Smart Cities: Are you prepared for the Energy Savings Opportunity Scheme?

Do you have: 

• more than 250 employees (full time/part time); or
• an annual turnover of +€50m and a balance sheet of +€43m?*

Are you part of a corporate group where at least one entity fulfils these requirements?

If so, under new legislation, your business may be required to carry out a mandatory assessment of energy usage and identify potential energy savings. 

The Energy Savings Opportunity Scheme Regulations 2014 came into force on 17 July 2014 and implements Article 8 of the EU Energy Efficiency Directive. The UK is one of the first countries to implement the Directive, but eventually this will be adopted by all countries in the EU.

The Regulations apply to all businesses, whether companies, partnerships or trusts if they meet these requirements as at 31 December 2014.** They can apply to not-for-profit and other organisations which are not “public bodies”, such as certain universities and registered social landlords. Businesses must comply with the Regulations in addition to any other applicable legislation, such as the CRC Energy Efficiency Scheme.

If your business is caught, then the first energy assessment must be carried out and notified to the appropriate regulator*** by the compliance date of 5 December 2015 and every 4 years after that. Assessments must cover 90% of energy consumption and can only be carried out by a lead assessor, who must be a member of an approved professional body. Directors or senior managers must sign-off the assessment before the regulator is notified.

Businesses will need to keep their “evidence pack” for 8 years from the relevant compliance notification date. A compliant assessment/audit is based on verifiable data (including energy profiling and site visits) and must identify energy saving opportunities. At this time, there is no statutory requirement on businesses to implement the energy efficiency measures identified in an audit.

Failure to comply can result in the regulator imposing fixed civil penalties on the business and/or publicising details of the non-compliance. There are no criminal sanctions for the business, directors or senior management in the Regulations arising from non-compliance. 

The underlying aims of the Directive and the Regulations are clear: increase senior management’s awareness of the opportunities to introduce energy efficiency measures and of the economic benefits of implementing such measures in businesses across the EU and the UK.

If you would like to know more about ESOS compliance or are considering entering into efficiency/savings contracts (to implement ESOS findings or more generally), please contact Matt Germain and Simon Hancock.

* Based on exchange rates as at 16 September 2014 – legislative values are set at +€50m / +€43m. Sterling figures must be converted to Euros using the exchange rate on the qualification date (31 December 2014). 

** Note there are exceptions for those covered by ISO. 

*** Environment Agency for businesses with a registered office or principal place of activity in England or equivalent bodies in Northern Ireland, Scotland and Wales.