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4 minute read

The value of compliance: why manufacturers must seize the ESOS opportunity

For busy manufacturing businesses, the need to meet regulatory obligations may sometimes feel like little more than an additional, unwarranted drain on precious resources. The generally slow response to the Energy Savings Opportunity Scheme (ESOS) Phase 1 suggested that a reluctance to prioritise time-consuming compliance processes was a sentiment echoed across many sectors. Environment Agency reports state that around 2,800 organisations were late in submitting audits, with 75% of audited businesses being forced to take remedial action to be compliant, and some facing fines ¹.

However, with ESOS phase 2 now on the horizon, it’s important to recognise two important things about this energy legislation: firstly, that the intention behind it is an incredibly positive and forward thinking one, and secondly, that the opportunity ESOS offers to businesses that are able to see beyond the completion of reporting requirements – and consider implementation – is significant.

Manufacturers who act on the findings of their ESOS reports, compliance provides a chance to make impactful cost savings and drive forward change / Picture: Ørsted


ESOS brings into force Article 8 of the EU Energy Efficiency Directive. This was incorporated into UK legislation via ESOS regulation in 2014, so will still apply post Brexit. It places a mandatory obligation on ‘large undertakings’ to conduct a thorough assessment of their energy use and energy efficiency at least once every four years.   While Phase 1 might have created new and unforeseen reporting responsibilities for many businesses, it’s expected that more will be ready to turn Phase 2 to their advantage. For those businesses who act on the findings of their ESOS reports, compliance provides a chance to make impactful cost savings and drive forward valuable change. Environment Agency figures show that ESOS is estimated to lead to £1.6 billion net benefits to the UK.  The majority of these are directly felt by businesses as result of energy savings.

It’s time to take action

Although the 5 December 2019 deadline might still seem some way off, acting early on ESOS can help to reduce the stress and increase the impact of compliance. Those who left it late last time around found themselves with the additional challenge of sourcing an appropriate lead assessor; there simply weren’t enough to go around. It can take up to six months to complete the necessary data collation, analysis and audits needed to be compliant with ESOS. As with all deadlines, the final date for submission of reports is likely to come around fast. Acting sooner rather than later will mean less chance of incurring penalties and more chance of unlocking the full opportunity of ESOS. After all, the sooner reporting is completed, the sooner action can be taken on the findings and the benefits felt.

Connecting compliance and value

The disconnect between identification and implementation of the energy savings opportunities ESOS uncovers is a problem which the regulation doesn’t attempt to resolve – and perhaps rightly so. Businesses must be able to adapt processes and adopt new efficiency measures at a pace that suits them, both operationally and financially. Unfortunately, when time is short and resources are stretched, it’s all too easy to develop tunnel vision; concentrating so hard on the demands of ‘business as usual’ that even small changes with big potential get lost by the wayside. With manufacturers facing so many varied pressures in today’s fast-paced and hyper-competitive marketplace, it’s no wonder that many are missing out on the true potential of the ESOS scheme.

So, what’s the solution? One way to reduce the burden of compliance and extract real value from your ESOS obligations is to find a partner who can take you from information gathering, right through to submission and beyond. One that can work closely with your internal experts and offer you high levels of flexibility – adapting their level of involvement to best suit your specific needs.

The intention behind ESOS is an incredibly positive and forward thinking one, that also gives manufacturers a significant opportunity / Picture: Ørsted


At Ørsted, we can fully manage the ESOS audit for our customers or provide specific support wherever it is needed. We work with a team of lead assessors who have specialist knowledge across a number of industries, so we’ll always appoint an assessor who can provide a report that is as relevant and useful as possible. Armed with the completed ESOS reports as our guide, we’re then able to help businesses find practical and affordable ways to implement change – focusing on the areas that have the most potential to improve energy efficiency and therefore lower operational costs. With energy costs forming such a significant proportion of business spend, the difference energy efficiency can make to the bottom line can be quite remarkable.

Outsourcing ESOS – the benefits

Whatever your internal capabilities, outsourcing some or all of your ESOS reporting and implementation requirements can bring a range of benefits to your business. With the right partner, not only will you save on time and resources, you’ll also be able to make light work of cost and carbon reduction, furthering your CSR ambitions and gaining a competitive edge through leaner processes.

Here at Ørsted, we understand the broader benefits of energy efficiency. We want to help other businesses take the next steps on their sustainable energy journey -it’s all a part of our mission to create a greener energy future.

By taking ESOS beyond compliance – to effective implementation and measurement – businesses are not only playing their part in helping the UK achieve its carbon targets, they can also reap real and lasting benefits for themselves. We help our customers by applying elements of our Energy as a Service offering, which enables savings through a combination of flexibility solutions, trading expertise and efficiency measures. Where needed, we can also help with upfront funding for embedded generation or energy saving assets, shouldering the operational, regulatory and market risks associated with such projects.

Energy as a Service takes ESOS reporting through it its natural and most beneficial conclusion, ensuring maximum value can be extracted from what could otherwise become a time-consuming missed opportunity.

(source – ¹ The EMA)