ESOS: The pros and cons of four routes to compliance

Organisations need to be careful when choosing their preferred routes for compliance with ESOS warns Kit Oung. Here are some tips on the various options.

Since the launch of Savings Opportunity Scheme (ESOS) by the Department of Energy and Climate Change in June 2014, there is a sudden proliferation of companies offering ESOS compliant services. Some providers are even claiming that their energy audit services is compliant with ESOS. Organisations need to be careful when choosing their preferred routes for compliance. Each method is not created equal and organisation can choose one or mix-and-match to suit their needs.

Each method is not created equal and organisation can choose one or mix-and-match to suit their needs.

An ESOS assessment covers 90% of the total energy consumed by large undertakings and includes buildings, manufacturing processes and transport. This article gives a range of positives and negatives for each of the four routes to compliance:

  1. Independently certified ISO 50001 energy management system.
  2. Valid Display Energy Certificate (DEC) with corresponding recommendation report.
  3. Valid Green Deal Assessment (GDA).
  4. Energy audit.

ISO 50001 Energy Management System

ISO 50001 is about applying and integrating a series of processes to focus the organisations’ attention to drive improvements and save energy. This includes, getting top management buy in, allocating resources, active participation in managing energy. In another words, it is a framework or system of governance to make energy saving happen.

Within an ISO 50001-based energy management system, there is a process called energy review. Here, organisation identify significant energy users and way to save energy by these users. Very frequently, the energy review is a high level document containing a mixture of ideas, back-of-envelope quantified opportunities, and some thoroughly thought-out opportunities.

An energy review also does not necessarily have a cost-benefit analysis for each of the opportunities. For no/low cost opportunities, carrying a detailed assessment is costly and unnecessary. Top management is unlikely to sanction medium- to high-cost projects based on opportunities with, say 50%, accuracy without further analysis to increase the savings and cost estimates.

Having said that, ISO 50001 does not mandate organisations to cover 90% of their total energy consumption. For organisation based around buildings and manufacturing, the energy consumption data for transport may also prove to be a challenge.

Display Energy Certificate and Green Deal assessments

DEC and its accompanying recommendation report is carried out by qualified assessors and is based on buildings’ operating data. The output of the assessment is based on a computer software generating the report and recommendation. The output is valid for 10 years from the date of the assessment.

GDAs, also available for buildings only, is a two-part assessment: an Energy Performance Certificate (EPC) and an Occupancy Assessment. Similar to DEC, GDAs are carried out by qualified assessors, based on inputs into a computer software and the outputs are valid for 10 years. However, the assessment is based on the design intent of the building rather than the operating data. GDAs also attracts energy efficiency finance where the investment can be paid back over a fixed period of time.

DECs and GDAs are low cost options for compliance. However, there are five principle drawbacks:

  1. DECs and GDAs are based on building structure and building services only. The organisation would still need to carry out assessment on any manufacturing activities and transportations.
  2. In addition, as the assessment report is valid for 10 years, the reports would be valid for up to two ESOS reporting periods. Any data used for the assessment would not be as current as compared to those used by an ISO 50001 energy management system and energy audits. The building use could be changed during the periods. Alternatively, there may be renovations and equipment upgrades which would not be taken into account.
  3. The assessment is based purely on energy efficiency. Savvy energy aficionados know that savings energy could come from removing an energy user, reducing the quantity of energy consumption or by improving efficiency. Saving energy by applying energy efficiency limits the options to investing in energy efficient products and quantum of energy savings that can be achieved.
  4. As the assessments are software driven, anyone can gain a qualification to use the software after attending an accredited course. The qualification indicates that the assessor has knowledge about the software. It does not indicate that the assessor has knowledge, skill and experience in assessing the building structure and building services.
  5. There are several providers of DEC, EPC and GA software – each having specific built-in assumptions. Some software are programmed for specific building features, e.g. atriums. Other software have defined geometry or material of construction. The assessor needs to know all of the assumptions of the software and match the building to the specific software. This would be more difficult if the assessor is not competent in building structure and building services.

Energy audits

Carrying out energy audit addresses top managements’ need for certainty on how much savings each opportunity brings and what it would cost. Using standards such as ISO 50002, it gives top management in a transparent and traceable manner via:

Carrying out energy audit for a building, a manufacturing and in transport require very different skill sets.
  • Clear signpost on their roles, responsibilities and how they are involved in an energy audit.
  • Guidance on defining a suitable type of energy audit with differing depth, details and scope to suit the needs of the organisation.
  • Standardised processes allows easy tracking and facilitate milestone payment structures.
  • Clear and transparent methods based on operational data builds insight on how they use energy and help create usable and relevant recommendations for improvement.
  • Defined outputs and expectations minimises rework and costs.

On the negative side, organisations need to define the scope, boundary and type of energy audit to comply with ESOS. Then the organisation needs to identify competent teams to carry out the work. Carrying out energy audit for a building, a manufacturing and in transport require very different skill sets. It has its own terminologies, competencies, and groupies. Identifying with competent teams and brokering information in an understandable manner can become a challenge – especially if it is in an area where the organisation is less familiar.

At the present moment, until the Environment Agency publishes a list of approved register of energy assessors, there are no approved lead assessors for ESOS compliance. As such, no one can be sure their services is compliant. In addition, the organisation would still need to put the recommendations through top management for capital sanction, manage the implementation programme, and verify and sustain the savings.

In summary

ESOS provides large undertakings with four ways to comply with ESOS. As discussed above, while all four methods contain an energy assessment, they are not created equal: each has advantages and disadvantages, and addresses different barriers in energy management.

Organisations need to weigh the pros and cons before choosing the appropriate means to compliance. Regardless of which method an organisation chooses for compliance, organisations will still need to supplement the chosen method with other methods to address the other barriers for saving energy: top management commitment, understandable information, finance, and/or governance.

Ultimately, the organisation will need to implement the opportunities. Without it, there would be no financial savings.

Kit Oung is an experienced energy manager at Energy Efficien:ology, board member of Energy Managers’ Association, and Advisory member of 2degrees Network. He is the author of Energy Management in Business (Gower) and Energy Audits (BSI).