The burning question: has ESOS Phase 1 worked?

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It might seem a world away now, but back in 2016, organisations were frantic to submit information for Phase 1 of ESOS by 29 January.

Almost 3 years down the line, the qualification date (31 December 2018) for Phase 2 is nigh-on upon us, and next year’s 5 December 2019 deadline will be here equally swiftly.

That being the case, now is an apt time to look at the scheme’s progress to date with a view to discovering, has it worked?

ESOS to date; success or failure?

By any estimation, answering this question is challenging. Does success constitute a decent percentage of compliant firms, or is it defined by actual energy efficiency improvements being installed?

Equally, success for some might simply spell energy efficiency making it to the boardroom agenda, while others would say that’s not the key; practical action is.

Some firms didn’t achieve what we might define the lower tier of success. Industry news portal EDIE reported that some time ago, the Environment Agency had issued more than 300 enforcement notices to non-compliant organisations, with around 200 more set to be issued penalties in that financial year.

EDIE believes hundreds more organisations could be in line for fines, which can be as high as £50,000. But then again, bear in mind there were over 10,000 firms affected overall, by most estimates.

Let’s take a punt and argue that by now, some 1,000 firms have been fined. The reality might be fewer. That’s still just 10 per cent of the overall total.

For a brand new scheme, which had the usual issues getting off the starting line and suffered from challenges on capacity to get reporting, and hence the overall job done, 10 per cent is arguably a successful ratio.

What other findings on ESOS Phase 1 are available?

Since the initial data rush in 2016/17, things have gone rather quiet. We know from the ESOS Newsletter 2017 Issue 1 that of reports audited in the 2016/17 financial year, 75 per cent were compliant although some actions were needed to fix them.

That’s not bad.

Further, 16 per cent complied with no changes needed, equally; not a bad marker. Glancing over reports published by firms that helped carry out actual audits paints a slightly different picture.

From analysing the results some third parties have released, it appears that about 70 per cent of firms were happy with the reports they got; a positive. But far fewer, less than 1 in 5, actually set about doing any more work with the companies that helped them in reporting.

Reading between the lines, this hints that firms were happy to get the work done, sign off compliance and shelve the data for the future.

Of course, they could do efficiency installation themselves, without letting their ‘audit assistant’ know.

But one third party auditor says just a quarter of its clients installing energy efficiency were doing so because of ESOS.

There’s more out there we can use to judge success; we downloaded an Environment Agency list of firms it had to remind to comply for late notification.

73 per cent of late notifiers told the EA their problem was ‘late awareness of the scheme.’ Whether the firms were copping out or not, communications could be improved in 2019.

The data correlates with numbers from third parties hinting audit prices more than doubled in the run in to the original deadline; more evidence of the need to get messaging out there early.

ESOS Phase 1; the final analysis

So, what can we ultimately say about ESOS Phase 1? Few fines have been levied, most firms got there in the end, energy efficiency did impact on boardroom tables.

However, on a positive note one consultancy firm rated its findings at over 300 customers and estimated the investment potential in energy efficiency measures to be circa £1.9billion: they noted that the top three categories were LED lighting, BMS and energy management systems.

It’s fair to say though, that awareness could have been better, the sector overall wasn’t well prepared and auditing resources were thin. Most crucially, what can we do as partners to make ESOS Phase 2 more of an implementation based, rather than reporting based tool?

This surely is the key to the scheme’s longevity and its ultimate legacy. The reporting aspect which kicked off some years ago will soon be back, but we need more.

Let’s open the conversation on how the next iteration of ESOS can be about delivering on the energy efficiency options we have available, not just noting them down.

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