The ESOS debate - an Energy in Buildings and Industry panel discuss the issue
10/11/2014« Back

 Is the Energy Savings Opportunity Scheme the best chance the UK has had to put energy saving on the agenda of every company or is it a burden that is likely to be ignored? An EiBI panel discussed the issue.

Optimism and caution are the two words to summarise the mood of EiBI’s panel of experts as they discussed the Energy Savings Opportunity Scheme last month at the London headquarters of the Energy Institute.

“This is another chance we have been given to get it right.” said Richard Hipkiss. “Success will come down to the end users. Some will grasp the opportunity of a high-tech route to compliance and others will opt for the low-tech tick-box route. One of my frustrations is how little we have learnt from the many layers of compliance already in place.”

Maximising what we have

However, Dr Hywel Davies believes that the Government should be given some credit for this initiative. The use of the well-established Display Energy Certificates and ISO 50001 international energy management standard have been incorporated to make it easier for organisations to comply, he believes. “What is good,” he commented, “Is that the Government hasn’t tried to create another energy-saving silo in which you do a whole host of activities that bear no relation to what’s going on elsewhere. It’s better to take what is there and use it. Let’s maximise what we have got. The Department of Energy and Climate Change has been quite clever in adopting this approach. If you are having to comply with the Carbon Reduction Commitment then you’ll have a lot of the data already at hand. This can go a long way to winning hearts and minds.”

Jamie Rodd agreed: “DECs don’t cover everything you need with an ESOS. You have to understand that every business is different and there are different routes to compliance.” “The DEC is not an alternative, its part of the process,” added Davies. It has to be a valid DEC and it’s only valid if it has an advisory report. But these must be created through an appropriate audit. This report has to have suggestions for cost-effective improvements.

The DEC only looks at the building. However, if it’s only an office with 40 people then the DEC may well cover most of the energy used.” And it’s not just a question of winning hearts and minds it’s also a question of education, an area where Rodd believes there is still work to be done. “We have had a lot of interest from people who think they have to audit everything.” he stated. “So for us it’s a question of working with clients so they understand. We have to say to them ‘this is what your estate looks like and what you have to do’. There is a good opportunity to make it work because it has to be signed off at board level. I’ve seen very positive messages from energy managers. It’s about budgeting and putting themselves in a better position. It’s beginning to drive the issue further up the corporate agenda.”

Getting the signature of approval from the finance director appears to be one of the keys to ESOS’ success. “A concern in the past,” said Professor Martin Fry, “Was that we have had free audits. So now if you have to pay out around £15,000 for an audit it has to be high quality and provide an incentive.”

Jamie Rodd added: “It’s a good thing that the finance director has to sign it off. If it’s not free it raises the question of whatcompanies are getting out of it and lifts it from being simply a paper exercise.” According to Davies, the projected costs of carrying out an ESOS audit are about a tenth of the projected benefits. “Even if the ratio is 5:1 that’s a good deal,” he said. “Most finance directors would go for that.”

However, added Davies: “There will always be people out there who will want to fulfil the legal requirements with the bare minimum of time, money and effort? ESOS is not immune from that.” “It’s how it is communicated to the organisation’s board, said Robin Hale. “And this has been the problem with energy for a long time.”

Price pressure on costs

Concerns were raised about the potential for price pressure on the cost of the audit. “Like everything else that has come before it comes down to the industry to set the price,” said Hipkiss. “Industry has driven the cost down of audits, so what’s to stop that happening with ESOS?” And there will also be organisations who have such a tight control over their energy use that they will find ESOS to have little value. “Whitbread is not going to find anything new,” stated Ben Brakes. “We have a long history of auditing our estate going back five or six years. ESOS adds another cost to the business – perhaps 1-2 per cent of our available spend on energy projects. We will have to build that into our capital budget.” However, Brakes already has an idea of what direction Whitbread will head when it comes to ESOS compliance. “We have never used ISO 50001 so we’ll not go down that route. We will pick and choose which vehicle to use. For us DECs are a valuable tool as they pick up both built and operational knowledge. People can begin to understand how buildings operate.

I believe we are ahead of other hospitality companies who have not implemented even the simplest solutions.” However, there are so many different types of organisations covered by ESOS that there will be different attitudes. A major oil refinery such as Grangemouth in Scotland may gain more than an office in the City of London. “There appears to be an issue with a number of financial entities such as hedge funds,” commented Davies. “[Investment house] M&G have a number of funds over £42m so they are classified as a large enterprise.”

Taking ESOS seriously

However, making the financial community take ESOS seriously might be a problem. “For these organisations energy is not important when compared to the 50-60 per cent they pay for staff costs,” said Hipkiss. “For them energy just doesn’t cost enough.” But Martin Fry believes that an “auditor has to tailor it to the resources of the organisation. Auditors need to know what resources the company has. It needs to be a recommendation that can be done rather than something that is impossible.”

Hywel Davies agreed. “The auditor has to think about the client. Some may not have huge resources. A good assessor is going to say ‘do this and it will pay for itself in six months whereas if you do this it might not cost as much but you won’t get your money back for 5 years.’” The quality of the assessor is also a major concern. As EiBI went to press a decision was imminent on the auditors from existingprofessional registers to carry out ESOS audits. “Lead auditors have to be on a register,” said Davies. “They have responsibility of the quality other auditors. We are not looking for thousands of auditors and there is no major crisis over numbers of available.”

Despite the likelihood of competition for the ESOS audit from bodies such as ESTA and CIBSE, Professor Fry is urging organisations to work together. “There is a need for an industry event between all bodies involved to show the industry how ESOS should be interpreted.” It’s clear that between now and when companies have to comply by December next year companies will begin to see the benefits of ESOS. However, it is up to assessors, energy managers and ultimately the board of directors of the UK’s major organisations to make this a turning point for energy efficiency.

The EiBI panel were Robin Hale, Director ESTA, Professor Martin Fry, Honarary President ESTA, Jamie Rodd, Director NIFES Consulting Group, Ben Brakes, Environment Manager, Whitbread Group plc, Dr Hywel Davies, CIBSE Technical Director, Richard Hipkiss, Chairman ESTA and Director digitalenergy Ltd.

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