EED article 8, the UK and ESOS


Courtesy of Energy Institute (EI)

EU member states have the job of deciding by the summer how they will implement the European Energy Efficiency Directive. Here, Rosamund Thomas describes the current plans for the UK – ESOS.

The European Union has set strong targets for energy within the next few years. The ‘20-20-20’ targets are a key strategy in the EU approach to a low carbon energy system; pushing for a reduction of 20% in greenhouse gas emissions; an increase of 20% in renewable energy; and an improvement in the EU’s energy efficiency of 20%; all by 2020.

The EU Energy Efficiency Directive, adopted in October 2012, is the main approach to promoting a stable energy efficiency market within Europe and addressing key barriers that hinder the development of this market. Article 8 of the Directive outlines the requirements for member states to ‘promote the availability’ of high quality, independent and costeffective energy audits to help achieve this.


The Energy Savings Opportunity Scheme (ESOS) is the UK government’s proposed approach to meeting the requirements of article 8 of the Directive. Under ESOS, all qualifying organisations are required to introduce a programme of regular energy audits, with an initial audit being conducted before 5 December 2015, and then undertaking one at least every four years subsequently.

Any organisation that employs more than 250 people and has an annual turnover exceeding €50mn and/or an annual balance sheet total exceeding €43mn is defined as large enterprise under the scheme, and will have to comply with ESOS. For the purpose of the Directive, an enterprise is defined as ‘any entity engaged in an economic activity, irrespective of its legal form’. This means that the scheme will apply to large companies, but also organisations such as partnerships, charitable incorporated organisations and certain universities. Public bodies however are exempt from the scheme as they are defined as a ‘contracting authority’.

Of the 7,000+ organisations that are expected to fall into the scheme, a large proportion are already complying with other regulations in order to manage their energy consumption. ESOS has the aim of acknowledging good practice that has arisen under existing policy by putting in place transitional arrangements and alternative routes to compliance. This is designed to ensure that the scheme complements the existing policy landscape and adds value to the energy efficiency market, rather than just becoming a administrative burden for companies. By doing so, the scheme hopes to address the existing information gap in energy efficiency and emphasise the value of energy auditing and energy management within organisations.

The government’s impact assessment for ESOS states the potential net benefit for British organisations could be between £0.8–3bn, based on the conservative estimation that 6% of the energy saving measures recommended through an energy audit will then be implemented.

Experienced auditors essential

To gain the views from industry and general public, the government published the ESOS consultation document in July 2013, inviting feedback for the document and the impact assessment. The consultation stage closed in October 2013.

The Energy Institute (EI) has been actively engaged with both government and industry to provide a platform for discussion in regards to the scheme. A high-level consultation workshop was hosted at the EI’s headquarters in London which enabled a unique dialogue between the Department of Energy and Climate Change’s Energy Efficiency Deployment Office (EEDO) and EI members.

The workshop was attended by members from a range of disciplines including Chartered Energy Managers, members of the Register of Professional Energy Consultants (RPEC) and end user organisations. This discussion formed the premise for the EI consultation response which underwent peer review from the EI’s recently formed Energy Management Panel (EMP) before submission to government. The report sought to represent the views of EI members as a whole; aiming to highlight the key issues of the scheme, consider any unintended consequences and give weight to opportunities thatmay have been overlooked.

A main aspect that the EI has emphasised within the consultation response was the importance of evidence. Ensuring that the ESOS assessments are carried out by professional, highly experienced auditors is paramount to ESOS success. The complexity of energy audits will require significant understanding and levels of competence from auditors and therefore evidence to demonstrate their level of experience and qualifications in the field is essential.

In addition, any route to comply with ESOS should have to provide a reliable and accurate evidence base to demonstrate meeting the minimum standards within the scheme.

Another aspect highlighted was how ESOS could be used to promote existing regulation and standards which already exercise a high level of standard. This includes international standards such as ISO 50001: Energy Management Systems and BS EN 16247-1: Energy Audits – General requirements.

Skills and next steps

Although ESOS is UK-focused, it is important to consider the wider, international stance of energy efficiency and the implications across Europe from the EU Energy Efficiency Directive. The EI response raised the question of how skills will be regarded across the EU.Whether assessors with non- UK qualifications would be able to undertake the ESOS assessments in the UK and whether, on that logic, UK assessors would be able to work abroad. This would relate to how other member states respond to article 8 of the Energy Efficiency Directive and the frameworks they put in place to meet the requirements.

The government is currently processing comments from the consultation stage, with the formal response and updated impact assessment scheduled to be released in spring this year.

At this stage it is not possible to tell what impact ESOS will have on British organisations and how effective it will be at developing the energy efficiency industry. However, it is clear that there is still a large potential within our businesses to reduce energy demand and it may be that a new approach will provide a muchneeded injection to drive progress.

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