Where are you going with ESOS and what are you trying to achieve?

Where are you going with ESOS and what are you trying to achieve?
15 November 2017

Where are you going with ESOS and what are you trying to achieve?

Last week we ran a webinar that looked at blowing apart the commonly held view that ESOS is just another legislative requirement to be complied with. Here, I look at some of the feedback we received during the webinar, and explain why the next round of ESOS is an invaluable opportunity to drive profitability.

Since 2015 the world has changed a lot. We are on the brink of a revolution in energy, one that could be as transformative for industry as the emergence of smartphone technology ten years ago was for the communications sector.

Back then technology suddenly caught up with us and changed the world for ever. And those that didn’t move with it were behind in a blink.

We know that the electricity generation and supply in the UK has already changed massively over the past 5 years, and Ofgem is embarking on a further major overhaul of the energy market. This will affect us all; we are going to be faced with a range of energy services and products, and an even larger amount of data to manage.

By moving from reactive to proactive energy management, and by maximising the use of data, any organisation will be able to respond to the opportunities and threats that will emerge in the future.

Energy is becoming more than just a commodity, it is increasingly a driver of profitability based on not only cost reduction but on income generation from demand management and generation. Will your energy strategy support you to exploit these opportunities or will you be left behind?

Another factor is the move to electric vehicles (EV). As soon as governments across the world started to set dates beyond which no new internal combustion engine vehicles could be produced, vehicle manufacturers began a race to be the first to offer fully electric vehicles onto the mass market. 

Within a decade EVs will be one of the biggest growth sectors, and all organisations will have to respond. Not only will your own car fleets see a massive change, the need to provide charging points and to implement ‘smart’ charging regimes to avoid periods of high cost electricity tariffs will become a massive economic consideration.Our team is hosting a free webinar on 30 November 2017 to find out how companies are already using fleet electrification to ‘super charge’ their bottom lines, which you can register to attend here.

So ahead of ESOS Phase 2, businesses have a window in which to plan and think about their energy strategy, especially as the government has confirmed that ESOS will be staying long after Brexit is complete.

Using ESOS to get more for your business

Should ESOS really  be about delivering a quick and cheap compliance notification to the Environment Agency? Or should it be about investing a little more and doing something that will deliver a long term benefit to your organisation?

We think that the answer is to spend more to save more. The objective  of recent webinar - which you can watch for free here - was to challenge organisations to change their approach to ESOS against a background of a rapidly changing energy market and massive modal shifts in transport with the increasingly rapid move to electric vehicles.

As a starting point, we asked attendees to complete a poll on to extent to which they had implemented any measures from ESOS Phase 1.  The result was quite saddening. Around two thirds admitted to not implementing any measures and had not seen much value from the reports. Around one third said that they had implemented some measures. No one attending the webinar said that they had done more than this. What compounds this is that our findings are in line with the Early Impact Evaluation of ESOS report published by BEIS last month.

So should we be pleased with this result or not? Personally, I feel quite disheartened. At the time of the first ESOS compliance round the then Department for Energy and Climate Change pushed for businesses to do more than compliance, and our own approach was based on the ethos that ESOS is an opportunity to save energy and thus save money.  

In ESOS phase 1 we worked with over forty organisations to deliver their ESOS programmes, covering over 5% of the UKs energy consumption. From this we found that even though companies have been advised for a decade on what best practice looked like in terms of energy management, many were still not operating at that level.

Don’t get me wrong; I know many companies who are champions at energy management and have made enormous strides. However, they would probably have done this despite ESOS - and they are in an underwhelming minority. What I can only conclude then is that across the wider piece, poor energy management is alive and well and living in a very large number of UK organisations.

So, what does this mean for ESOS Phase 2? The evidence from Phase 1 is that, in general, companies’ approaches to energy management leaves much to be desired. Granted, ESOS is focussed on energy efficiency, however that is a vital piece in the ever-growing puzzle; it needs to be framed within a wider strategy and used as a tool to get a better handle on your energy consumption and management processes.

As you will have to comply with ESOS, why not use this imposed investment requirement as part of your strategy to give you a robust platform on which to plan and build the changes which will undoubtedly be coming?

Watch our free webinar recording here to find out more about the outcomes from ESOS Phase 1, the changes in the market that are coming and the opportunities open to you in ESOS Phase 2. Then, why not contact me at christine.stjohncox@ricardo.com to discuss how to get the most out of ESOS for your organisation.