, amounting to a sizeable cash back on energy bills.

Double losers

Despite these obvious rewards, hundreds of organisations failed to comply with Phase One of ESOS. These businesses will now become double losers because as well as missing out on energy efficiency savings, they face financial penalties of up to £50,000.

The 500 organisations that falsely claimed that they didn’t qualify for ESOS the first time round, are now being actively pursued by The Environment Agency.  More than 300 enforcement notifications have been issued, with more to come, and civil penalty proceedings are underway.

The problem of partial and late compliance

In the first phase, nearly 3,000 organisations failed to report their compliance on-time and sent late notifications that they had over-run the reporting schedule, resulting in a number of fines. Just 16% of participants were found to be fully compliant, with many required to complete remedial actions in order to meet their legal obligations.

Reputational damage

It’s not just the financial damage that non-compliance brings; some organisations are also publicly ‘named and shamed’, which can bring reputational damage in a world where green business practice is both respected and expected.

How to comply with ESOS Phase Two

Phase Two of ESOS has recently been announced, requiring ‘large undertakings’, such as organisations with more than 250 employees, or a turnover in excess of 50 million Euros, to measure their total energy consumption and identify energy efficiency opportunities.

The overall deadline is 5 December 2019, but organisations must first assess whether they are required to participate in ESOS by the qualification date of 31 December 2018.

Organisations that participated in ESOS Phase One must repeat the exercise, but cannot use the same data, which must be based on at least one year’s energy measurement.

There are various routes to ESOS compliance, such as ISO 150001 accreditation, energy surveys, Display Energy Certificates, and Green Deal Assessments.

Take early action

The environment agencies are encouraging qualifying organisations to begin the auditing aspects of the ESOS compliance process as soon as possible. In particular, the ISO 50001 route requires early action, as it can often take well over 12 months to achieve certification and put in place a high performing energy management system.

Allowing plenty of time will avoid the last minute bottlenecks experienced in phase one, when there was a shortage of qualified lead assessors available. This will also ensure that assessments can be completed thoroughly and right first time, thereby reducing the risk of penalties for non-compliance.

The major benefit, however, is that the sooner businesses complete their ESOS assessment, the sooner they will capitalise on cost savings opportunities from improved energy efficiency, which could result in cutting energy bills by as much as a fifth.