Inogen Associate, Delta-Simons' Dan Ellis reports on new EU energy auditing regulations.
Launched in June 2014, the Energy Savings Opportunity Scheme (ESOS) is a new mandatory energy assessment scheme for large enterprises (and their associated corporate groups) in the United Kingdom.
ESOS is the UK's response to Article 8 of the EU Energy Efficiency Directive (EED) – requiring all member states to implement legislation to encourage the use of energy audits and energy management systems. The aim is to motivate organizations to implement energy-saving measures in order to reduce carbon emissions and help increase operational efficiency and profitability.
If an organization meets the following criteria on the 31st December 2014, then it will be required to participate:
Has greater than 250 employees
Annual turnover greater than €50m and balance sheet of €43m
Part of a corporate group which has at least one entity which meets the above criteria.
What will organizations be required to do?
Participating organizations will be obligated to:
- Undertake energy audits for buildings, transport and industrial processes;
- Identify and evaluate opportunities for energy-saving projects;
- Ensure an approved assessor has approved the audit;
- Ensure that a Board-level Director has reviewed and signed-off the audit; and
- Notify the administrating authority of compliance by 15th December 2015.
If an organization remains a ‘large enterprise' as defined above, it will be required to undertake additional audits every four years, thereafter.
How does ESOS affect landlords and tenants?
In the case of service charges, where the tenant is unaware of actual consumption, the landlord will be expected to include that property within their scope.
Where energy is measured and actual consumption paid for by the tenant, then the landlord of the property does not have to include that premises as part of their ESOS Assessment and it does, therefore, fall under the responsibility of the tenant (if they are required to participate).
It is, therefore, vital that large organizations assess their current portfolios and work with their landlords and tenants to establish the scope of their energy auditing requirements.
What about Overseas Premises and Travel?
Energy consumption and travel outside of the UK is not covered within ESOS.
However, if energy consuming activities occur outside of the UK, but within the European Union, then the participant may be subject to that member state's regulations in response to Article 8 of Energy Efficiency Directive (if any).
Requirements for EU Member States
It is understood that EU member states are currently at different stages of implementing EED Article 8, with requirements varying from country to country.
For global clients and international property portfolios, it will require a detailed and coordinated approach to audit energy consumption across Europe.
Whilst this legislation is only applicable to EU member states, it may also indirectly affect non-EU companies. If EU companies are under the umbrella of a holding company based in the US, for example, the holding company may want to be involved in the strategic delivery of the energy auditing throughout its corporate group.