Complying with Legislation

We’ve now helped a variety of businesses comply with the two main energy legislation requirements:

SECR - Streamlined Energy & Carbon Reporting

ESOS - Energy Saving Opportunity Scheme

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SECR

This legislation came into effect on 1st April 2019 and requires large UK companies to publicly report on their energy use, carbon emissions and energy efficiency actions. It replaced the reporting aspects of the previous CRC & MGHGR legislation. 

It is implemented by way of the directors’ report within annual company accounts, rather than requiring any additional filings with Companies House or another regulator. The report must include a narrative on energy efficiency actions taken during the financial year.

 

SECR applies to:

  • All quoted companies.

  • Large UK incorporated unquoted companies which meet two of the following three criteria within a financial year. These are having:

  • 250 employees or more

  • Annual turnover greater than £36m

  • Annual balance sheet total greater than £18m

UK subsidiaries that qualify for SECR will not be required to report if they are covered by a parent’s group report. 

It applies to annual reports for financial years which start on or after 1st April 2019.

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ESOS

This legislation works on a four year compliance cycle and requires qualifying business to assess their energy consumption and identify opportunities for savings. The current compliance phase runs from 6th December 2019 - 5th December 2023. So this will need to be completed by 5th December 2023.

 

ESOS applies to any company that on the qualification date of 31st December 2022 employs more than 250 people (either part time or full time). Companies with less than 250 employees will also be required to complete ESOS if their turnover exceeds €50m AND they have a balance sheet exceeding €43m. Failure to comply could lead to a penalty of up to £50k and / or a daily fine of £500 for late compliance up to a maximum of 80 days.

 

The regulations require companies to measure their energy use across their operations (this includes vehicle fuel), identify areas of significant energy consumption and carry out audits on these areas. The process then has to be signed off by a registered Lead Assessor (Richard Felgate and Jim Sharman of HES are Lead Assessors). An evidence pack also has to be prepared which the Environment Agency may request to see. 

 

So for a multi-site business, this usually means auditing a representative sample of businesses (often 10% - 20%) and reviewing data for the whole business including any offices and transport. The data review has to include 12 months of continuous data and the data set must include the qualification date of 31st December 2022.

ESOS Phase 5 Updates


Get ahead now and open up some great savings opportunities for your business, and at the same time prevent bottlenecks and resourcing issues that could lead to problems (or fines!) later on.

Following the recently published and long-awaited outcome of the government consultation on the Energy Savings Opportunity Scheme (ESOS), we are pleased to take our clients through the main changes coming to ESOS Phase 2 and discuss why your business should start its ESOS Phase 3 compliance now.

 

  • The inclusion of intensity metrics

    • Bringing ESOS in line with other reporting schemes such as SECR, there is now a requirement to include energy intensity metrics within the overview section of reports

  • Standardised ways of reporting

    • To ensure standardisation, a template will be available for population. This should result in key information such as organisational structure, route to compliance and other high level information, being included in a standard way for all participants for summary reporting. 

  • Changes to the de-minimis rules

    • De-minimis energy that can be disregarded from assessment is set to be reduced from 10% to 5%. This is likely to increase the requirement for transport reporting as in previous phases this typically fell within de-minimus and received little attention. For some organisations this might also significantly increase the number of site audits required.

  • Report sharing

    • To improve the understanding and uptake of opportunities identified during ESOS, there is now a requirement to ensure reports are disseminated within organisation groups.

  • Action plan

    • Addressing the “so what?” aspects of previous ESOS phases, there is now a requirement to publish a target and action plan, to be updated and reported on annually. This will ensure the opportunities identified are acted upon, either within the SECR energy efficiency narrative or through a reporting function of the ESOS portal. 

  • Expansion of data submission

    • In previous phases, not much of the information gathered as part of ESOS compliance was actually required to be submitted. There are now increased submission requirements to assist with monitoring and enforcement.

 

What isn’t changing? 

Existing surveys already undertaken will not be affected by changes during Phase 3. If you have been waiting to get started, now is the time to move forward with renewed urgency.

 

Getting started

Implementing ESOS recommendations as early as possible means you will benefit from the financial savings that energy efficiency projects bring, faster. With the energy market in its current highly volatile state, prioritising ESOS Phase 3 could give your business the required boost to its bottom line to get you through Winter 2022-23, as well as reducing emissions as part of your journey towards Net Zero.