Know thy energy: ESOS and it means for your business

The new legislation – The Energy Savings Opportunity Scheme (ESOS) – is the UK Government’s proposed approach to leading large enterprises through comprehensive and regular energy audits.


The world’s energy conundrum is a tough one: on the one hand energy dependency is substantially increasing, whilst on the other hand, resources are diminishing and the need to reduce consumption is becoming more urgent. Energy efficiency should therefore be a fundamental consideration for UK business, both in the quest for energy security and in limiting the impact of climate change.

With the aim of establishing concrete objectives to improve energy efficiency, the EU passed the 2012 EU Energy Efficiency Directive (2012/27/EU), which stipulates a 20% energy efficiency target to be met by 2020 by member states. Crucial for the private sector is Article 8, which requires all member states to introduce a mandatory requirement for all large enterprises to undertake energy audits every four years.

The Energy Savings Opportunity Scheme (ESOS) is the UK Government’s proposed approach to implementing the requirements set out in Article 8, and is currently being established by the Department of Energy and Climate Change (DECC). The scheme sets out a broad legislative framework, supported by best practice guidance, which aims to lead large enterprises through comprehensive and regular energy audits.

Under the proposed mandatory energy audits, large undertakings will be required to measure their entire energy consumption over the course of a 12 month period and to determine their most significant energy usage. Organisations will also be required to include assessments of the following three areas: key buildings, transportation and industrial/ commercial processes.

The objective of the regulation is to ensure that the companies which are considered to have the largest energy use understand all aspects of that use in relation to their business: from supply, transformation, transmission and distribution to consumption. Through acquiring the detailed knowledge on energy use, it is hoped that those organisations will make better decisions in terms of good energy management.

Importantly, this month, DECC are due to announce the requirements of the legislation, determining the ESOS compliance criteria. Leading up to the announcement, we are advising all businesses to determine whether they are within the ESOS scope and if this is the case, to start to consider where the gaps may be. We are also urging companies not to treat the legislation as another layer of environmental red tape on top of the existing regulation, but to take the opportunity to examine their energy use and make savings.

There are great benefits of comprehensive energy audits or management systems. Understanding the entirety of your business’s energy system will allow you to identify areas of inefficiency, wastage and perhaps even vulnerabilities within your operations. Being able to address these areas effectively will enable you to minimise your resource consumption, reduce costs, whilst at the same time improving your environmental credentials.

Read our ESOS briefing SmartPaper to learn more about how ESOS will affect you. If you would like to have any further information on energy or environmental management systems or how to comply with ESOS, please contact our London or Manchester based offices for further advice.

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