Is your company prepared for ESOS?

A new EU directive requires all large companies operating in EU member states to undertake an energy audit every four years. This will be implemented in Gibraltar as the Energy Savings Opportunity Scheme (ESOS) and its aim is to enable companies to analyse their annual energy consumption and then use this to plan on incremental reductions in consumption where possible.

The ESOS regulations came into force in the UK in July 2014 and the Gibraltar equivalent is due to be published in the first quarter of 2016. Companies will then have a period of time to engage with one of the locally qualified energy auditors to tender for an audit of their firm. The good news is that it only affects those companies which are not small and medium sized enterprises (SMEs).

Gibraltar companies which meet either one or both of the conditions below will need to have an audit of their energy use:

  • Companies which employ 250 or more people
  • Companies which have an annual turnover in excess of €50m (£38,937,777), and an annual balance sheet total in excess of €43m (£33,486,489).

Energy audits will not be required by the vast majority of local businesses as they do not currently meet any of these criteria. However, there are still a number of large enterprises which do meet them and it is important that they prepare themselves to be able to comply with the new regulations when they come into effect. Companies which fail to comply are likely to be fined.

The audits will be conducted by qualified independent assessors and paid for by the companies which are being audited. Although this will introduce an additional business cost one of the main benefits of having an audit is that it will highlight areas where a company’s energy use can be improved, reduced or made more efficient. Over the medium to long term the cost savings are likely to more than offset the cost of the audit and reduce a company’s carbon footprint at the same time. For this reason, even companies that are not obliged to undertake an audit are encouraged to do so.

The auditors will assess the total direct energy use of an individual company including electricity consumption, fuel for vehicles and other machinery which the company uses. Companies will not be assessed for indirect energy consumption, for example the cost of having items delivered to them by a third party. The length of time and cost of an audit will vary depending on the size of the company and the complexity of its operations.

Local companies which are part of a larger group based elsewhere in the EU should liaise with their head office in the first instance to see if an energy audit has already been conducted. The local subsidiary may already have been included in the group’s energy audit. If so then a valid certificate issued by the auditor should be available to them to show that they have complied with the new regulations.

The rules are likely to be published before Easter 2016 and then companies which require audits will be given a grace period to comply so that the audits can be undertaken. Audits will then need to be conducted every four years thereafter.

You can read more about the UK’s ESOS scheme at www.esos.uk.com, although when introduced locally, the Gibraltar scheme may differ from its UK counterpart. Full details of the scheme will be made available online via the H.M. Government of Gibraltar webpage, including details of qualified auditors, and the Department of the Environment & Climate Change will be issuing guidance in due course