ESOS Facts on a Page

The UK?s ESOS energy saving program stands for ?Energy Savings Opportunity Scheme?. Its purpose is to reduce demand – and hence fossil-based pollution at both ends of the supply chain. It currently applies to large UK companies only. However its guidelines are also valuable input to smaller firms voluntarily going greener.

The program threshold is 250 employees and / or turnover or at least ?UK50 million. This affects approximately 9,000 UK firms, with others below the threshold wondering whether the government plans to lower it. In essence, ESOS requires that qualifying businesses complete comprehensive audits of energy use and opportunities at least every fourth year.

The plan is carrot and stick. Compliant companies will probably uncover significant savings when they stop and measure. They may even unearth carbon credits they can sometime exchange for cash. Reactionary firms who try to duck the issue will feel Her Majesty?s wrath through stiff penalties. In time, they may find it harder to attract investors. If ESOS affects your company, then the wise thing could be complying by the first deadline of 5 December 2015.

To do so, you must conduct an energy audit and report it to the UK Environment Agency. This comprises

  1. Measuring total energy use across processes, transport and facilities
  2. Pie charting 90% of this to identify areas that are energy intensive
  3. Singling out cost-effective energy-saving projects in high use areas
  4. Submitting your report to the Environment Agency ahead of the deadline

ecoVaro recommends affected companies do not leave this to the last minute. While having ISO 50001 may exempt some from ESOS, the regulations are far from straightforward and it will take months to reach complete clarification. We would like to suggest a more balanced approach.

ESOS is a wonderful incentive to save energy costs while contributing to a better future for the kids. The Energy Savings Opportunity Scheme is precisely that. The cost of energy has crept up on us to the extent that we have to do something, government or no government.

Measuring energy consumption is as simple as installing meters at critical points in the flow, and you probably have many of them anyway. Once you have your data you no longer have to crunch the numbers. ecoVaro can do this for you and return the result in the form of handy graphs and spreadsheets.

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Article 8 of the EU Energy Efficiency Directive ? Orientation

Following in-depth discussion of the UK?s ESOS response, we decided to backtrack to the source, especially since every EU member is facing similar challenges. The core purpose of the directive is to place a pair of obligations on member states. These are

  1. To promote the availability of energy audits among final customers in all sectors, and;
  2. To ensure that enterprises that are not SMEs carry out energy audits at least every four years.

Given the ability for business to look twice at every piece of legislation it considers unproductive, the Brussels legislators took care to define what constitutes an enterprise larger than an SME.

Definition of a Large Undertaking

A large undertaking meets one or both of the following conditions:

  1. It employs 250 or more people
  2. Its annual turnover is more than ?50 million and its balance sheet total exceeds ?43 million

Rules for Energy Audits

If accredited / qualified in-house specialists are unavailable then independent experts should supervise audits. The talent shortage seems common to many EU businesses. In hindsight, the Union could have ramped up slower, especially since the first compliance date of 5 December 2015 does not leave much swing room.

ecoVaro doubts there was a viable alternative, given the urgent imperative to beat back the scourge of carbon that is threatening the viability of our planet. The legislators must have been of a similar mind when laying down the guidelines. Witness for example the requirement that penalties be ?effective, proportionate and dissuasive?.

In order to be compliant, an energy audit must

  1. Be based on twelve months of verifiable data that is
    • over a continuous period beginning no more than 24 months before the beginning of the energy audit, and;
    • identifies energy saving opportunities including paths to their achievement
  2. Analyse the participant’s energy consumption and energy efficiency
  3. Have not been used as the basis for an energy audit in a previous compliance period

Measurement of current status and progress tracing are at the core of energy saving and good governance generally. EcoVaro has a powerhouse of software tools available on the cloud to help project teams save time and money.

Energy Savings Opportunity Scheme (ESOS): An Overview

Energy management is crucial to most businesses in the UK. This is primarily because energy usage substantially affects all organizations, whether large or small. The good news is that, energy costs can be controlled through improved energy efficiency. And this is exactly why Energy Savings Opportunity Scheme (ESOS) came into being ? to promote competitiveness among businesses.

Energy Savings Opportunity Scheme is the realisation of the UK Government’s ambition towards achieving the maximum potential of cost-effective energy in the economy. ESOS aims to stimulate innovation and growth, cut emissions and support a sustainable energy system.

ESOS at a Glance – Legal Perspective

The EU Energy Efficiency Directive took a major step forward on November 14, 2012 and headed towards establishing a framework to promote energy efficiency across various economic sectors. To interpret Article 8 of the Directive, the government has given birth to ESOS; requiring large enterprises to undergo mandatory energy audits and energy management systems by December 5, 2015 and at least every 4 years thereafter.

Large enterprises include UK companies that have more than 250 employees or those businesses whose annual turnover exceeds ?50 million and whose statement of financial position totals more than ?43 million. With this, over 7000 of the biggest companies in Britain will need to comply with ESOS as an approach to review their total energy use in buildings, business operations, transport and industrial processes.

Generally, ESOS is both an obligation and an opportunity. It is an obligation for the indicated target companies since they need to submit to additional regimes; focus on audit evidences; act in accordance to group structures and compliance; and observe limited penalties and note retention periods. Moreover, it is also an opportunity for companies to strive for more savings on energy projects; attempt to standardise their potential market; and effectively lower debt and legal costs.

ESOS Audits ? Looking Beyond

According to the Department of Energy and Climate Change (DECC), average first audit costs would be estimated at about ?17,000 and subsequent ones at around ?10,000. As expected, these audits will result in energy saving recommendations, of which companies need not proceed for a follow up; and substantially improve businesses in their energy management issues. DECC further states that every business that complies with ESOS could save an average of ?56,400 each year from an initial investment of ?17,000 only.

Currently, up to 6,000 UK businesses are already subject to existing CRC Carbon Reduction Scheme, Mandatory Carbon Reporting, Climate Change Levy and other compliance. This signifies that ESOS may overlap with prevailing energy efficiency legislation and may put additional pressure on energy administration. While this is true, however, ESOS holds extensive benefits. Although the scheme can be viewed as another costly compliance to environmental standards, ESOS goes straight to the bottom line and provides the organisation with competitive advantage. If large businesses act now and comply with it, they will be able to enjoy maximised payback in the long run.

Indeed, Energy Savings Opportunity Scheme is already here. It is mandatory with minimal investment. And all you have to do is act quickly, implement new improvements and earn more.

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Month End Accounting the way it should Be Today

Month end accounting has always been a business critical exercise. Without the balance sheet, income statement, and other financial reports this exercise ultimately produces, management could not make informed decisions to keep the company in the right direction and at the ideal operational speed.

Now, in order to maintain optimal business velocity, month end activities have to be carried out as swiftly and as accurately as possible. Delays will only inhibit managers from reacting and effecting necessary adjustments in time. Inaccurate information, on the other hand, obviously lead to bad decisions.

But that’s not all. Never has the month end close been as demanding as it is today. Regulations like the Sarbanes-Oxley Act, Solvency II, Dodd-Frank Act, and others, which call for more stringent controls and more robust risk management practices, are now forcing companies to find better ways to face the end of the month.

Sticking to old month-end practices while striving to achieve regulation compliance can either cost a company more (if they add manpower) or simply bog it down (if they don’t). Among the worst of these practices is the use of spreadsheets.

These User Developed Applications (UDAs) are very susceptible to errors. (See spreadsheet risks)

What’s more, consolidating data from spreadsheets as well as carrying out reconciliations on them is very time consuming. These activities usually require data from outside sources – i.e. a workstation in a different department, building, or (in the case of really large corporations) geographical locations.

Furthermore, if one of these sources fail, the financial reports won’t be complete. This is not a far-fetched scenario, considering that spreadsheet storage and backup is typically carried out by the average end user. This leaves the spreadsheet data vulnerable to hard disk crashes, virus attacks, and unexpected disasters.

Thus, in order to produce accurate financial reports on time all the time, you need a financial/IT solution that offers optimal provisions for risk management, collaboration, backup, and business continuity. Learn about server-based solutions and discover a better way to carry out month end accounting.

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