organisations, the UK Government has introduced the Energy Saving Opportunities Scheme (ESOS) and Streamlined Energy and Carbon Reporting (SECR).
ESOS affects organisations qualifying as ‘large undertakings’ – those with 250 or more employees, or with an annual turnover exceeding £44.8m, combined with balance sheet totals exceeding £38.6m. Importantly, if any company within a corporate group meets these criteria, all UK companies within that group must comply.
Assessments for ESOS report on energy consumption over 12-month periods. They must include significant consumption areas and show progress against action plan commitments. If these commitments are not met, participants must provide an explanation.
As well as writing assessments, organisations undergo an energy audit, carried out by a compliant auditor. The audit is designed to identify tailored measures that will save energy and achieve carbon and cost savings. Typically, any audit costs are outweighed by the savings made from implementing the recommendations. Alternatively, they may choose an alternative compliance route such as ISO 50001:2018.
Valpak’s energy auditors work with organisations to prepare a report on their total energy consumption over a period of 12 months. They complete the energy audit and our certified Lead Assessor signs off all submissions. We also find it helpful to attend Environment Agency audits, to answer any questions or assist organisations throughout the process.
Streamlined Energy and Carbon Reporting (SECR) introduces additional obligations for large companies. It requires obligated businesses to prepare detailed energy and carbon reports within the annual directors’ report. The legislation affects UK businesses classified as large companies under the Companies House Act 2006.
Reporting for SECR must include: comprehensive energy use data covering purchased electricity, gas, and transport; associated greenhouse gas emissions calculated using recognised methodologies; at least one intensity ratio demonstrating efficiency relative to business metrics; detailed energy efficiency actions undertaken, and transparent methodology explanations enabling verification and comparison.
In Valpak’s role as consultants, we encounter organisations that find it a challenge to gather energy data from multiple sources and calculate their greenhouse gas emissions. If this is the case, it can help to engage an independent expert to provide an independent review.
Energy procurement Energy reduction offers a straightforward way to ease costs, but if we are looking at energy management, procurement also plays an important role. Nearly three decades after UK gas and electricity market deregulation, there are more suppliers and products on the market than ever before. This has brought both the opportunity for significant savings and the potential for costly mistakes. As a result, energy procurement has evolved into a sophisticated discipline requiring deep market understanding and strategic timing.
When it comes to competitive advantages that can deliver substantial savings, timing is everything. With energy contracts secured up to three years ahead, an understanding of futures markets is essential for maximising efficiency.
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During the 2022 energy crisis, for example, purchasing electricity contracts on different days resulted in fourfold price variations for identical commodities. Similarly, organisations purchasing gas during 2020 COVID lockdowns secured rates around 1p/kWh for up to four years, whilst others paid 25p/kWh for identical commodities during the same period. Supplier premiums, volume penalties and hidden broker fees can all result in overpayment. Many suppliers bundle costs within invoices, making it difficult to identify hidden charges.
To avoid hidden costs, buyers can follow guidance to avoid common mistakes:
• Use reputable consultants with industry expertise; • Avoid fixed-term contracts in downward markets; • Ensure transparent fees; • Retain signing authority; • Avoid restrictive broker agreements; • Identify onerous clauses; • Prepare for supplier credit checks; • Expect comprehensive tender reports; • Compare quotes accurately; and Choose financially stable suppliers.
Energy buying groups now enable smaller consumers to access flexible, economical tariffs that were previously reserved for large users. These typically provide costs benefits of over 10% while reducing risk through price caps.
We have already seen the impact of sudden energy cost increases and, as we move forward, energy will become even more important. As markets evolve and sustainability requirements intensify, facilities managers that realise the potential of energy management will lead the way.
The combination of immediate cost savings, long-term environmental benefits, and regulatory compliance makes energy management a key focus. By treating energy as a strategic resource requiring sophisticated management – rather than an unavoidable commodity cost – facilities managers can transform operational costs to their competitive advantage.
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https://assets.publishing.service.gov.uk/media/67e3e 0f79137aeade25de022/2024-provisional-greenhouse- gas-emissions-statistics-statistical-summary.pdf
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