Did ESOS do more harm than good?

I was all in favour of the Government’s Energy Savings Opportunity Scheme, ESOS. What’s not to like about European-wide legislation that obliges organisations to identify where they can save energy and reduce costs? It’s a win-win for everyone! Energy bills will be cut, carbon emissions will be cut and we’re a step closer to limiting global warming to under 2°C this century.

Posted on 17 November 2016.

ESOS will move energy awareness into the boardroom and trigger a tsunami of energy and cost saving projects, I thought.  Even if organisations are not currently engaged in energy saving, it will make them realise just what could be achieved!  As a passionate life-time believer in the obligation for every organisation to use energy responsibly, this was music to my ears.

Indeed, we carried out comprehensive ESOS audits for numerous organisations that we then successfully helped to deliver energy and cost savings - through better metering and energy reporting, implementation of projects,  CHP evaluations, negotiation of EPC’s and the delivery of energy training programs.  Where a key challenge was the availability of resources, we provided what is, in effect, a part time energy manager who could be called upon as and when needed.

However, for some organisations, undertaking ESOS seems to have had a very negative effect.  Of the 100s of organisations I have spoken to in this post-ESOS era, a considerable number believe that it was all a waste of time and money as it didn’t tell them anything they didn’t already know and that many of the opportunities identified did not have a payback acceptable to their organisation. 

It’s true that some organisations started with the preconception that ESOS was just another piece of legislation and they approached it as a tick box exercise to endure.  Only a robust audit and a quality audit report could have swayed these organisations.  And therein lies the rub.

The quality of auditors and the audits  themselves was ‘variable’, to say the least, doing little to promote the cause of energy efficiency at board level and, incidentally, generally doing nothing to enhance the reputation of energy consultancy professionals.  We saw a lot of companies shopping around for the cheapest audit and, surprise, surprise, they got exactly what they paid for. In fact, when the Environment Agency audited a sample of 51 reports, only 35% passed without further remedial actions required! 

DECC themselves (now BEIS) admitted that ESOS legislation was imperfect.  I would argue that they got it 90% right but the 10% they didn’t get right was the most important part - enforcement. The lack of prosecutions for non-compliance shows that not only was the legislation imperfect but that the administrators i.e. the EA were ill equipped to effectively deal with non- compliance thereby further undermining the credibility of DECC and the EA.

So how might it have been done better?

There are a number of key improvements that could have been made.  The exclusion of those organisations that fell below a given energy threshold which would have resulted in many charities, employment agencies and cleaning companies that otherwise qualified by way of the number of employees. ESOS delivered little value to these organisations and was rightly viewed as being a cost burden.

Another significant improvement would have been to encourage qualifying organisations who’s ESOS audit identified good quality improvement opportunities with paybacks of say three years or less, to produce an implementation plan and incentives, over and above resultant energy savings, offered to ensure these plans were actually put into effect. Similar schemes already exist in other EU member states.

This would have helped overcome one of the biggest challenges facing many managers – successful engagement of the board directors.

For those seasoned energy professionals amongst us it is clear that energy is only given the focus required and the resources needed when one of three things happen; high energy prices, strong legislation or buy in from the board. Neither the UK Government nor the EU can control global energy prices but they can certainly ensure strong legislation is in place. Unfortunately ESOS could certainly not be considered as a good example of such and has done little to get board buy-in.

The more enlightened organisations we work with saw ESOS for what it was and used the audit report as a catalyst to change the way energy is viewed and managed and have grasped the opportunity to deliver tangible and sustainable benefits.

I still thoroughly support the concept of ESOS, but it is flawed.  As part of the EU, the compliance date for the next round of ESOS in the UK was set for December 2019. Perhaps Brexit will offer the UK government an opportunity to look at how ESOS could work more effectively and implement a UK alternative with more teeth?

My glass is still half full!