Ask the expert: How to get value from ESOS phase 2
Dan Hubbard is strategic account manager at BiU, a Chartered Energy Manager and ESOS Lead Assessor who is helping clients comply with phase 2 of the Energy Savings Opportunity Scheme (ESOS). We caught up with him for advice on approaching compliance this time around.
At what stage are your clients at with ESOS phase 2 compliance?
Many of our clients are well underway – we’ve completed the vast majority of site surveys and we expect to be finalising their evidence packs this summer. But, we’re still getting a lot of enquiries coming in from companies who haven’t yet started the process.
Are companies approaching phase 2 differently, compared to phase 1?
Phase 1 was quite rushed for some companies, unless they already had an active energy management plan in place. There was a large amount of work to do in a short timescale.
Phase 2 should be a much more straightforward process, because all of the structures for data collection and reporting were put in place for participants in phase 1. So this time around, we’re seeing a lot of companies tailor their compliance obligations to fit in with their energy management strategy and goals – and using the ESOS process to discover real energy and cost savings.
What’s the best way of getting value from your ESOS audit?
Companies should consider an investment grade audit rather than a basic audit – this will give them detailed feasibility studies into energy saving opportunities, with a robust lifecycle cost analysis.
Then, key to getting value from ESOS is how you present this information to the Board. Directors need to see a clear, impactful and well-presented high level summary with a clear idea of costs and return on investment.
This is a prime opportunity for energy managers to make the case for energy efficiency improvements. We’re helping our clients to put together those high level summaries that make the case for action and investment.
What about ESOS and Brexit?
ESOS is enshrined in UK law and there are no current plans to scrap it. Certainly, the 5th December 2019 deadline for phase 2 is not going away. [See our short post on ESOS and Brexit]
What advice would you give to businesses affected by both ESOS and SECR (the new Streamlined Energy and Carbon Reporting scheme)?
A lot of companies qualify for both ESOS and SECR, and there is some duplication in the requirements for the two schemes, so consistent and accurate data gathering is key. With the right systems in place, your ESOS data could be used as your baseline year for SECR reporting.
ESOS requires you to identify energy saving opportunities, and SECR requires you to give a narrative on energy efficiency actions taken So, if you implement the ESOS opportunities identified, you can report on these in your SECR submission.
Do you anticipate any common pitfalls with ESOS phase 2 compliance?
I would just warn companies not to assume that they’re not eligible for phase 2, just because they weren’t affected by phase 1. If your employee numbers or finances have changed since then, you may now meet the threshold as defined by the qualification criteria on the 31st December 2018.
The exchange rate has also changed since phase one, which may affect whether your turnover or balance sheet meets the definition of a ‘large undertaking’, which is quoted in euros. (Check whether you qualify for ESOS phase 2).
Is there still time to comply with ESOS if you haven’t yet started?
The short answer is yes. But the clock is ticking – if businesses haven’t started, they really need to. More complex organisations might struggle to gather all of the data required. And as we get closer to the deadline, the focus will shift to simple compliance rather than getting value from the process.
The Energy Advice Hub is powered by BiU, the UK’s leading energy and utility consultancy. If you’d like help with ESOS compliance, call us on 01253 785409 or email [email protected]