Energy saving opportunities

The new scheme is expected to help reduce energy bills for large enterprises by £300m in 2016, but the Carbon Trust believes savings could be two to three times higher if business act and implement cost effective measures.

The ESOS regulations will require more than 7000 large enterprises in the UK to undertake an energy audit at sites that make the majority of the total energy use of the business. This audit will then have to be repeated every four years.

The government estimates that the net benefit of the policy to the UK will be around £1.9bn between 2015 and 2030. This is based on a conservative prediction that only 6% by value of potential energy saving opportunities identified will be implemented.

But the actual benefits for business, based on Carbon Trust analysis,  are likely to be far greater than estimates suggest, with the actual  savings on energy bills  being some two or three times higher.

The Carbon Trust has provided over 200,000 fully-costed energy saving recommendations to more than 35,000 UK businesses. This experience suggests that around four in 10 simple recommendations with quick paybacks are implemented, while around two in 10 of the more complex or long-term recommendations are taken forward.

Large businesses can cost-effectively save around 15% from energy bills through efficiency measures, with an average internal rate of return of 48% and payback within three years. In many cases savings can be even higher. It is not uncommon to see reductions of as much as 25%.

These savings can be achieved through readily available and well-established technologies in areas such as lighting and heating, provided that the technology is properly specified and sized, and that the installer is appropriately skilled.

Myles McCarthy, director of implementation at the Carbon Trust, said: "The scheme is a much needed wake up call for businesses that haven’t already benefitted from the significant cost savings that can be achieved through energy efficiency. But identifying the opportunity is only half the battle. If recommendations go unimplemented then businesses will needlessly be paying over the odds on their energy bills.”