Energy efficiency in the UK has reached a new milestone, especially for businesses participating in the Energy Savings Opportunity Scheme (ESOS). As we move forward with ESOS Phase 3, companies must go beyond merely identifying energy efficiency opportunities – they must take actionable steps and demonstrate progress. This shift marks a significant change in how businesses approach both compliance and energy management. Here’s what Phase 3 participants need to know and do next.
The New Landscape of ESOS Compliance
Since its launch in 2014, ESOS has been a crucial part of energy efficiency regulation for large UK businesses. Traditionally, the process involved assessing energy use across buildings, industrial processes, and transport every four years, followed by a compliance notification to the Environment Agency. This approach often resulted in a period of inactivity between phases, with limited focus on implementing the identified energy-saving opportunities.
However, with ESOS Phase 3, the game has changed. Now, businesses are required not just to identify energy efficiency measures but also to create an Action Plan and report on their progress annually. By 5 December 2024, all Phase 3 participants must submit an Action Plan outlining their energy reduction strategies and begin yearly reporting on their progress.
Key Updates in ESOS Phase 3 Reporting
Phase 3 introduces several important updates:
- Tighter Reporting Requirements: Previously, businesses could exclude up to 10% of their energy supplies from reporting. This has now been reduced to 5%, meaning companies must report on at least 95% of their total energy consumption.
- Mandatory Action Plans: By December 2024, businesses must submit an Action Plan that includes:
- The specific steps they plan to take to reduce energy consumption.
- Whether these steps were recommended during their ESOS assessment.
- Expected energy savings, with details on how these savings were calculated.
- Annual Progress Reporting: Following the submission of the Action Plan, businesses must report their progress annually. The Environment Agency will publicly disclose whether organisations have implemented their planned measures, adding a new layer of accountability and transparency.
Preparing Your ESOS Phase 3 Action Plan
Creating a robust Action Plan is now a critical step in ESOS compliance, requiring approval from a board-level director. Here’s what your plan should include:
- Clear Actions: Outline the specific actions your organisation plans to take to reduce energy consumption. These actions might include upgrading HVAC systems, installing energy management systems (EMS), or implementing renewable energy solutions.
- ESOS Recommendations: Clearly indicate which actions are based on your ESOS assessment recommendations.
- Energy Savings Estimates: Provide detailed estimates of the energy savings your actions are expected to achieve, backed by solid data.
Annual Progress Reporting: Staying on Track
The move to annual progress reporting demands a more proactive and structured approach to ESOS compliance. Here’s how to stay on top:
- Accurate Data Collection: Ensure that your energy data is accurate, comprehensive, and current. This data forms the basis of your progress reports and is essential for tracking the effectiveness of your Action Plan.
- Engage with Leadership: With your Action Plan requiring board-level approval, maintaining ongoing engagement with your senior leadership team is crucial. Regularly update them on progress and be ready to adjust strategies as needed.
- Continuous Monitoring: Utilise energy management systems to monitor progress in real-time. If your actions aren’t delivering the expected results, be prepared to make adjustments swiftly.
Lessons Learned from ESOS Phase 3
At GLEG, we’ve gained valuable insights from guiding clients through Phase 3:
– Intensity Metrics: The late introduction of intensity metrics, such as kilowatt-hour per square meter for buildings, presented challenges. However, future phases will allow for more accurate data collection and deeper insights.
– Transport Data Challenges: Gathering transport metrics, particularly for passenger miles, proved difficult for many organisations. As transport audits gain prominence, improving data collection processes in this area is essential.
– MESOS Portal Testing: Our involvement in testing the Environment Agency’s MESOS portal allowed us to refine our reporting processes and address technical issues, ensuring our clients were fully compliant by the registration deadline.
Quick Wins and Strategic Actions
As you develop your Action Plan, consider integrating quick wins – measures with payback periods of less than 12 months. These can include:
- Environmental Policies: Establish or update your environmental policy to demonstrate your commitment to sustainability and provide a framework for ongoing improvements.
- Behaviour Change Programs: Implement programs to engage employees in energy-saving behaviours, which can yield immediate benefits with minimal investment.
- HVAC and BMS Adjustments: Simple adjustments to heating, ventilation, and air conditioning (HVAC) settings or Building Management Systems (BMS) can result in significant energy savings.
How GLEG Can Support Your ESOS Compliance…
Navigating the complexities of ESOS Phase 3 requires expertise and experience. GLEG offers comprehensive support, from developing your Action Plan to ongoing progress updates. With a strong track record in ESOS submissions and site audits, we ensure that your compliance is not only complete but also strategically aligned with your broader sustainability goals.
ESOS Phase 3 marks a significant shift towards actionable energy efficiency. As businesses adapt to these new requirements, it’s essential to treat ESOS compliance as an ongoing, dynamic process. By developing a robust Action Plan, maintaining accurate data, and engaging with stakeholders at all levels, your organization can meet regulatory obligations while driving substantial energy savings and contributing to the UK’s Net Zero goals.