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Impact of proposed changes to ESOS

Dateline 5 June 2023


Under the terms of the Energy Savings Opportunity Scheme (ESOS) Regulations 2014, the UK’s large private-sector undertakings have to assess their major energy uses every four years to identify cost-effective energy-saving opportunities. They are then supposed to notify compliance through the government-appointed scheme administrator, the Environment Agency (EA), before 5 December 2023. Compliance must be assessed and ‘signed off’ by a registered lead assessor.

We’re currently in the third compliance period, reporting on energy audits—which may have been carried out at any time since December 2019—related to the participants’ assets and corporate structures as they stood on 31 December 2022.

The issues

A number of participants have completed their assessments, and had them signed off, but the EA has failed to open a notification system[1] because it plans to change some of the requirements. Some of the proposed amendments to ESOS are potentially onerous, notably the extension—from 90% to 95%–of the proportion of energy use that a participant must audit. For many, that will mean suddenly having to add marginal minor energy uses where the cost of assessment is disproportionate to any possible gains. Vehicle fuel is the classic example.

The EA has been issuing guidance to participants (most recently on 24 May 2023) which assumes that the ESOS regulations will indeed change before 5 December. Although likely, it is not certain that they will change[2], which could potentially lead to participants undertaking needless extra work. This incidentally puts participants’ energy auditors and lead assessors in a difficult contractual and commercial position. Strictly speaking the EA has no legal basis for the guidance it is currently issuing because it cannot guarantee that the regulations will change nor, if they do change, that they will be applicable to participants certified as compliant before the new regulations take effect.

As a separate issue, part of the guidance issued by the EA is a template listing information that participants will need to supply during the notification process once it becomes available. A substantial part of the information relates to matters such as the savings achieved since previous ESOS cycles, and assorted (in some cases dubious) performance metrics. This amounts to market research or impact assessment and responses to these questions ought to be voluntary since they are not at present stipulated as requirements of ESOS and there appears to be no provision for them to become requirements in any new regulations[3]. If treated as mandatory, they will further add to compliance costs.

Suggested actions

The prudent approach is to assume that Parliament will approve new ESOS regulations before 5 December and EA will force the issue, making them in effect retroactive and incidentally making the market-research questions mandatory part of the notification process.  Whatever happens it is almost certain that new ESOS requirements will be in effect for the next compliance period, so the effort of setting up the necessary record-keeping and reporting now will not be entirely wasted.

However, to minimise the impact during the current ‘phase’ of ESOS I would suggest:

  1. Lobby against any revised regulations taking effect before 5 December 2023;
  2. If they do take effect, lobby for them not to apply to participants certified as having complied before the date that the new regulations become law;
  3. Lobby for the exclusion from the Notification System of questions related to market research or impact assessment.


[1] ESOS Regulation 8(1) obliges the Scheme Administrator to establish a Notification System but Regulation 8(2) allows it to make it available to participants only when they decide it is ‘reasonable’.

[2] The Secretary of State cannot at the moment even lay new ESOS regulations before Parliament; he lost the power when the European Communities Act 1972 was repealed. The Government is relying on the successful passage through Parliament of the Energy Bill (currently with the Public Bills Committee) to restore those powers and enable new regulations to be laid before Parliament and voted into law.

[3] The writer was unable to identify any specific provision in the relevant part (Part 10) of the Energy Bill

Link: Main article on ESOS

Reverse rotation

Here’s an aspect of energy saving in motor-driven systems that had never occurred to me until I went on a training course about industrial dust extraction systems. Our instructor, Christoph Ritter of Osprey Corporation (pictured on the training rig), guaranteed his audience that if he went to their factories he would find that some of their vacuum fans would be running backwards This may sound crazy, but it can and does happen. It only needs two of the motor power connections to be swapped accidentally. Centrifugal fans do still work in reverse but their efficiency becomes diabolical. If they have straight radial blades the fan-wheel itself is no less efficient but the air leaving the volute has to turn through 180 degrees, with the consequent loss of head. If the fan has backward-curved blades (normally more efficient) these are forward-curved when reversed, introducing even more loss.

The problem tends to be masked in direct-coupled fans with variable-frequency drives. One reason is that you cannot easily see the direction of rotation when there are no belts to observe; the other is that the drive system will compensate by speeding up the fan (if it can) drawing much more power to deliver the required air flow. On Christoph’s course he uses a rig to demonstrate this and a fan current of 5 amps had to go up to 22 amps to deliver the same flow when the fan motor was running backwards.

Don’t assume it cannot happen to you.


DATELINE 1 APRIL, 2023: At our last transport energy course the closing discussion took an interesting turn when a delegate raised the question of energy conservation in fishing fleets. After the course I dived in and did a bit of research on the net. I was soon hooked. One company, Dover Solar, proposes electric trawlers towing PV arrays. Another outfit, Energy Fish-in-Sea, has floated the idea of towing sonic emitters to drive the fish forwards. They have yet to demonstrate it at scale and I wonder whether there would be a catch; it could flounder. Could the UK make its fishing fleet net zero? I’ll leave you to mullet over.

Net and gross calorific values

In the UK when estimating fleet energy consumption from vehicle mileages,  we may choose to use the tables published in official guidance (extract illustrated below) which convert distances in miles or kilometres to kWh consumptions for different classes of vehicle.

Figure 1: extract from the tables in UK Government guidance

As indicated in Figure 1, the conversion factors are stated on a net calorific value (NCV) basis. However, this is not compatible with the way we normally account for energy in the UK. We actually use gross calorific values (natural gas, which of course is our predominant fuel for static applications, is billed on a GCV basis). For consistency we should account for transport fuels on a GCV basis as well.

What difference does it make? A fuel’s gross calorific value is a measure of its total energy content, whereas NCV ignores that fraction of energy which will be lost as latent heat in water vapour in the exhaust. The higher the hydrogen content of a fuel, the greater the discrepancy. Forecourt diesel’s GCV is 6.3% higher than its NCV; for natural gas the difference is 10.8%.

To convert kWh quantities based on NCV to their GCV equivalent you need to multiply by the following factors:

Aviation Spirit 1.053
Aviation Turbine Fuel 1.053
Burning Oil 1.053
Butane 1.084
Coal (domestic) 1.053
Coal (electricity generation) 1.053
Coal (electricity generation – home produced coal only) 1.053
Coal (industrial) 1.053
Coking Coal 1.053
Diesel (100% mineral diesel) 1.064
Diesel (average biofuel blend) 1.063
Fuel Oil 1.064
Gas Oil 1.064
Lubricants 1.064
LPG 1.074
Naphtha 1.053
Natural Gas 1.108
Natural Gas (100% mineral blend) 1.108
Other petroleum gas 1.087
Petroleum coke 1.053
Petrol (100% mineral petrol) 1.053
Petrol (average biofuel blend) 1.055
Propane 1.086
Waste oils 1.071



Discounted cash flow

HOW SHOULD energy-saving investment opportunities be evaluated? I recommend discounted cash-flow (DCF) rather than the commonplace, but somewhat crude, metric of simple payback period. DCF will give you two measures of a project’s value:

  1. Internal rate of return (IRR) is the rate of interest you’d need to get from investing your cash in something else, to make that the more profitable choice; and
  2. Net present value (NPV) shows you what lump sum today would equal the lifetime profit from the project, assuming that you place relatively less weight on future savings the further off they are.

To carry out a DCF calculation for an energy-saving project you start with year-by-year estimates of costs and savings. In the simplest model there is a single cost item in the first year and equal annual savings thereafter; but with some projects there will be costs in future years, or the savings may be predicted to vary in future. The screenshot below shows an annotated example in an Excel spreadsheet. It evaluates a heat-recovery system which, as well as an up-front investment cost, will incur annual electricity costs and maintenance charges (all outgoings being shown in red):

The IRR in this example is 54.7%.

The NPV depends on what you choose as a ‘test rate of discount’. In theory this would be the interest you pay on borrowings, although in practice it is often set a lot higher as a hedge against perceived risk. The example above uses 16% and you can see in row F the discount factors that result. In Year 3 the factor is 0.641, meaning that the savings of £31,332 expected that year are only worth £20,073 in today’s terms.  In aggregate the NPV is £91,444. That’s how much better off you would be than the option of doing nothing.

Note that with a lower test rate of discount, the discount factors in row F increase, which raises the net present value.

A DCF workbook is available to download here. It includes the annotated example shown above, a live calculation that you can use for experimentation and familiarisation, and an unlocked version which you can copy and adapt.



‘Average’ and ‘Standard’ degree day figures

EFFECTIVE MANAGEMENT AND ANALYSIS of buildings’ energy consumptions for heating or cooling calls for summary data about how cold or hot the weather has been. Weekly or monthly degree-day statistics provide that information in a convenient manner. But as well as the current values (against which your weekly or monthly energy consumption can be gauged), in the United Kingdom[1] we have two kinds of long-term aggregate value that can be useful for other purposes.

Standard degree-day values

For normalising consumptions we need degree-day values for a ‘reference year’, which allow actual consumptions for buildings in different locations (and possibly measured at different times) to be adjusted back to a comparable basis. Historically, the UK government recommended a standard value of 2,463 heating degree days (to base 15.5C). The source of this number is unknown; it is, in effect, arbitrary but for the purpose of weather-adjustment it does not matter what the number is. This single point of reference was later developed into the following table providing corresponding reference values for different base temperatures, for cooling as well as heating, and disaggregated to individual months:

|     |        Heating       |       Cooling        |
|Month| 18.5'C 15.5'C 10.0'C | 15.5'C 5.0'C -20.0'C |
|     |                      |                      |
| Jan |    488    395    226 |      0    17     705 |
| Feb |    426    342    189 |      0    23     652 |
| Mar |    390    297    134 |      0    64     803 |
| Apr |    319    233     96 |      5   114     837 |
| May |    235    151     39 |     14   192     963 |
| Jun |    148     77      9 |     26   265    1015 |
| Jul |     88     42      4 |     96   380    1155 |
| Aug |    100     45      5 |     57   338    1113 |
| Sep |    162     83     10 |     14   245     995 |
| Oct |    268    177     48 |      1   158     925 |
| Nov |    359    275    124 |      0    53     719 |
| Dec |    439    346    176 |      0    29     755 |
|     |                      |                      | 
|Total|  3,422  2,463  1,060 |    213 1,878  10,637 |

Table 1: standard degree day values

It is important to appreciate that these standard values are fixed and not related to any particular geographical area.

Average degree-day values

If we are forecasting consumption we need to know what future degree-day values we can expect month by month. For this purpose we use 20-year average degree-day values. So the expected degree-day value for next February (for example) is the average of the last 20 Februaries. You can download the UK regional average figures via this link.

In contrast to ‘standard’ degree-day values, ‘average’ values differ from region to region and tend to vary with time thanks to the changing climate. I usually update the table once a year.

[1] Subject to the availability of suitable historical data, the same principles could be applied in other regions.

Keeping a sense of proportion

This web site doesn’t usually cover domestic energy saving but the topic is of indirect relevance when one is conducting staff energy awareness training. Learning about how to cut energy costs at home is one of the benefits to staff  of participating in such programmes.

At the time of writing (October 2022) UK energy prices are increasing dramatically and the media (as ever in such circumstances) are awash with energy-saving tips, many of which are trivial or patronising. As part of any awareness-raising programme it could be useful to steer people away from irrelevant time-wasting ideas and towards things that will actually make a difference. In this article I’ll put some numbers to some of the advice that’s currently doing the rounds. These are rough-and-ready estimates based on a lot of simplifying assumptions and the prices I will use are £0.15 per kWh for gas and £0.52 per kWh for electricity.

Tip no. 1: when cooking, avoid opening the oven door to inspect the contents

The argument presented here is that the hot air will escape and more energy will need to be put in to compensate. Let’s look at that: the capacity of the oven will be of the order of 60 litres. Let’s say all the air in the oven is replaced with room air. 60 litres of room-temperature air will have a mass of 0.07 kg. With a specific heat of near enough 1 kJ.kgK,  and supposing a temperature rise of (say) 180 degrees, that implies 0.07 x 1 x 180 = 12.6 kJ = 0.003 kWh, or 0.2 pence wasted. Verdict: bonkers.

To put that in perspective, it’s the equivalent of preheating the oven for 4 seconds longer than needed. But even preheating the oven prematurely isn’t a huge deal. Once up to temperature it will very likely dissipate something of the order of one kilowatt (costing 52p per hour) so ten minutes idle costs only about 9p.

Tip no. 2: don’t boil more water than you need

Suppose you boil 0.5 litre more water than you need. With a specific heat of 4.2 kJ/kgK and assuming cold supply at 10°C, the extra heat supplied is 0.5 x 4.2 x (100-10) = 189 kJ = 0.05 kWh or 2.6 pence worth. Verdict: trivial.

Tip no. 3: use a shower rather than a bath

Let’s look first at the cost of a bath using gas-fired hot water. I’ll assume 100 litre (kg) cold feed at 10°C and bathwater heated to 45°C. At a specific heat of 4.2 kJ/kgK that needs 100 x 4.2 x (45-10) = 14,700 kJ of net heat. Assuming 80% boiler efficiency that equates to 18,375 kJ gross , i.e. 5.1 kWh or say 77 pence.

Contrast that with 10 minutes in an 11kW electric shower: that’s 11  x 10/60 = 1.8 kWh, costing 94 pence, a bit more than the bath. To name a saving you’d need to limit yourself to 8 minutes in the shower. Verdict: marginal

What about a shower fed from the gas heating? Suppose it’s a combi boiler with 16 kW water-heating capacity operating at 80% efficiency (ie 20 kW input) again for ten minutes. That would use 20 x 10/60 = 3.3 kWh of gas, costing 50 pence (27 pence less than the bath). Verdict: unexciting

Tip no. 4: turn off unwanted lights

Let’s take for our example an LED lamp rated at 10 watt. That will cost about 3 pence per hour to run but unlike ovens, kettles and baths, one tends to have a lot of them and use them continually so their cumulative effect in a  household could be relatively costly. Eight such lamps run on a daily basis for four hours more than needed would add 8 x 4 x 10 x 365 = 116.8 kWh per year, costing an extra £61 per year. Verdict: do it





The energy-conscious organisation

In 2019 I was involved in the “Energy Conscious Organisation” initiative promoted by the Energy Services and Technology Association. This programme is about behaviour change not in the normal sense (something which organisations promote on the shop floor) but fostering a more holistic approach, bringing in the design and procurement of assets, for example, or addressing maintenance policies. It amounts to organisational culture change drawing in management and professional functions. I think an “Energy Conscious Organisation” could be characterised as follows. It minimises its use of fuel and electricity by…

  • Engaging and involving everyone at all levels and in all functions;
  • Encouraging vigilance, facilitating resolution of problems and exploiting opportunities;
  • Developing individuals’ skills and knowledge as needed;
  • Adapting its policies and processes to guarantee continual improvement;
  • Measuring, monitoring and reporting the results

For brevity we could reduce this to five watchwords: Vigilance—Engagement—Skills—Monitoring—Adaptation. If only that had a memorable acronym.

Air-con bolt-on

Bulletin reader Adam F. is plagued by emails from a company selling a bolt-on thermostatic control for split-system air conditioning units. They claim ‘up to 40%’ savings. Is this plausible?

Now the rate of heat flow into an air-conditioned space is proportional to the outside-inside temperature difference (barring changes in ventilation rate and ignoring solar gain, which I will come back to). Let’s suppose you are maintaining 18°C indoors: the rate of heat inflow when it’s 28°C outside will be double what it is when it is 23°C (a ten-degree differential compared with a five-degree differential).

To maintain steady internal conditions the heat inflow must be balanced by an equal amount of cooling. There are two ways to reduce the energy used for cooling:

  1. reduce the rate of heat inflow; or
  2. improve efficiency or reduce losses in the refrigeration plant which provides the cooling

Solutions based on improved thermostatic control address the first option, and they claim to do so by preventing overshoot whereby the evaporator (indoor unit) continues to cool the space after the set point has been reached and it has turned off. The effect of such overshoot, if it occurs, will be to depress the internal temperature slightly. The heat flow into the space will accordingly increase slightly, balancing the excess cooling that has been supplied. But how significant will the effect be? Ultimately it depends on the impact on average internal temperature over time. Remember that the overshoot will be transitory, but let’s be pessimistic and suppose that it gives an average space temperature that is 0.2°C lower than it need be. With an outside-inside differential of 5 degrees, that would imply only 4% excess heat flow and corresponding cooling load. But this is 4% of quite a low load; if the system were sized for a 20-degree differential a 0.2°C offset in space temperature would be adding only 1% to the load when running at design conditions.

But there is a twist. Overshoot can only occur as the thermostatic control commands the cooling to turn off. This may be quite frequent at low loads, but becomes less so as the load increases and the cooling spends a greater proportion of its time running. So the hotter the weather and the harder the cooling has to work, the less waste there will be in absolute terms, and this smaller absolute waste becomes an infinitesimal percentage of the higher demand. Solar gain, when it occurs, increases the load on the cooling system, which reduces the number of start-stop cycles by lengthening the ‘on’ periods and hence cuts down the opportunities for thermostatic overshoot.

The final thing to bear in mind is that although we have, in this analysis, a range of potential savings from maybe 4% at low load to essentially nil at full load, not much consumption occurs at low load so the potential year-round savings are skewed well away from the 4% figure.

My verdict: plausible savings might be of the order of 1% but only if thermostatic overshoot actually occurs.