There is one year to go until the second Energy Savings Opportunity Scheme (ESOS) assessment is due for completion since the scheme came into effect on 31 December 2014.
What is ESOS and do you need to comply?
ESOS is an energy assessment and energy saving scheme, the regulations of which set out the mandatory compliance for all organisations that employ 250 or more people or have an annual turnover of more than 50 million euros (£38,937,777); and an annual balance sheet total in excess of 43 million euros (£33,486,489). This covers a significant proportion of the manufacturing sector in the UK and for manufacturers that meet the criteria, compliance is vital.
If the environment agency are not notified that an ESOS assessment has been undertaken and that compliance has been achieved, a business can face fines of up to £235,000.
Why does complying with ESOS matter for manufacturers?
The levels of energy needed to manufacture products is high with bespoke machinery and large factory spaces required to be running for long periods impacting on heating, lighting and other machine related costs such as industrial processes and transportation of products.
Manufacturers must be wary that this could make them a target for the environment agency, should compliance with ESOS not be assured. That said, the scheme is an opportunity to have greater visibility on current costs and to discover methods that can help organisations save valuable resources that can subsequently be reinvested into other areas of the business. Publicity and social awareness will continue to increase on environmental issues in the coming years and manufacturers must do all they can to make the necessary changes or risk serious reputational damage.
Tips for success to comply with ESOS
Things like factory insulation, using more energy efficient motors, fans and pumps, lighting, vehicles and the use of compressed air can have a huge impact on energy bills for a sector that can then reinvest savings in areas such as new product innovation and entering new markets.
Choosing advisors who have experience in determining total energy consumption, and identifying the subsequent energy saving opportunities is vital for the process to be seamless and efficient.
How to comply with ESOS?
In order to comply, manufacturers have two options.
- The first is to develop and implement a certified and approved energy management system, ISO 50001, covering all the assets and activities of the organisation such as buildings, industrial processes and transportation.
- The second is to identify areas of significant energy consumption, auditing these areas and identifying savings opportunities. They must then appoint a lead energy assessor and produce an implementation plan to exploit the energy saving opportunities.
Whilst the threat of fines for non-compliance looms for a sector that relies more on energy than many others, manufacturers must view ESOS as an opportunity to make significant long term cost savings. In terms of mandatory environmentally friendly activity, this is probably only the tip of the iceberg.
For example the recently introduced regulations on streamlined energy and carbon reporting requires many of the same manufacturing organisations to report their energy and carbon emissions annually from April 2020. More on this to come from us in 2019.
For more information on how your manufacturing company can comply with ESOS, please contact Graham Dalrymple.