By Daniel Hunter
Almost half (46%) of large businesses required to comply with the new Energy Savings Opportunity Scheme (ESOS) do not feel the cost will be recouped by the savings made for their business in the long-term.
ESOS, a legislative move to reduce commercial energy consumption by 20% ahead of 2020, has led to planning confusion in the business community with 60% of companies admitting to having not budgeted for the scheme this year. Instead, business leaders plan to fund the cost of audits and compliance from other budget areas including forecast profits, with many fearful of a low return on investment.
Despite these concerns, research conducted by Utilitywise, one of the UK's leading energy, carbon and water consultancies, shows that businesses who have started the ESOS process are significantly more clued up on costs, with over one third (40%) of those who have not started revealing they have no idea about the financial outlay their business will need to make. Worryingly, nearly one third (31%) of businesses impacted by the new rules have not started the process yet, with 21% of businesses not even planning to begin until the autumn.
However, a large majority of business people (86%) are aware of the penalties they could face if they do not comply with the new legislation. Furthermore, 72% of businesses also understand the threat of the 'naming and shaming' that could happen if they fail to meet the December deadline date.
Sam Davidson, Head of Consultancy Services from Utilitywise, said: "Businesses who have kick started ESOS are a lot more clued up on how much it costs and how long it will take than those who have not started the process yet. As the year sprints on, we are concerned some businesses will get caught out in the autumn with an unexpected cost, little time to complete ESOS in a detailed manner and, worse still, be fined for non-compliance. We welcome the legislation as a route to more businesses understanding their energy usage better, but are clear on the fact that a return on investment will only be achieved when the recommended measures are understood and implemented."
Challenges cited by businesses trying to get to grips with ESOS include a lack of initial understanding (27%), struggling to track down all the information required (24%) and assessing if their business was going to be affected by the changes. Over half feel they could have been supported through the process more effectively and over a third (37%) would have liked more time to get their heads round the scheme.
Whilst public bodies are not affected, large organisations of more than 250 employees, or those that have an annual turnover of £38 million and a balance sheet of more than £34 million, must comply with the new rules. The cost of compliance can vary depending on the business and can be anything from £7,000 to £30,000. The legislation requires those affected to be compliant, having undertaken an ESOS audit (or obtaining an alternative route to compliance), however a reduction in the amount of energy a business uses will only follow as a result of introducing the proposed solutions. A huge majority (80%) of business people understand the legislative moves have been put in place to reduce the amount of energy used by businesses across the country and 43% of the businesses feel ESOS will benefit them.
One in five businesses will implement the recommended energy savings measures regardless, but 31% will only make changes to their energy usage if they can be guaranteed to see significant savings. Official research shows that if businesses take up ESOS recommendations there is the potential to achieve a 37% reduction on energy usage, 18% reduction on carbon and a 45% reduction on water. The Department for Environment and Climate Change (DECC), who introduced the mandatory scheme, estimates that if ESOS participants reduce energy by 0.7%, this would reduce their energy bills by approximately £250 per year, to save around 3TWh per year of energy (the equivalent to 719, 424 average UK households). Utilitywise, with their experienced energy management team and using exclusive t-mac technology for monitoring and controlling commercial energy usage, can support businesses to understand and implement the recommendations raised by ESOS and take them on an energy savings journey.
Jo Scully, ESOS Project Manager, Environment Agency, said: "Many businesses are in the midst of their ESOS preparations and we hope to see them all benefit from the changes they may make to their businesses as a result of a more energy efficient approach. We have been raising awareness over the last year by sending letters to more than 14,000 organisations, holding workshops, publishing guidance on our website and setting up a dedicated helpdesk. We recommend that businesses who need to comply start the process as soon as possible.”
ESOS top tips for businesses
- Have a flexible approach to ESOS and if possible, work with a provider who finds a compliance route that works for your organisation
- Businesses are not expected to be experts in ESOS, but should work with knowledgeable and experienced suppliers who can guide them through the process
- Completing ESOS should not be a tick-box exercise or providers chosen for speed - the benefits for businesses will come from a quality approach and service
- Grasp the opportunity that ESOS provides - if you can better understand your current energy usage and implement changes to reduce this, you'll see significant savings
- Take action, technology such as our t-mac BeMS, will enable businesses to realise the energy saving opportunities highlighted by the audit and reduce consumption and cost