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What is the Energy Savings Opportunity Scheme (ESOS)?

Yes, we have another acronym for you, but this one definitely deserves some unpicking, as it might benefit your business, in the longer term. The Energy Savings Opportunity Scheme forms part of the European Union Energy Efficiency Directive. If this sounds suspiciously like more paperwork for your business, then yes, there probably will be a little more admin in the coming years. However, there may also be chances to save your business money when it comes to implementing the results of your ESOS audit. So there may also be a silver lining to this bureaucratic cloud.

What’s involved?

The basics of ESOS are an energy audit of your business, which must be done, at the latest, by the end of this year. If you already have undertaken energy audits – perhaps for the Green Deal, for Display Energy Certificates or for ISO 50001 – and they cover the right period, they can be used. Either way, the results of that assessment must then be submitted by December 5th 2015 to the Environment Agency, so there is plenty of wriggle room to wriggle in, although having said that, if you don’t submit, the fines run up to a cool £50,000, which is not exactly small change.

Who’s in and who’s out of ESOS?

Let’s deal firstly with who’s out. Small and medium enterprises (SMEs) are, largely, exempt (The Environment Agency defines an SME as a company with an annual turnover less than €43 million, employing less than 50 people). The public sector is also exempt, as are charities, unless they are larger than this definition of an SME. Equally, a corporate group can also ask to be exempt, if its distinct businesses each fulfill the SME definition. Who does that leave? Well essentially all other larger businesses that can’t tick any of the boxes mentioned above - an estimated 9400 larger enterprises. And if that’s you, then you should probably read on, even though there is a cost involved to conducting an ESOS energy audit and it doesn’t make for pleasant reading. Ready? It’s round £20K for the initial audit by a qualified assessor. And it doesn't stop there, because the audit must be conducted every four years. That covers all the negatives, but what, you might be justifiably thinking, is the point of all this? Well in terms of the positives, the audit will examine all the significant areas where your business uses energy; from your premises, through to processes, through to transport. It will then highlight where significant efficiencies might be made, effectively providing you with a checklist of ways you can save your business money. You are not obliged to make these changes but to do so would seem to make sense – in fact, by the government’s own estimates an ESOS audit might identify up to £300 million in energy savings for larger enterprises. In that sense, £21,000 is peanuts. So, something of a double-edged sword. Some front-loaded fiscal pain, for sure, but then some longer-term gain, perhaps savings of 0.7% in energy reduction across the sector; or, in financial terms, £1.6 billion by 2030. And in an environment where we all need to be more careful with our energy usage... such efficiencies may prove crucial.

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