Leverage ESOS to Boost Investment in Your Energy Management Plans
It’s no surprise that a recent Utilitywise survey found that 49% of interviewed UK businesses expected the cost of ESOS compliance to outweigh potential savings. Many of these companies do not plan to implement ESOS savings suggestions. It is difficult for an energy manager to get an energy management implementation budget approved by a CFO, who views energy savings as not achieving a significant return on investment.
This is unfortunate given the continued rise in electricity prices in the UK. For example, recent UK Government data show that for July to December 2014, UK industrial electricity prices for medium-sized buyers, including taxes, were the third highest in the EU 15. Between Q4 2013 and Q4 2014, UK industrial electricity prices rose 4.7%. With electricity prices continuing to increase – why has ESOS auditing received such a lacklustre reception from UK businesses?
One reason for the low enthusiasm is the lack of mandatory implementation requirements. Corporates are not required to implement ESOS audit suggestions for energy efficiency improvements. This means the fee to complete an audit amounts to another carbon tax, similar to the UK CRC. The cost to use electricity continues to increase with little perceived financial benefit.
An ESOS audit doesn’t have to be a missed opportunity though. When an auditor with industry level expertise and access to additional energy services completes an audit, the outcome can be targeted energy management recommendations that are more likely to lead to specific cost savings. This is particularly true in the industrial manufacturing sector where industry specific processes and operations need to be maintained while achieving energy use optimisation and increased profit margins. An increase in profit margins from a generic energy audit is less likely.
The value in ESOS audits will come from the implementation of targeted energy management plans. Firms, such as EDF Energy and Schneider Electric, can provide a full suite of energy services to enable firms to put recommendations into practice. Aligning energy services delivered with alternative pricing models, like energy performance contracts, would be even better as they then can become self-funding – where the projects are paid for through energy savings.
If you want to leverage ESOS to drive investments in energy projects, find out if you qualify for a complimentary delegate pass to the Verdantix Summit focused on getting value from investments in energy innovation on October 8th at the Royal Society in London. You will hear from energy experts at Rolls-Royce, Vodafone, the Green Investment Bank and RWE nPower.