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ESOS Compliance Guidance – Everything You Need to Know

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esos compliance guidance – everything you need to know

As a business, it’s only natural to seek out ESOS compliance guidance. Above all else, you’ll want to eliminate the chance of disruption and avoid penalties for non-compliance. So how does it work? Who does it apply to? And how can you make sure you’re compliant?

Read on for all the ESOS compliance guidance your business needs.

What is ESOS?

Short for the Energy Saving Opportunity Scheme, ESOS was introduced in 2014 for ‘large undertakings’ in the UK, based on the EU’s Energy Efficiency Directive. Broadly speaking, it requires businesses to assess, record and report on their energy consumption every four years.

The most important factor of ESOS compliance guidance is who it affects. According to the government definition, a large undertaking is any organisation that either:

  • Employs 250 or more people
  • Has an annual turnover exceeding £44.1 million and a balance sheet exceeding £37.9 million

ESOS has been split into phases, which determine when businesses should check their eligibility and carry out assessments. The compliance date for Phase 1 was 5th December 2015, followed by 5th December 2019 for Phase 2 and 5th December 2023 for Phase 3.

Eligible businesses should have met their Phase 2 obligations by December 2019, meaning the next date for your diary was 31st December 2022 – the qualification date for Phase 3 of ESOS. The government has also confirmed that the compliance date for ESOS Phase 4 will fall in 2027.

One key change for Phase 4 is progress reporting. If organisations fail to meet goals set out in their carbon reduction strategies, they will be required to explain why that’s the case.

What happens if I don’t comply?

One of the most vital pieces of ESOS compliance guidance is that eligible organisations must meet their obligations.

Fines of up to £500 per day or £50,000 overall can be implemented for companies that fail to meet their requirements. The Environment Agency has already put some of those fines into action, with a total of over £150,000 in fines for 15 businesses in 2018.

Breaches include failing to:

  • Maintain records that prove your ESOS compliance
  • Notify the environment agency by the compliance date
  • Undertake your energy audit at all, which is typically the most serious breach
  • Respond to a penalty notice or enforcement notice
  • Ensure your report is accurate and factually correct

What do I need to do?

If your business meets the definition of a ‘large undertaking’ above, or you expect it to on 31st December 2022, then you’ll need to carry out a full ESOS assessment for your energy consumption. You must:

  • Appoint a lead assessor who is a member of an ESOS-approved register, internally or externally
  • Calculate energy consumption used during activities carried out by your business – or used by assets held by your company
  • Identify any areas of significant energy consumption, accounting for 90% of your total energy consumption or more
  • Notify the Environment Agency of your assessment in compliance with ESOS regulations
  • Maintain accessible records of all assessments and reports to prove compliance

Your audit needs to be based on 12 months of verifiable data from a continuous period. That doesn’t have to be the 12 months prior to the compliance date – as long as it is within 24 months of the start of your audit and no more than a year before the start of future compliance periods.

what is esos?

Guidance for ESOS compliance

In addition to everything covered above, the following tips will make sure the ESOS process runs smoothly for your organisation.

Get help if needed

Firstly, don’t feel like you have to go it alone with ESOS compliance. Guidance from the government shows that you can appoint a lead assessor internally or externally, and it may seem quicker and easier to keep things in house.

However, this can actually complicate the process and take more time away from other people within your business. Everyone knows how time-consuming the hiring process can be. Alternatively, you may need to assist employees with approval from one of the approved registers for ESOS lead assessors.

Choose a reliable contractor

If you’re looking to appoint a lead assessor externally, there are a few important factors to consider when choosing between assessors. Look for a company or contractor that’s:

  • Accredited – Schemes like NICEIC and SafeContractor can assure you that they’re competent, capable and operate safely
  • Experienced – As well as industry experience, look for experience as a lead assessor for companies similar to yours
  • Well reviewed – Check sites like Trustpilot, Google and Facebook to see what other organisations have to say about the service they received

Use it as an opportunity

Last but not least, use ESOS as an opportunity. All too often, eligible organisations see ESOS as a burden or ‘red tape’. But it could actually save you lots of money. The underlying purpose of ESOS is to help businesses improve energy efficiency and reduce emissions. At a time when energy prices are higher than ever, that’s never been a more attractive proposition!

Start early

While the Phase 4 compliance date isn’t until 2027, energy audits can start as early as January 2024. By getting ahead of the pack, you’ll have more time to implement changes, save energy and reduce outgoing costs – not to mention having another thing ticked off your to-do list!

Expert ESOS compliance guidance

When you’ve got other things to focus on, ESOS compliance can seem overwhelming and unnecessary. But it’s important to have the best guidance on your side to avoid penalties and disruption for your business.

At Volta Compliance, we provide specialist ESOS services to businesses in and around Leeds. By assessing and reporting on your energy, our ESOS-approved contractors can keep you compliant and save you money.

To find out more, simply contact our team on 0113 397 1361 or email [email protected].

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Richard Carr Volta Compliance
Richard Carr
Managing Director
Richard is the Director of Volta Compliance. He is a fully qualified approved electrician graded with the JIB. Richard has over 20 years electrical experience working on commercial and industrial installations.