Earlier this month, the Construction Leadership Council (CLC) published its Roadmap to Recovery, setting out how the construction industry can adapt and support transformation following the COVID-19 pandemic. It describes three phases, Restart, Reset, and Reinvent, making up a two-year plan to recover and transform the industry.

While the CLC’s roadmap focuses on the construction industry, the Restart, Reset, Reinvent framework can be applied to the existing built environment as well. The world is changing, bringing both a need to adapt and an opportunity to do things better.

The world is changing, bringing both a need to adapt and an opportunity to do things better.

A key area of change is how buildings are used. Organisations and individuals have proven that flexible working is effective and, in many cases, working practices are unlikely ever to return to pre-COVID “normal”. Workplaces will change, hours will become more varied, and companies may look to downsize their space. This will have a significant impact on energy management and utilities use, but we are in a period of flux and it will not happen overnight.

This article considers the steps organisations can take to improve their energy performance in the short and medium term.


Restart

In the coming months, lockdown measures will continue to be reduced. Organisations which have been on hold will be kicking back into action, furloughed staff will be returning to work and those who have been working from home will start to return to offices on a flexible basis. The focus for many will be increasing output, minimising disruption, and keeping colleagues safe.

This is the time to maximise on immediate, low cost energy savings – the simple practices that can avoid waste and reduce bills. Many organisations are cascading information around health and safety, working practices, and annual leave, and these updates provide a great opportunity to ‘reset behaviour’ and bring energy efficiency into the discussion.

Although the year so far has been far from ordinary, legislative requirements have not changed and compliance activities must still be carried out. The Restart phase is a great time to perform risk reviews, to identify any gaps and make sure necessary work is underway. SECR, ESOS, EPCs, DECs, and a plethora of other acronyms must not be ignored.

The Restart phase is a great time to perform risk reviews, to identify any gaps and make sure necessary work is underway.


Reset

As operations start to gain some stability, companies will be looking to consolidate and develop. There will be increased understanding of what the “new normal” will look like, and a period of forward-planning.

Energy efficiency, zero carbon aspirations and climate resilience should all be part of this conversation. Many organisations have, or are in the process of, setting strategic Net Zero targets and the Reset phase is an ideal time to develop ambitions into a robust plan.

As working practices start to settle into a routine, it’s a great time to review how buildings are performing. What has changed? Do spaces meet occupants’ evolving needs? Do controls strategies fit with the new world? Building and energy management controls will be the key to unlocking performance improvements, with better zoning allowing more flexible control, and landlord-tenant contracts starting to incorporate bespoke occupancy and controls requirements.

As working practices start to settle into a routine, it’s a great time to review how buildings are performing.


Reinvent

In the long term, ways of working and how buildings are used will be permanently transformed. Communities and organisations are striving for Net Zero and technology innovation continues at a supercharged pace. The Reinvent phase brings the challenge of preparing for this new world.

In the next few years, the focus will be on implementing systems to support and enable this transformation, and understanding and trialling new technological solutions. Robust planning through the Reset phase means these changes can be aligned with existing asset replacement programmes as far as possible to reduce costs. The following ideas map out what this could look like, but the list is endless.

  • Occupancy monitoring linked to building management systems, enabling automatic control with flexible occupancy patterns.
  • High resolution asset monitoring, using performance data to drive proactive maintenance regimes.
  • Interlinked low carbon generation, EV charging and battery technologies with demand management capabilities.
  • Detailed energy monitoring, improving understanding of consumption and waste, while enabling flexible billing in variable workspaces.
  • Low carbon heating solutions able to modulate without losing efficiency, to meet highly flexible demand.

In the long term, ways of working and how buildings are used will be permanently transformed. The Reinvent phase brings the challenge of preparing for this new world.


Looking to the future can be both exciting and intimidating, but with a methodical approach and robust planning we can deliver a positive and lasting transformation in the built environment.

To learn more about the broad range of services we provide, please browse our site or get in touch with us today.


Header photo by Philipp Birmes from Pexels

Acclaro Advisory - Optimising Energy Performance in Buildings - Part One - Image 1 - London city buildings at night

Optimising Energy Performance in Buildings: What’s changed in the last 25 years?

Acclaro Advisory - Optimising Energy Performance in Buildings - Part One - Image 2 - The Gherkin and The ShardThe introduction of Net Zero – the UK’s contribution to stop global warming by aiming for net-zero greenhouse gas (GHG) emissions by 2050 – provides a significant driver for energy efficiency and a means for the real estate sector to step up and have a voice about how organisations can help to deliver on this important target.

This is the first of a series of blog posts which aim to provide coordinated information on: optimising energy performance in buildings; strategy, target setting and culture; and procurement and supplier impacts.

This article will focus on the first area – optimising energy performance in buildings.  Whilst this area has been discussed for many years – the PROBE studies¹ from 1995 helped to identify and quantify the challenges with existing buildings – the fact is that little progress has been made.  Many of the issues raised in these reports are common across the building stock standing today, so we have few surprises about the ongoing challenges and issues.  Business as usual is no longer sufficient, a different approach is required.


Why is energy performance in buildings an issue now?

Whilst Net Zero regulation has led to some positive changes, the greatest driver has been with investors who are requiring more of an evidenced-based approach including an understanding of risk.  The issues of energy and, more importantly, climate change are becoming incorporated into how funds are invested.  Regulations such as ESOS and SECR² raise the need for accurate data and public reporting to be made by some 11,000 UK organisations.  This provides a greater level of exposure – increasing reputational risks, and the potential to not be selected for bids and tenders.

As such, organisations at a senior level need to have a better understanding of the data and information provided from an enterprise risk perspective.  There is a role for the real estate sector to understand how energy is used and most importantly, why.  Better understanding within organisations of the difficulties associated with data collection and reporting without a joined up approach is necessary³.


What does good look like?

The increased prevalence of digital technologies has led to the disruption of the business-to-business or customer model as seen in Uber and WeWork.  The Internet of Things (IoT) and machine learning is helping to deliver efficiencies by looking at more variables, and co-ordinating the insights into outputs.  Examples include:

  • DeepMind saved 40% of energy in Google’s data centres;
  • At The Edge (a building in Amsterdam)⁴, 28,000 sensors track items such as desk use, power use, water, meeting rooms, temperature, coffee.  Data is used to allocate space for staff, provide targeted cleaning, vary lighting and AC levels, maintenance schedules;
  • ABB Copenhagen utilise actuators on lighting, heating, audio, blinds, but FM decides on the prioritisation;
  • Predictive Maintenance – Disruptive Technologies such as Ravti, OpenSensors, Demand Logic

Acclaro Advisory - Optimising Energy Performance in Buildings - Part One - Image 3 - A man in front of a computer with a chart on the screenAlthough these ideas are becoming mainstream, the differentiator is to enable decision making by the end user, supporting positive behaviours.  Savings in the region of 20% to 40% (cost and carbon) can be realised from the use of the technology, with payback substantially less than some renewable energy and low carbon options.

‘The barriers to uptake are well documented: a lack of information; a lack of access to capital; high upfront costs and long payback periods; misaligned incentives between tenants and landlords; disruption to normal business activities; and competing investment demands within companies resulting in other business growth investments taking precedence’ – BEIS Committee Report⁵

Development of a business case and early engagement is critical to align the energy programme with the Business Goals and help overcome these barriers.


Common Issues

To start with, there are four key areas to focus upon to understand whether a building can be optimised, looking at the knowledge of the building, its means to be optimised and for this performance to be maintained.

1. Legacy⁶

Understanding the original intent of the building, the changes made and current use of the building, will help to determine whether it is fit for purpose.  An older building will naturally have more changes, but there are common issues related to heating and cooling demand, lighting provision and levels and controls (BMS) accuracy across all buildings regardless of age.  Looking at these areas will help determine the potential opportunity – remember, predictive maintenance tools typically find 20-40% improvement.

2. Skills 

The skills of building occupants are at odds with the complexity of the systems in new buildings; where offices have previously employed technicians, skilled facilities managers on high salaries are needed to look after new high-tech buildings.  A lack of competency will damage the ability to maintain a building’s performance regardless of the controls.

3. Contracts⁷

Clients have various departmental responsibilities from cost pressures and supply chain metrics, through to wellbeing and mental health and also environmental reporting and compliance.  Each of these areas have different drivers for their areas of the business and typically engage different contractors to deliver.  It is important to have a common goal and set of requirements that all parties can agree to which can reduce the level of conflict – higher office temperatures will improve wellbeing, but will also increase energy costs and may change the energy procurement criteria.

4. Internal barriers

Client engagement is vital; many case studies are illustrating scenarios where aspects are paid for but not necessarily fully delivered.  An engaged client is more likely to recognise this.  Education and awareness of the client is important – the optimisation of the building as a concept is set at management level, but is measured at the operational level.  Therefore the role of FM enables informed decision making to be made.


Acclaro Advisory - Optimising Energy Performance in Buildings - Part One - Image 4 - A large modern glass building

How to improve and succeed

The first step is to understand at a broad level where you are under the four common issues. A light touch approach to the energy performance can be taken. The development of a business case will match the current position against the business goals and objectives. Most organisations have public stated carbon reduction goals and any business over 250 employees will need to provide a Directors Report as part of the SECR. The key impacts revolve around disclosure, inability to bid and resilience of the business.

In my next post, we will look at developing a strategy and plan from this business case to take the programme forward so that it doesn’t just address the short term issues.


References

¹ – https://www.cibse.org/knowledge/building-services-case-studies/probe-post-occupancy-studies

² – https://www.acclaro-advisory.com/2018/11/13/secr-another-year-another-reporting-acronym/

³ – BEIS Committee – Energy Efficiency: building towards net zero

⁴ – https://www.bloomberg.com/features/2015-the-edge-the-worlds-greenest-building/

⁵ – BEIS Committee – Energy Efficiency: building towards net zero

⁶ – https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/497761/Non-Domestic_Building_performance_full_report_2016.pdf

⁷ – https://www.rics.org/uk/upholding-professional-standards/sector-standards/real-estate/procurement-of-facility-management/

Through the ‘Making Policy Clear’ Series, Acclaro Advisory will inform clients of policy and regulatory changes around energy, environmental and social issues. We bring clarity to governance, compliance and targets so you can get on with regular business activities. We dismantle the complexities of new and amended legislation and standards in a way that will help you meet your requirements today and be ready for new ones tomorrow.

Part 4 of this series focuses on Article 8 of the EU Energy Efficiency Directive (EED) (2012/27/EU).

The EED contains a number of requirements and measures intended to increase the energy efficiency across the European Union. The Directive establishes a set of binding measures to help the EU reach its 20% energy efficiency target by 2020 and to support further energy efficiency improvements beyond 2020. All EU member states are required to transpose and implement Articles of EED into regulation suited to each country.

The origin of ESOS

The UK ESOS scheme was put in place as a response to the EED Article 8 – Energy Auditing. Article 8 requires the Member States to introduce a mandatory programme for large enterprises (non-SME) to conduct regular energy assessments and efficiency audits. This has been transposed in various forms across the EU member states with key elements remaining roughly similar for each country.

The EED (2012/27/EU) Article 8 requires the Member States to introduce a mandatory programme for large enterprises (non-SME* ) to conduct regular energy assessments and efficiency audits. This has been transposed in various forms across the EU member states with key elements remaining roughly similar for each country.

* Small-Medium Enterprise

How are the 28 EU countries implementing EED Article 8?

Navigating the compliance regime across Europe can be a difficult process, especially for multinational organisations.

The EED Article 8 compliance qualification criteria are generally built around the European Commission definition a non-SME:

  • more than 250 people; AND
  • those with an annual turnover exceeding €50 million; OR
  • total assets exceeding €43 million.

However, this can vary based on regional level definitions of a large enterprise and other related laws. In addition, some Member States have included additional qualification and compliance criteria.

Some Member States follow the EU rule on the consolidation of at least 2 of the qualification criteria (financial and employee count) while others, such as the UK Energy Savings Opportunity Scheme Regulations 2014 (ESOS), requires only one of these criteria to be met.

Other examples of transposed variations include:

  • The UK ESOS utilises a “one in, all in” methodology for the scheme qualification. Once one UK undertaking qualifies, all of the undertaking UK operations automatically qualify. 90% of the energy consumed must be audited for compliance and sampling* is accepted. However, this is not the case across EU Member States.
  • In France, a company qualifying is identified by its SIREN number in addition to meeting one of the large entity criteria as with UK ESOS. At least 80% of the annual energy consumption must be audited and sampling* is accepted.
  • In Bulgaria, compliance governed by the country definition of a non-SME with industrial sites having an annual compliance threshold to comply. Most of the transpose Article 8 is tied to other building legislation which means the owners can be responsible for ensuring that identified measures are put in place.
  • In Sweden, companies qualify for mandatory energy assessment based on the EU Commission definition of a non-SME. Here linked and partner entities (local or overseas) should be considered. However, an energy threshold applies. Reporting is also allowed either in stages over the 4-year period or at one point in time during the 4 year period.

*Sampling rules apply

Acclaro Advisory provides comprehensive information in one location

Through us, you have access to knowledge and experience on the transposed regulation in the 28 EU countries. We can help you navigate the complex challenge of meeting all variations of requirements of the energy audit obligation.
Our team is up-to-date with the status of the directive across Europe and are equipped to support full compliance and carry out audits.

If you would like to understand these points further or would like advice or support with Article 8 of the EU Energy Efficiency Directive 2012/27/EU, please contact Erica Hall on +44 1183 273519

In the meantime, you can learn more about the Acclaro Energy Programme which helps you adapt and address responsibilities of energy efficiency as a business.

 

ESOS – Will you be compliant?

The 5th December 2019 ESOS date is fast approaching! Is your business ESOS Compliant?

It’s hard to believe that we are already halfway through 2019.
There have been a few changes this year with legislation and strengthened intentions around climate action at all levels of industry. For example, we’ve had councils make Climate Emergency declarations, the London Toxicity Charge (T-Charge) has been replaced by the upgraded Ultra Low Emission Zone (ULEZ) and organisations are looking towards Net Zero Carbon buildings and Carbon Neutrality by 2030.

At Acclaro we have been supporting our clients on their Environmental Sustainability and Energy Efficiency journeys. At present one of our main focus areas is ESOS. The UK’s opportunity for non-SMEs to recognise and act on energy efficiency improvements. Energy efficiency has been recognised as the premier cost-effective way to concurrently improve energy security, reduce energy costs, reduce carbon emissions, contribute to the overall energy and climate goals and enhance competitiveness.

5 months until the ESOS Phase 2 Deadline!

If you have not already made arrangements for compliance, it’s time to get in touch. Several organisations have started their compliance preparations and audits. But we already foresee a bottleneck as with 2015. So, don’t leave yours to last minute. Act now and make sure you are ESOS Compliant.

To get you started, here’s a list of what you need to do and how we can help.

1. Assess the total 12-month energy use across the organisation.

  • Remember to include at least your energy consumption for December 2018. This ensures you meet one criterion of compliance.
  •  Assess all buildings, UK transport related to your business (company cars / expensed car travel etc), industrial processes.

2. Identify areas and sites of significant energy use.

  • This should be your largest energy consuming assets from the above list.

3. Choose your route to compliance most suitable to business goals.

  •  What are your business goals/intentions?
  •  Are any changes on the horizon?
  •  Do you have specific targets or challenges?

4. Appoint your ESOS Lead Assessor, who is qualified to review your compliance route and reports.

5. Evidence opportunity for energy efficient measures in areas or sites of significant energy use and have the reports signed by the ESOS Lead Assessor and company Director.

6. Notify compliance to the administrator.

  • These are different for England, Wales and Northern Ireland.

Our experienced team has supported several organisations during phase 1 and have already started phase 2 compliance for our clients. We provide all the support you need from start to finish and beyond compliance.

Examples of our team’s experience with project complexity include:

  • Meeting compact schedules required during the intense phase 1 compliance deadline.
  • Effective audit sampling strategies to meet compliance and business requirements.
  • Successfully managing late compliance for organisations resulting in no financial penalties.
  • Successfully supporting on the Environmental Agency’s post-ESOS phase 1 audit checks.
  • Highlighting and implementing improved processes for phase 2 compliance.
  • Conducting Office, Theatre, Shopping Centre and Research Laboratory audits.

What about my multinational organisation?

Through us, you have access to knowledge and experience on the transposed regulation in the 28 EU countries. We can help you navigate the complex challenge of meeting all variations of requirements of the energy audit obligation.

Our team is up-to-date with the status of the directive across Europe and are equipped to support full compliance and carry out audits.

If you would like to understand these points further or would like advice or support with Article 8 of the EU Energy Efficiency Directive 2012/27/EU, get in touch with us +44 1183 273519 or email 

In the meantime, have a look at our Making Policy Clear – EED Article 8 article.

Acclaro Advisory provides Comprehensive information in One Location.

You can learn more about the Acclaro Energy Programme which helps you adapt and address responsibilities of energy efficiency as a business.

Your Sustainability Shopping List

We are almost at the end January and there is already a growing list of activities and aspirations for the proactive Sustainability Manager in 2019. It’s now time to focus on the priorities of a Sustainability Manager.

If you are looking for inspiration, and want to freshen up the tired strategy from previous years, read on. Before reading Acclaro’s top 5 sustainability priorities, we should remind you that underpinning all of these areas is the need for good quality data to be captured and interpreted. Without which little can be achieved.

1. Developing a Social Value Approach

Globalisation offers many positives, but the drive for cheaper goods and services has affected not only, supply chains but also the communities that companies work within.

Social Value is currently measured on the value and impact of the corporate, rather than the benefit derived by the community. Some are scrambling to measure a monetary value. Assessing the benefits that supply chains can bring, or engaging with communities we operate within, is surely the first logical step.

We suggest, take a step back. The first stage is to understand what already takes place across the business coupled with assessing the needs of the community in which you operate, (or serve if you are a public-sector body). Capturing this information will help to develop a cohesive programme of engagement. This can be structurally managed across internal, supply chain and community programmes. There are many benefits to gain from a social value programme. This includes an increasing number of tenders requiring some form of disclosure of the value you create, so now is the time assess what your organisation can bring to society.

2. More accurate GHG Supply Chain Emissions

The reporting of greenhouse gases provides an ever-greater understanding of how our organisations impact climate change. However, when it comes to affecting change, it can be difficult to understand which areas of a business to target that will yield the most effective results. Carbon emissions from the supply chain is being increasingly scrutinised. Therefore, understanding these burdens and your ability to target them effectively is critical.

Using economic models based on annually updated economic data can map supply chains and associated emissions. The data from industrial Supply and Use tables is combined with emissions factors to create a model that maps national emissions linked with the spend of an organisation. This maps the entire organisations economy using matrix algebra to link environmental and economic data. Save yourself time and move away from the bottom up approach that sees us plot only a small proportion of supply chain emissions very inaccurately. There are other ways of doing it, and you can have a greater impact on climate targets by using correct data to being with.

3. Energy Audits and Reporting

Carbon emissions and energy consumption remain some of the biggest risks and contributors to climate change. The move towards nearly zero carbon buildings is accelerating with standards being developed as part of the wedges associated with science based targets.

The first stage should always be to minimise emissions and the energy being consumed through an effective understanding of how and why energy is used the way it is. Regulations are asking for public disclosure allowing for greater scrutiny and the need for verified and accurate information to be disclosed.

Significant quantities of information exist, but translating this into usable data and tangible outcomes from dynamic systems is the challenge – but can yield significant savings in excess of 15% energy reduction.

4. Environmental Risk Management

Whilst often initiated and implemented as part of management systems, the recent driver for climate and biodiversity related risk evaluation has come from the investor community. The premise is simple and equates to understanding the environment’s impact on you. These disclosures are targeted at mainstream investors and are intended to help them assess whether climate risk is appropriately priced in to their valuation of your company, enabling investors to make more informed decisions

Techniques and approaches for the scenario testing are still in development, but this year will see an increase in the understanding of the risks and early stages of validating the implications. Early movers will benefit from the opportunities available.

5. Building a Responsible Business Culture

Finally, this is the piece that joins the dots together. Business culture is changing and the expectations of new employees and our major consumers are dictating different terms – we now have a language of Purpose.

Responding to the societal pressures, the increased level of data, reporting pressures and investor requirements will necessitate a different response from organisations. And that culture needs to extend beyond the four walls of the sustainability team, into business and towards supplier management and sales programmes.

This is a long journey, that connects together forward risks, social benefits and environmental impacts, a develops a long-term strategy. Ultimately it will mainstream your role, but a concept we need to grapple with is, will it make it redundant? In time, perhaps some day-to-day operational parts. But there will always a need for strategic thinking and forward planning.

Acclaro Advisory wishes you a belated Happy New Year, and we hope to see you at many an event to discuss the direction you are taking for a sustainable future.

Good luck with putting  your priorities as a Sustainability Manager into action.

Through the Making Policy Clear Series, Acclaro Advisory informs clients of policy and regulatory changes around energy, environmental and social issues. Series 1 is focused on the energy and carbon regulatory schemes which impact business energy cost and reporting responsibilities. Now let’s take a look at the Energy Savings Opportunity Scheme  (ESOS).

For a detailed breakdown on the full extent of the impact on your organisation, steps to comply and where Acclaro’s expertise can support. Contact us now to arrange a consultation.

What is the Energy Savings Opportunity Scheme (ESOS)?

ESOS is a mandatory energy assessment and energy savings opportunity identification scheme for large enterprises operating in the UK. It aims to help organisations to increase energy efficiency and reduce energy cost by identifying cost-effective measures to improve business energy performance. Ultimately lowering carbon emissions.

This scheme was put in place as a response to European Union law which required all EU states to transpose and implement Article 8 (4 to 6) of the EU Energy Efficiency Directive (2012/27/EU) into regulation suited to each country. This has been transposed in various forms across the EU member states with key elements remaining similar in each country. The ESOS Regulation 2014 gave effect to the scheme with the first compliance (Phase 1) which ended on 5 December 2015.

We are now in the second compliance period (Phase 2) which will last until 5 December 2019. Compliance with the scheme runs every four years.

Phase Qualification Date Four Year Compliance Period Compliance Deadline
1 31 December 2014 From 17 July 2014 – 5 December 2015 5 December 2015
2 31 December 2018 6 December 2015 – 5 December 2019 5 December 2019
3 31 December 2022 6 December 2019 – 5 December 2023 5 December 2023
4 31 December 2026 6 December 2023 – 5 December 2027 5 December 2027

Will ESOS affect me?

All large undertaking operating in the UK (business, not-for-profit, university etc.) except Public Sector undertakings, which on 31 December 2018 meet either one of the criteria below:

ESOS Criteria June 19 Update

* This includes an overseas (non-UK registered) organisation with a UK registered establishment meeting either Criteria 1 or 2. Here, the only UK operating establishments need to comply.

N.B. Bank of England rates applied for qualification period of ESOS Phase 2.

We understand that organisational structure is not always this clear. If you are unsure of where your entity fits, or you are unsure if it meets the requirement to comply please get in touch for clarity.

How will the Energy Savings Opportunity Scheme (ESOS) Affect Me?

  • ESOS runs over four-year phases; Phase 1 ended on 5th December 2015 and Phase 2 will end on 5th December 2019.
  • Organisations must assess the total energy use across the business. This must cover a full 12-month period that includes 31st December 2018.
  • Non-compliance can result in financial penalty up to £90,000 and reputational damage.
  • Compliance can provide a series of benefits to the organisation which include but are not limited to;  Enhanced understanding of energy use across the organisation.
     Enhanced understanding of the parts of the business which consumes the most energy and carries the highest energy cost.
     Uncover and highlight deficiencies in data and information measurement and monitoring processes.
     Identify simple solutions to improving energy efficiency, such as behaviour change and engagement.
     Identify cost savings and activities to lower carbon emissions.

How Do I Comply?

1. Assess the total 12-month energy use across the organisation.

For example, Energy used in your buildings, industrial processes and for business-related transportation (company travel via cars, equipment/product transport via trucks, etc.) All assets/activities must be accounted for.

2. Identify areas and sites of significant energy use.
3. Choose your route to compliance most suitable to business goals.
4. Appoint your ESOS Lead Assessor, who is qualified to review your compliance route and reports.
5. Evidence opportunity for energy efficient measures in areas or sites of significant energy use and have the reports signed by the ESOS Lead Assessor and company Director.
6. Notify compliance to the administrator, the Environmental Agency.

How Acclaro Can Help?

The Acclaro Energy Programme is an end-to-end energy management package that helps your business to get to grips with its energy consumption from all angles. Our programme helps you adapt and address responsibilities of energy efficiency as a business, whether cultural, technical or financial.

At Acclaro, we possess vast experience in ESOS compliance, energy efficiency and reporting with a variety of clients. Our Energy Team assists clients through expert advice and detailed energy audits, providing opportunity for further energy reduction when in-house teams can no longer identify.

The final countdown to ESOS will soon begin, so get in contact with us now. Our experienced team help you through compliance and provide the best approach to fit with your organisation’s goals and aspirations.

 

NB This Blog was updated on 19th June 2019

The Countdown to ESOS Phase 2

With so much currently happening: Brexit negotiations, new policy frameworks SECR, end of CRC and FiT… the list goes on; it’s hard to believe that there are only 12 more months to comply with the next phase of Energy Savings Opportunity Scheme (ESOS). We are on the countdown to ESOS Phase 2.

Energy Savings Opportunity Scheme (ESOS) is a mandatory reporting regulation that requires large undertakings to audit their energy use. The key word in this scheme is opportunity. The aim is to identify opportunity to save energy and potentially cut related energy costs.

Yes! It has already been 4 years. We are officially in the last 12 months to comply.

While ESOS phase 1 may be in the distant memory of the corporate world, it remains fresh in the minds of Consultants, Energy Managers and Lead Assessors. Also, ever present in the mind of the Environment Agency’s (EA) own auditors, the introduction of ESOS requirements in 2014 was chaotic. As a result, many companies struggled to complete the scheme before the first compliance deadline 5th December 2015.

During phase 1, over 2700 companies were forced to send notifications advising of their need for late compliance to the Environmental Agency. However, even with the resulting deadline extension into the first quarter of 2016, many organisations were ultimately fined for non-compliance.

The UK regulators continue to conduct ‘Compliance check audits’ for Phase 1 ESOS while companies should be preparing for phase 2.

Lessons Learnt from Phase 1

  •  Poor quality energy data
  •  Poor quality energy audits including due diligence due to poor quality data
  •  Poor quality reports due to lack of detail
  •  Lack of Early Action taken compounded by the availability of Lead Assessors

In 2018, it was reported that 15 businesses had been issued in civil penalties of up to £45,000 for non-compliance. While several other businesses received non-compliant designations without financial penalty.
Standards are expected to be considerably higher for phase 2

Are you ready?

Don’t leave choosing your assessor until too late. As the 12 months moves on it will be more challenging on the supply of auditors and Lead Assessors available to work with you.

Research suggests that few companies have started to secure the support of Lead Assessors for the fast approaching ESOS Phase 2 compliance deadline on 5th December 2019. Its time to actively support now to avoid repeating the bottlenecks and other challenges of phase 1. The countdown to ESOS Phase 2 is on!

What has changed since Phase 1?

In short, nothing has changed with regards to the regulation. Compliance dates remain the same for Phase 1 but have been updated to reflect the new Phase. The regulation will remain in place unaffected by the UK leaving the European Union.

If the size and structure of your organisation has changed since the first compliance period, then it is best you re-assess your organisation against the qualification criteria.

Who Must Comply?

Companies have grown, merged and evolved since 2014 which could mean that they are now eligible for compliance. For those who are new to ESOS…

If your organisation has maintained its size (as a large undertaking) for at least two consecutive accounting periods but has reduced in size since it remains eligible to comply. However, for organisations which were SME’s for two consecutive accounting periods, but has changed in December 2018, these would not be required to comply.

Even more so you must understand your organisations’ legal corporate structure when assessing the qualification.
All large undertaking (as defined in the Companies Act 2006) except Public Sector organisations, which meet any of the following criteria must comply with ESOS:

1. ≥250 employees
2. Annual turnover >£44mil (€50 mil) and, Annual balance sheet total >£38mil (€43mil)*
3. Part of a Corporate Group undertaking (overseas company) that meets one of the other criteria.

Your organisation will be assessed by these criteria as the ESOS qualification date – 31st December 2018. You may still be eligible to comply if your organisation is close to either of these criteria. Contact us for a consultation if you are unsure about your eligibility.

* Using the Bank of England spot exchange rate at the close of business on qualification date 31 December 2018.

Routes to Compliance

Energy Assessments and notification of compliance must be completed by 5th December 2019 to comply with ESOS via:

• ESOS Energy Audit
• ISO 50001 Certification
• Display Energy Certificates
• Green Deal Assessments

Assessments must consider all business energy consumption for buildings, industrial processes and transport over 12 consecutive months including qualification date 31 December 2018.

Does ESOS apply to our Europe based businesses?

If you are a multinational organisation with businesses throughout Europe, you may also need to comply in these territories. We have extensive experience with auditing for the transposed Article 8 of the European Energy Efficiency Directive; the ESOS equivalent in EU countries. Our lead assessors and consultants have worked in and with assessors in Europe to ensure our clients effectively comply with the regulation and meet business objectives. Make sure your business has the Countdown to ESOS Phase 2 in its sights!
To understand more about the energy audit compliance requirements for EU sites have a look at our Making Policy Clear – EED Article 8 or get in touch.

Acclaro Advisory Expertise

The Acclaro Energy Programme helps organisations adapt for and address the very visible responsibilities that sit within energy efficiency. We aim to deliver the right result for our clients. That’s why we start our programme by finding out your drivers and barriers to making energy interventions. Understanding your concerns means we can deliver recommendations that really fit the way you work. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.

NB This blog was updated 19th June 2019

Through the Making Policy Clear Series, Acclaro Advisory informs clients of policy and regulatory changes around energy, environmental and social issues. Series 1 is focused on the energy and carbon regulatory schemes which impact business energy cost and reporting responsibilities.

Increased Climate Change Levy – Why is CCL increasing?

At end of July 2019, the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme is set to be closed.

The CRC is one of the two energy taxes that target large energy-intensive organisations. This tax is levied to encourage energy efficiency in business. The end of CRC will result in a significant increase to the Climate Change Levy (CCL) to recover the loss of the CRC energy taxation revenue.

Who pays CCL?

The second energy tax is to encourage energy efficiency in business is the CCL.
Exempt from CCL are organisations using less than 1,000kWh electricity and less than 4,397kWh gas, per month.

The end to CRC will simplify the various levels of compliance and reporting regimes for many organisations. While energy and carbon reporting will remain, the additional administrative burden of CRC will be significantly reduced, as it is likely that the organisations affected will also be compliant to mandatory greenhouse gas reporting.

How will the increase to CCL Affect Me?

  1.  For organisations where energy consumption is not a major component of business expenditure, the increase in CCL rates may not create a major impact on overall business costs. However, energy cost will increase from 1st April 2019.
  2.  If you are covered under the Climate Change Agreement (CCA) scheme, the CCL rate increase will have little to no impact on business energy cost, with the increase more significant to natural gas and LPG costs in comparison to the previous years’ costs.
  3.  If you are currently part of the CRC scheme, the energy tax is ultimately transferred to the increased CCL rates. From April 2019 energy bills will increase. Organisations will be required to submit their last CRC report by the 31 July 2019 and surrender allowances for the last time by the end of October 2019. The new Streamlined Energy and Carbon Reporting (SECR)1 framework will require organisations to continue to calculate and report the total annual energy consumption and carbon emissions.
  4.  Typically, this change will add between 2 – 4% to the business energy bill.

More on the impacts of SECR can be read in part one of this series here.

How can I prepare for this change?

CCL is added to energy bills by energy suppliers, therefore there are no changes necessary for consumers to accommodate the increased taxes. However, these organisations should consider ways to reducing business energy cost to minimise the impact of the increased tax.  Energy efficiency is widely recognised as the most effective way to reduce energy consumption and costs. The CRC scheme was designed with an aim to incentivise improving energy efficiency and reducing carbon emissions in large energy intensive organisations.  Well run energy audits can uncover several opportunities for energy efficiency. However, if not combined with effective implementation, the true value of these opportunities can be lost.

How Acclaro Can Help?

The Acclaro Energy Programme is an end-to-end energy management package that helps your business to get to grips with its energy consumption from all angles. Our programme helps you adapt and address responsibilities of energy efficiency as a business, whether cultural, technical or financial.  At Acclaro, we possess vast experience in CRC, CCA, energy efficiency and reporting with a variety of clients. Our Energy Team assists clients through expert advice and detailed energy audits, providing opportunity for further energy reduction when in-house teams can no longer identify. Our energy programme is designed to support you through a series of phases forming parts of your energy efficiency journey; from understanding energy consumption to embedding energy efficient practices into day-to-day business.

As organisations portfolios, data collection, emissions methodologies and reporting procedures vary significantly, it is important to plan before the change occurs. We are setting up discussions with a range of clients to further understand how the closure of CRC will impact their organisation. If you are keen to learn more, please contact us.

Our team can create a detailed action plan utilising your current processes to help streamline and reduce the impact of this transition. For a breakdown on the full extent of the impact to your organisation, steps to comply and where Acclaro’s expertise can support, email us now at info@acclaro-advisory.com to arrange a consultation.

Through the ‘Making Policy Clear’ Series, Acclaro Advisory will inform clients of policy and regulatory changes around energy, environmental and social issues; bringing clarity to governance, compliance and targets so you can get on with regular business activities. We dismantle the complexities of new and amended legislation and standards in a way that will help you meet your requirements today and be ready for new ones tomorrow.

This first series is focused on the energy and carbon regulatory schemes which impact business energy cost and reporting responsibilities. Our team has pulled together key information and insight on what is expected to occur and how organisations can prepare. Part one of this series will focus on the Streamline Energy and Carbon Reporting (SECR).

We would be happy to provide a detailed breakdown on the full extent of the impact to your organisation, steps to comply and where Acclaro’s expertise can support. Email us now at info@acclaro-advisory.com to arrange a consultation.

Streamline Energy and Carbon Reporting (SECR)

What is SECR?

The Streamlined Energy and Carbon Reporting (SECR) framework will be in effect from April 2019 as part of a new policy landscape. The framework has been designed to streamline and reduce complexity in the carbon and energy reporting regimes while broadening the scope for reporting compliance. This is set to impact approximately 11,900 companies (PCL) and 230 Limited Liability Partnerships, up from the approximately 1,200 required to report carbon emissions.

SECR will require large companies to report their annual energy consumption and carbon emissions in Annual Director Reports alongside financial data.  The new framework comes ahead of the closure of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, set for the end of July 2019. The Climate Change Levy (CCL) and CRC are two energy consumption taxes on large energy-intensive organisations currently levied to encourage the businesses to consume energy more efficiently. The end of CRC includes an increase on the Climate Change Levy (CCL) rates as a re-balance measure to recover the loss of the CRC energy taxation revenue.

At Acclaro, we feel that the new requirements can have a significant impact on many organisations and can ultimately increase their administrative burden. This can be said mainly for the many organisations which did not participate in similar schemes but are now captured in the new compliance scope. Moreover, the accompanying changes to the energy tax regime will have a significant impact on energy costs. On the other hand, increased energy cost and increased transparency for investors and other stakeholders will encourage more companies to be accountable and responsive to the need for effective energy management and carbon reduction to meet UK climate change targets.

Who needs to Comply?

The compliance structure of SECR is very similar to the compliance criteria of ESOS. The need to comply with the new framework will be based primarily on financial or employee thresholds.

An organisation falling near to these thresholds will need to clearly explain why they do or don’t need to comply with the regulations. They will also need to maintain an evidence pack which could be subject to audit by the Environment Agency. Additional specific exemption conditions apply under limitations of data and prejudicial disclosure concerns; only expected in exceptional circumstances.

How will SECR Affect Me?

There are a series of minimum reporting requirements that must be met. For example:

1. If you are already reporting under mandatory Greenhouse Gas (GHG) reporting there is little change except for the inclusion of annual energy use and energy efficiency action in your company annual reports.
2. If you are reporting and purchasing credits in the Carbon Reduction Commitment (CRC EES). The new SECR regulation will replace the CRC reporting framework with much of the direct costs of CRC shifted to the increase on Climate Change Levy¹.
3. If you comply with ESOS. It’s likely that most organisations who have had to comply with the Energy Saving Opportunities Scheme (ESOS) will be required to report additional information under the new scheme. This will introduce annual public disclosure of energy use, energy efficiency action and scope 1 & 2 carbon emissions.
4. If you don’t fall into either of the current reporting schemes. It is likely that some organisations, such as public authorities and charities, normally exempt from mandatory energy and carbon reporting requirements, will fall into the broadened scope of this new framework. It is critical for such organisations to act now in preparation for the 2019 reporting requirements.

¹More on the impacts of increased CCL rates can be found in part two of our Making Policy Clear – Energy and Carbon Series here.

How Do I Comply?

Compliance varies by organisation and its current reporting regime. Reporting will be based on the company’s annual reporting cycle and is required through the company Annual Reports. Typically, Director Annual Reports must include:

1. Annual UK energy use covering all UK sites, including business travel.

2. Annual scope 1 and 2 greenhouse gas emissions, including an intensity metric and methodology. Scope 3 emissions can be reported voluntarily.

3. An overview of annual energy efficiency action taken in the financial year. Companies can voluntarily disclose ESOS action as a part of this report.

4. Where practical, annual global energy use and greenhouse gas emissions (if applicable).

How Acclaro Can Help?

We expect to see more details on the framework and updated to legislation in the coming months, with an impact to reporting in 2019. As organisations portfolios, data collection, emissions methodologies and reporting procedures vary significantly, it is important to plan before the roll out of the framework occurs.

The Acclaro team has a breadth of experience in ESOS, GHG and sustainability assessments with a variety of clients from IT technology companies to Opera theatres and public bodies. Our clear structured approach supports compliance regimes and we help to validate and back up your results, so you have a solid sounding board for your sustainability reporting. Our team has assisted many companies to adapt for and address responsibilities that sit within energy efficiency. Our clients have benefited from investor interest, improved recruitment and client retention. We can help you turn compliance risk into opportunity.

We are setting up discussions with a range of clients to further understand how SECR will impact their organisation.

If you are keen to learn more, please contact us. Our team can create a detailed action plan utilising your current reporting regime to help streamline your transition into this new framework.

Today we launch the Acclaro Energy Programme, and with it comes a series of free guidance that opens up the world of energy management and policy. Today we begin with a jargon busting look at UK energy and carbon compliance.

The energy and carbon industry is so full of reporting acronyms, that sometimes it’s hard to keep up.  July (2018) brought yet another to the doors of the UK corporate world; SECR – Streamlined Energy Carbon Reporting. For the many businesses currently navigating the energy and carbon regulatory regimes, adding another to the mix should not be too difficult to handle. In many instances, reporting requirements utilise the same energy data in a variety of ways to translate into business energy and carbon. But, as new regulations are added, the harder the names roll off the tongue.

Let’s talk a bit about what currently exists.

CCL
Climate Change Levy is first of the two energy taxes targeted towards energy-intensive organisations. Introduced in 2001, the tax is applied to electricity and gas bills for all businesses and public sector organisations that pay the standard rate of VAT. Exempt from CCL are businesses using less than 1,000kWh electricity and less than 4,397kWh gas, per month. No reporting is required by business energy users. CCL seems to be here for the long haul.

MGHG
Mandatory greenhouse gas reporting (MGHG reporting), introduced in 2013, requires all UK quoted companies to publicly report their greenhouse gas emissions on all forms of energy used annually. At present this policy only affects around 1200 companies. The main focus is on transparency of carbon data for carbon management and reduction.

CRC
The Carbon Reduction Commitment Energy Efficiency Scheme, this one doesn’t exactly roll of the tongue, but luckily it is also known as the CRC scheme. CRC is second of the two energy taxes targeted towards large energy-intensive organisations. This tax and reporting mechanism, introduced in 2016, is levied to encourage eligible businesses and public sector organisations to consume energy more efficiently. Over 5000 undertakings report annually to the Environment Agency. The reports cover UK energy use and the purchase of allowances to cover their carbon emissions. The scheme phases cover emissions generated over UK financial year; March 2019 will mark the last phase – the end of the CRC scheme.

ESOS
Energy Savings Opportunity Scheme (ESOS) introduced in 2014; another which seems to be here to stay, is a mandatory reporting regulation that requires non-SME undertakings to audit their energy use. The key word in this scheme is opportunity; the aim is to identify opportunity to save energy and potentially cut related energy costs. However, whilst this scheme requires an element of reporting, the minimal nature of the reporting does not include public disclosure. In fact, unless formally audited, the compliance reports are not reviewed by the regulator, Environment Agency.

SECR
Streamlined Energy and Carbon Reporting framework, as the name suggests is aimed to simplify and bring together elements of the above reporting schemes into one clean process. This framework will be in play from April 2019 with a wider compliance qualification. Similar to MGHG reporting, it will be implemented through disclosure in annual directors reports with Companies House. SECR will replace CRC reporting, with a combination of MGHG and ESOS reporting elements. These changes will add value to robust reporting mechanisms and the opportunity to quantify ESOS outputs with energy efficiency action and carbon management into one streamlined approach.  It is estimated that the number of companies which will be required to comply with SECR will change from the 1,200 covered in MGHG to 11,900. This includes all quoted and large unquoted companies with some exceptions. In other words, many companies complying with ESOS will be scooped up into the SECR framework.

Our team of energy and sustainability experts have extensive experience in navigating the policy landscape and delivering reporting that meets regulatory requirements and business objectives. To find out more about the above reporting mechanisms and how they may affect your business, please get in touch.

The Acclaro Energy Programme helps organisations to adapt for and address the very visible responsibilities that sit within energy efficiency. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.