The ESOS countdown is on: could EPCs be a route to compliance?

There is less than six months to go until the deadline for phase 2 of the Energy Savings Opportunity Scheme (ESOS). If past performance is anything to go by, most ESOS-obligated organisations will still not have begun their energy audits. If they are to ensure compliance by 5th December 2019, however, they need to be acting now.

To date, ESOS compliance has not gone as smoothly as the Environment Agency probably hoped. The problems of four years ago with phase 1 have been well documented, with most compliance reports submitted either last minute or late. Peak ESOS reporting for phase 1 was the 4th December 2015, the day before the deadline. Delayed action from organisations in starting the compliance process meant that, for lead energy assessors, they had a lot of time-consuming energy audits to do, and not much time to do them in.

If we have learnt any lessons from phase 1, it should cause us to consider what resources we have that could lead to a more efficient, less time-consuming route to compliance. Energy Performance Certificates (EPCs) could be a very valuable, currently underutilised, resource here.

Compliance issues

ESOS obligated organisations are required to carry out an ESOS assessment every four years. This involves conducting an audit calculating total energy consumption (consumed by buildings, industrial processes and transport), identifying the areas of significant consumption (amounting to at least 90% of the total), and highlighting opportunities to make energy savings. Once this assessment is complete, they submit a notification of compliance to the Environment Agency. ESOS is applicable to large organisations with over 250 employees, or with an annual turnover above €50 million and balance sheet above €43 million. For most organisations, buildings will make up 90% of their energy demand.

The statistics that emerged following phase 1 in 2015 revealed that non-compliance with ESOS was rife. Around 2,800 organisations didn’t complete on time, only 16% of those that did were fully compliant, and 500 organisations that were obligated to submit never did, leading to a large number of civil penalty proceedings. Interestingly, the Environment Agency engaged in more enforcement activity against organisations that did submit an assessment, but where they failed to fully meet the requirements.

Arguably the main reason for late, poorly formulated, or no submissions at all is due to organisations not allocating enough time for lead energy assessors to successfully complete the assessment. For organisations with rented properties, where EPCs will already have been undertaken, they have the potential to significantly cut down on the time it takes for assessment.

It is important to note that EPCs are not a catch-all for ESOS compliance. There are four routes to compliance: ISO 50001, Display Energy Certificates (DECs), Green Deal Assessments (GDAs) or ESOS compliant energy audits. EPCs can be used for the third option, as they can be used to generate a GDA report, and for the fourth, as they can inform an energy audit.

Quicker assessment

So, how can EPCs save energy assessors time and effort for ESOS assessments? The answer lies in the energy model that is contained within the building EPC file. This can be uploaded into software that can automatically calculate the energy savings opportunities, and produce a report template for assessors that is already populated with this key information.

Once the EPC data file has been uploaded, intelligent software platforms can analyse it and provide a range of improvement measures for the property, including the cost to implement the measures and the length of the payback period, the energy that will be saved, and the resulting carbon reduction.

Software that also allows assessors to input the actual building consumption data can enhance these savings measures, scaling them in proportion to the real consumption data. This allows the suggested improvement measures to be much more accurate and realistic, aligning them with how the building actually operates and consumes energy, not just how the building model suggests it would. This more realistic assessment could result in a greater degree of post-ESOS actual improvement activity – the findings from phase 1 revealed ESOS assessment did not have much of an impact on future energy efficiency decision making.

Utilising a platform that can do the bulk of the analytical work for assessors, and input it into a template ESOS report – populated with the reference year of energy data, savings measures for the organisation, and detailed savings measures for each property in the portfolio – could save a lot of time and effort. It could also reduce the number of site visits, which assessors are expected to conduct as part of the ESOS audit. If they have the energy models from EPCs done in the last four years, that constitutes a site survey, so they could choose to only inspect a select few sites.

All property rented or sold in the last ten years will already have an EPC, and organisations with rented sites count for a large proportion of ESOS-obligated companies. This means that many organisations are actually sitting on a resource that could be used to help lead energy assessors take a more efficient route to compliance. For assessors, it presents an opportunity to conduct more ESOS assessments in the given time, in what will no doubt be a very busy period in the run up to the phase 2 deadline.

Looking to the future, there is some talk of ESOS being extended to sweep up even more organisations. If this happens, the time pressures and mounting demand on assessors will be exacerbated further. With that in mind, it’s time to start thinking smarter about how we approach ESOS assessment, and the range of resources in our toolkit that could help.

Stephen Preece

Stephen Preece is the Business Development Director at proptech company arbnco, which develops software solutions to improve the energy efficiency of commercial & public sector real estate. Its arbn consult platform now incorporates ESOS reporting functionality.