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Using ISO 50001 for ESOS Compliance

Using energy efficiently helps save money as well as helping to conserve resources and tackle climate change. Any organisation can achieve the ISO 50001 standard, but it is particularly relevant to significant energy users or if you are captured by the ESOS legislation.

ISO 50001: An alternative route to ESOS compliance

The International Organisation for Standardisation (ISO) is the world’s largest developer of International Standards. ISO 50001 outlines how a business should develop and maintain an Energy Management System (EnMS) and is known as one of the most cost-effective methods of energy and cost reduction.

ISO 50001 certification will improve your energy efficiency, enhance your sustainability credibility when tendering for contracts, demonstrates your organisation’s commitment to corporate responsibility and could result in monetary benefits. It can also help you reduce greenhouse gas emissions and meet any EU ETS, EPBD and CRC commitments you may have. In addition, accredited sites are exempt from the Energy Savings Opportunity Scheme (ESOS) (as long as at least 90% of your total energy use is covered).

Some organisations are considering ISO50001 for ESOS Phase 2 in 2019 to implement a robust energy management system and make future ESOS compliance easier. Although the ISO certification has typically proven more expensive than an ESOS assessment, significant energy savings translate directly to enhanced profits for the certified organisation.

What is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment and energy saving identification scheme, first introduced throughout the UK in July 2014.  It occurs in four-yearly phases and aims to reduce EU energy consumption by 20% by 2020.

The Environment Agency (EA) has the authority to apply penalties (of up to £90,000) against those mandated companies not participating in ESOS or found to be non-compliant.

Who is affected?

Organisations will be affected by the regulations if they qualify as a large undertaking on 31 December of each qualification year. For ESOS, large organisations are those which have:

  • 250 or more UK employees; or
  • Fewer than 250 UK employees but have;
    – An annual turnover exceeding €50 million (approx. £39 million); and
    – A balance sheet exceeding €43 million (approx. £34 million).

Public bodies are not affected.

What do you need to do?

An ESOS Assessment requires those affected to do the following:

  1. Measure your total energy consumption (over a 12-month period)
  2. Conduct energy audits to determine cost-effective energy efficiency recommendations
  3. Ensure an audit is completed and energy saving opportunities reported, or an alternative compliance route such as ISO 50001:2011 – Energy Management System (EnMS) is implemented
  4. Complete the sign-off process by the qualified Lead Assessor and Director
  5. Report compliance by 5th December of the compliance year

Where are we up to?

Phase 1

The Phase 1 compliance deadline passed in December 2015, but, many companies are still yet to comply. If you qualify for ESOS but are yet to act, the Environment Agency will have tried to get in touch with you. If your organisation has missed this deadline, you will need to fill out the online form on the Environment Agency website to explain why.

Many organisations struggled to comply with requirements of ESOS Phase 1 and are now potentially facing significant penalties. The ESOS scheme gives many companies the opportunity to improve their energy efficiency and as a result, make significant cost savings.

Phase 2

The qualification date for the second phase of the scheme is the 31st December 2018.

The compliance date is the date by which the participant must have undertaken its ESOS Assessment and notified its compliance to the Environment Agency (EA). For Phase 2, this is 5th December 2019.

If you predict that you will be caught by ESOS Phase 2, it could pay to start preparations now; to avoid disruption, unnecessary cost further down the line and to start saving money by implementing energy efficiency measures.

If your business is one of those yet to really see the benefit of energy efficiency savings, it’s worth getting on board now, particularly when rising wholesale prices and third party costs make the case for energy reduction even more compelling.

As the next ESOS compliance deadline isn’t until 5th December 2019, ensuring that you have an effective energy management strategy in place might not be at the top of your to-do list. But, if you’re one of the 10,000 organisations that will need to have completed the whole process again by the Phase Two deadline, it’s a good idea to get started now.

Many businesses choose to adopt ISO 50001 because accreditation acts as a route to ESOS compliance, as long as at least 90% of total energy use is covered. So, if you’re ISO 50001 certified by the ESOS deadline, you can rest assured that you won’t need to do anything further to comply with ESOS regulations.

The benefit of ISO50001 compliance is that it enables you to deliver an ongoing strategy for reducing your business energy consumption – meaning continuous cost savings and board-level support are easier to secure. ISO50001 can also help you to demonstrate your business’ green credentials and will not only provide you with peace of mind that ESOS compliance is within easy reach, but also that your organisation will be equipped to deal with any future changes to reporting legislation.

And, as a result of the energy management system you implement as part of ISO 50001, you’re likely to see a reduction in your greenhouse gas emissions. This will not only make it easier to meet any energy and carbon reduction commitments you may have, but it will boost your green credentials, which should appeal to stakeholders and customers alike.

While there are many benefits to ISO 50001, it may not be suitable for every business so don’t worry if you don’t think it’s the right option for your organisation – it’s not the only way to make your organisation more energy efficient! Remember, if you’re not ISO 50001 certified by the ESOS Phase Two deadline then you may need to use alternative ESOS compliance options.

Why start now?

Since 2005, the cost of energy has risen by 70% and is forecast to rise a further 25% before 2020. The UK is faced with a changing landscape and businesses are now less in control of their utilities costs. Wholesale energy prices have the potential to be incredibly volatile and by 2020, third party charges (non-commodity costs) could account for around 60% of your electricity bill, overtaking the cost of wholesale energy.

Using published rates and forward-looking estimates, Inenco have created an Interactive Non-Commodity Cost Dashboard for users to calculate how their business will be exposed to incremental non-commodity costs over the coming years. From the dashboard, you can view the make-up of your typical energy bill going forward and how your business will be impacted.

By implementing recommendations from your ESOS report, you improve your organisations energy efficiency and therefore, achieve financial savings to offset the incremental costs.

Starting that process now will give you the opportunity to gather information over time, which could be easier on your business and your budget, rather than compiling it in retrospect.

By working with Inenco you’re using a proven partner with experts who will work as an extension to your team to provide advice and value to your organisation.

Quality Lead Assessors are in short supply and it has recently been reported that there is only one Lead Assessor for every 10 organisations. 40% of organisations still weren’t compliant 4 months after the Phase 1 deadline and there was a lack of Lead Assessor resource – act now to ensure you are compliant before the deadline.

Why choose Inenco?

Outsourcing ESOS compliance has many benefits. At Inenco, we know the exact data needed to complete the audit and submit the report, along with where to find it, relieving you of the administrative burden. We’ll conduct a free scoping review up front to determine your obligations, going on to build a structured plan tailored to your company.

The core of the Inenco consultancy offering is energy analysis and the identification of opportunities to work smarter. Established for over 50 years, we have carried out more energy surveys than any other independent consultant in the UK.

We pride ourselves on our approach to driving maximum value from a customer’s portfolio, from ESOS and other UK energy legislation. We’ll work with you throughout the process to ensure you understand our approach along with opportunities for improvements that will deliver an energy, carbon and cost saving.

Need support with your ESOS compliance?

Get in touch today on 0845 46 36 26 or email