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We champion responsible business
Understanding ESOS
Thursday 16 April 2015
We champion responsible business
Welcome and Introduction
Keelin McConeProgramme Manager
ARENA Network
We champion responsible business
RSPB
Lisa McAnallyVisitor Experience Officer
Belfast WOW (Window on Wildlife)
BITC -Business in the Community NIRSPB’s WOW, Airport Road West, Belfast
Thursday 16th April2015
Understanding ESOS the
Energy Savings Opportunity Scheme(ESOS)
Judith Wilson [NIEA ESOS Lead]Hugh McGinn
What is ESOS?
• Energy Savings Opportunity Scheme (ESOS)– New UK regulation to comply with Article 8 (4) of
the European Energy Efficiency Directive. – Requires all large undertakings in the UK to do
energy efficiency audits and notify the Environment Agency by 5 December 2015 that they have complied.
– and thereafter to do the same at least once every four years.
ESOS Vision
• The scheme is estimated to lead to £1.6bn net benefits to the UK.
• The majority of these being directly felt by businesses as a result of energy savings.
• Improved air quality in the UK.• Stimulate the market for manufacturers and installers of
energy efficiency equipment.• Reduction in traded CO2 allowances.
As an energy manager what do I have to do?
Simple:1. Determine if you are in the scheme2. Measure your total energy consumption 3. Conduct energy audits to identify cost-effective energy
efficiency recommendations. 4. Report compliance to the Environment Agency (as the
scheme administrator).
Or, is it that easy?
Am I In? What is a ‘large undertaking’?
• Large undertaking* in the UK is defined as: at least 250 employees; or an annual turnover in excess of €50 million (£38,937,777
million) and an annual balance sheet total €43m (£33,486,489 million)
If your undertaking is part of a corporate group which includes a large UK undertaking which meets the above criteria you must participate in the scheme
• Phase 1: Based on your status on 31 December 2014
*An undertaking, as defined in the Companies Act 2006, is: a corporate body or partnership or an unincorporated association carrying on a trade or business, with or without a view to profit
Qualification Criteria definitions • An Employee : anyone with a contract of employment
regardless of hours [zero hour contracted staff are included, as are F/T and P/T employees, manager, owner or partner]
• Trade/Business type and amount of energy use is irrelevant if the criteria of a large undertaking is met (as per Section 1161(1) of the Companies Act 2006)- You are in ESOS
• If you are subject (mandatorily) to the Public Contracting Regulations 2006 you are excluded from ESOS.
Qualification Criteria definitions (cont)• To help determine if you are a large undertaking use last accounts submitted
to Companies House prior to 31/12/2014 to determine qualification as a Large Undertaking
• You may need to go further back if you are near / cross the threshold to get 2 consecutive years.
• A is not required to participate, B is required to participate
For participation B and B1 would form one participant (highest UK parent group), while C and C1 would form another unless they agree to aggregate.
A would not be required to participate because it is not an undertaking in the UK.
UK Organisational structure and impact on qualification for undertakings
Changes after qualification • Changes to organisation size/structure etc after the
qualification date do not effect qualification. Once you are in you are in.
• Any organisation / undertaking sold by a qualifying organisation between 31 Dec 2014 and 5 Dec 2015 needs to comply with ESOS (either with old owner, new owner or on their own)
• Assets (not organisations) sold or acquired during period 31 Dec 2014 and 5 Dec 2015 do not need to be included in total energy consumption calculation or be audited. But it would be sensible to include them anyway.
I’m in - what am I required to do?
1. Conduct ESOS assessment [Measure total energy consumption] Where not fully covered by ISO50001 certification
2. Conduct energy audits Where not covered by ISO50001 certification, Green Deal coverage or
Display Energy Certificates (partial or full coverage)
3. Identify energy savings opportunities
4. Use a lead assessor to either do or sign off points 1 to 3 above (unless fully covered by ISO50001)
5. Get a director to sign off that they have seen the recommendations of the work
6. Notify the scheme administrator of ESOS compliance
1. Conduct an ESOS assessment• Identify total energy consumption (buildings, installations,
transport)– Total energy consumption data
• 12 months consecutive data covering 31/12/14 and end before compliance date 5/12/15• Supplies for all assets covering a specified 12 month period • Common units - can use £ or common energy unit (not CO2)• Purpose: To determine which assets will need to be covered by compliant audits or alternative
routes to compliance
• Identify 90% of your total energy consumption = ‘Areas of Significant Energy Consumption
• Determine coverage by ISO50001, Green Deal, DECs, existing audits which meet the ESOS criteria
• Determine additional ESOS audits that need to be undertaken prior to 5/12/2015
Areas of significant energy consumption • Flexibility about which energy is in the 90%
– Could exclude all of one fuel type; or– Certain assets/activities; or– A combination
In this example you couldIgnore A Service LtdConcentrate on TransportLogistics
2. Conduct ESOS audit(s)Compliant audits:• Use 12 consecutive months’ verifiable data
– 12 months data starting from as far back as 6 Dec 2010
• Where 12 months data is not used or consumption profiling is not undertaken justification must be provided
• Audits can have been undertaken between 6 Dec 2011 and 5 Dec 2015
• Assets don’t need to have been audited at the same time• Analyse your energy consumption and energy efficiency• Identify practicable ways in which you can improve your energy
efficiency• Identify the estimated costs and benefits of the ‘energy saving
opportunities’ recommended• Purpose - recommend cost effective ‘energy saving opportunities’
3. Identifying savings opportunities from ESOS audits
• Use life cycle cost analysis [LCCA] to determine cost effectiveness rather than simple pay back period where possible
• Identify recommendations within your control• No requirement in the regulations to
implement the identified savings
4. Lead assessor• Your lead assessor can either:
– carry out your ESOS assessment and audits themselves
– check that the assessment and audits done by people who aren’t lead assessors meet the ESOS requirements
• Lead assessor signs off the work but can use analysis from others i.e. individuals can undertake these activities and the lead assessor can review them.
Lead assessors cont.• Lead assessor is an individual that belongs to an approved
register
• Approved bodies and registers are on ESOS webpage https://www.gov.uk/energy-savings-opportunity-scheme-esos#approved-registers-of-lead-assessors (see last slide)
• Lead assessors can be internal or external
5. Director Sign off• Show recommendations of the assessment to a board
level director– 1 director if lead assessor is external– 2 directors if lead assessor is internal
• Director confirms: – They have reviewed the findings– Organisation is within scope of the scheme– Organisation is compliant– Information provided in notification is correct
• No specific format required
6. Notifying the EA
• Online notification form accessed from ESOS page on .gov.uk
• Notification questions are available in Appendix B of the ESOS guidance
• Provide basic organisation details – not energy data or improvements identified
• Needs to be submitted by 5 Dec 2015 to be compliant.
Keeping an Evidence pack• Cost Effective Energy Savings Opportunities Identified
• Details of your ESOS assessment and audits (where applicable)
• Certifications for alternative compliance routes
• Details of any areas where you are not fully compliant with the rules
• Record of your director(s) & lead assessors sign off
• Records to be kept for 12 years
Summary: Key Dates
• Qualification Date 31/12/14– Do not need to register or tell the EA you qualify
• First Compliance Date 05/12/2015– Tell the Environment Agency you have complied online
via .gov.uk webpagehttps://www.gov.uk/energy-savings-opportunity-scheme-
esos#submit-your-esos-notification-of-compliance
• And every 4 years thereafter
Summary of Requirement for ESOS
Role of the NIEA• The Environment Agency
is the scheme administrator for the UK.
• Northern Ireland Environment Agency is the regulator for Northern Ireland based organisations.
We will check notifications for completeness, ie compliance criteria, organisational structure, total emissions and 90% coverage calculations, records, audits and recommendations, director sign off, lead assessor registration.
Follow up organisations who have not notified EA that we believe should have notified EA [We believe there are approximately 300 organisations in NI that are potential participants out of about 9000 UK potential participants].
Issue information and enforcement noticesIssue Civil penalties
Non-compliance ESOS Regulation PenaltiesFailure to notify Regulation 43 A fixed penalty of up to £5,000
An additional £500 for each working day starting on the day after service of the penalty notice until the notification is completed, subject to a maximum of 80 days Publication
Failure to maintain records
Regulation 44 A fixed penalty of up to £5,000 The cost to the compliance body for undertaking sufficient auditing activity to confirm that an organisation has complied with ESOS Publication The penalty notice may specify steps to remedy the breach
Failure to undertake an energy audit
Regulation 45 A fixed penalty of up to £50,000 An additional £500 for each working day starting on the day after service of the compliance notice, until the breach is remedied, subject to a maximum of 80 days Publication The penalty notice may specify a requirement to undertake an ESOS Assessment.
Failure to comply with a compliance notice, an enforcement notice or a penalty notice
Regulation 46 A fixed penalty of up to £5,000 An additional £500 for each working day starting on the day after service of the penalty notice, until the breach is remedied, subject to a maximum of 80 days Publication
False or misleading statement
Regulation 47 A fixed penalty of up to £50,000 Publication
Civil penalties
Further info/guidance• EA ESOS WEBPAGE:
https://www.gov.uk/energy-savings-opportunity-scheme-esos
ESOS Guidance: https://www.gov.uk/government/publications/comply-with-the-energy-savings-opportunity-scheme-esos
ESOS Regulations:http://www.legislation.gov.uk/uksi/2014/1643/contents/made
ESOS [email protected]
Approved registers of lead assessors: organisation and name of register• Association of Energy Engineers – certified energy auditor international CEA-I• Association of Energy Engineers – certified energy manager international (CEM-I)• CIBSE (The Chartered Institution of Building Services Engineers) – CIBSE low carbon
consultant (LCC) register, ESOS lead assessor subset• ECMK Limited - ECMK ESOS lead assessor register• Elmhurst Energy Systems – Elmhurst approved ESOS lead assessor• Energy Institute (EI) – chartered energy manager• Energy Institute (EI) – register of professional energy consultants (RPEC)• Institution of Chemical Engineers – register of chartered chemical engineers
(MIChemE/FIChemE) ESOS LEA• Institution of Environmental Sciences – IES lead energy assessor• National Energy Services Limited - National Energy Services ESOS register• Quidos – ESOSRegister.com• Stroma Certification Ltd – ESOS lead energy assessor certification• The Energy Managers Association – EMA energy saving opportunity scheme lead
assessor register • The Institute of Environmental Management and Assessment – environmental
auditor and full membership of IEMA (ESOS lead assessor subset)• The Institute of Environmental Management and Assessment – principal
environmental auditor (ESOS lead assessor subset)
Thank you for your attention.
We will answer any queries during the question and answer session.
Alternatively you can e-mail us directly on [email protected].
We champion responsible business
Making Sense of ESOSRobin Davey
Energy Management Consultant & Lead Assessor
RDEEM
Robin DaveyEnergy Management Consultant & Lead Assessor
RDEEM
We champion responsible business
Routes to compliance
• ESOS Energy Audit• ISO 50001• DEC• ISO 14001• GDA (domestic)• GDA (non-domestic)
Note - The energy usage information provided must be within the compliant period
We champion responsible business
Examples of scope and boundaries of the audit
A multiple retail or office based organisation •How many sites/branches have you? (list)•Are they owned or leased? (specify)•Do you sublet any premises? (specify)•Have you clear and continuous records of energy usage for each site? If not, can you explain why not?•Will you include energy usage from tenants in your figures?•Have you any pro bono agreements with tenants? (specify)•Do you intend to include owned transport in your audit?•Do you intend to include energy consumed by company cars and grey fleet travel in your audit?•What will you include in deminimus energy usage?
We champion responsible business
Examples of scope and boundaries of the audit (contd)
A manufacturing organisation
• What factories, offices and enterprises are included? (list)• What sites are excluded and why?• Are you including transport? (specify vehicles)• Does the company sublet part of its premises? (specify)• Have you 12 consecutive months of energy usage, electricity,
natural gas, oil or LPG recorded for each factory in £ & kWh, litres or tonnes in the case of woodchip/wood pellet?
• Have you a list of the products manufactured in each factory?• Are you including company cars or grey fleet vehicles?• What are you excluding under the deminimus clause?
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Requirement/action Participant Lead Assessor
Overall responsibility for compliance with ESOS Yes
Appoint Lead Assessor Yes
Highlight any audit work already undertaken Yes
Agree audit methodology for new audits Yes Yes
Define scope of audits Yes Yes
Agree audit timetable Yes Yes
Agree sampling approachYes Yes
Agree number of site visits required Yes Yes
Make data available for audit Yes
Identify energy saving opportunities Yes Yes
Calculate energy/cost savings of measures identified (LCCA or another method, e.g. SPP)Yes
Determine energy use profiles Yes
Present audit(s) recommendations Yes
Review overall ESOS Assessment Yes
Obtain director(s)/senior managers sign off of audit(s) findings and recommendations Yes Yes
Notify the Scheme Administrator of compliance by the compliance date Yes
Maintain an ESOS Evidence Pack to substantiate the audit(s) Yes Yes
We champion responsible business
Key Points
Requirement/action Company Lead assessor
Overall responsibility for compliance with ESOS Yes
Appoint Lead Assessor Yes
Agree number of site visits required Yes Yes
Review overall ESOS assessment Yes
Obtain directors/senior managers sign of audits, findings and recommendations
Yes Yes
Notify the scheme administrator of compliance by the compliance date
Yes
Maintain an ESOS evidence pack to substantiate the audit (s) Yes Yes
We champion responsible business
Key Points
Requirement/action Company Lead assessor
Overall responsibility for compliance with ESOS Yes
Appoint Lead Assessor Yes
Agree audit timetable Yes Yes
Agree number of site visits required Yes
Make data available for audit Yes
Review overall ESOS assessment Yes Yes
Obtain directors/senior managers sign off audit’s findings and recommendations
Yes Yes
Notify the scheme administrator of compliance by the compliance date
Yes
Maintain an ESOS evidence pack to substantiate the audit (s) Yes Yes
We champion responsible business
Timing
• Completion by November 2015• It is now 16 April 2015• The time taken for a completion from a well organised
company with no hitches is three months• Only a handful of companies have submitted their
application for compliance to date• The later you leave it, the more it will cost• Start now! Appoint your lead assessor, start
compiling your energy records, and preparing your evidence pack
We champion responsible business
Cost (guidelines)
The cost will depend on the size, complexity and how well prepared your company is.Company led audits - Example 1 A medium sized company with one factory or office complex, no subsidiaries or sizeable tenants, it is able to provide:•Clearly presented energy data for 12 consecutive months preferably is spreadsheet format•A basic planned energy improvement programme
A ball park cost £3,000 - £4,500 If the company has two similar factories or dual site
office complexes, this could increase by 15 % - 70%
We champion responsible business
Company led audits (guidelines) - Example 2
• A medium – large company with multiple offices or similar subsidiary operations. It can provide:
• Clearly presented energy data for 12 consecutive months for each site/operation. If applicable it will include transport and travel energy usage/cost
• A good understanding of energy improvement initiatives with a documented evidence of previous and planned improvements
A ball park cost £3,500 - £5,500 Approximately £900 - £1,250 for each additional site/operation requiring a visit (all sites may not require visits)
We champion responsible business
Bespoke audit (guidelines) - Example 1
• A medium – large company with multiple offices or similar subsidiary operations
• It has not collated energy information, when pressed for this it is provided as incomplete copies of invoices which have to be checked to see that they are relevant and complete by the lead assessors organisation
• There is a minimal understanding of energy usage and costs throughout the company
• There may be complexities and lack of knowledge in the ownership and tenancy of the office or sites in useA ball park estimate of £5,500 - £6,500 for the main site(s) and £1,000 - £1,500 per additional site or operation analysed and audited
We champion responsible business
What you get for your money
An evidence* pack containing• Verifiable energy data presented in hard copy and digital form (some
companies may refuse to accept third party data storage devices)• A list of the sites/operations and evidence of those audited• An action plan agreed for energy savings for the next 4 years• Where applicable the energy saving initiatives will be costed using either
the simple payback method or life cycle cost analysis
*BITCNI will retain a digital copy of the information in the evidence pack
We champion responsible business
What you get for your money (continued)
The evidence will be presented in board friendly report * that includes:
• A summary of the audits and assessments carried out• An action plan with a programme of energy saving initiatives
agreed between the company contact and lead assessor• The projected potential total cost and annual savings in £,
energy in kWh and CO2 in tonnes• A proposed programme for checking and recording progress of
energy saving initiatives over the next four years
* BITCNI will retain a digital copy of this report
We champion responsible business
Key points
• The report must be signed by one company director
(If it is compiled by an internal lead assessor 2 directors)• It is the company (not the lead assessor) who is responsible for
submitting the report for compliance• The submission will be done on line, ideally this should be done
jointly by the company contact and lead assessor• The chosen route(s) to compliance will be clearly identified • It would be advisable to allow 1 month for checking and notification
by the environment agency after submission of the ESOS report
We champion responsible business
Questions
We champion responsible business
Thank You