The government has indicated that it may subsidise the cost of energy efficiency measures for businesses under the Esos programme.
Under the Energy Savings Opportunity Scheme (Esos), businesses have to conduct an energy audit and have it signed off by a director. However, after that, they don’t actually have to do anything.
The reasoning is that no responsible director will knowingly do nothing when shown exactly where the business is wasting money. But businesses often have other priorities. Studies, including a reader survey and subsequent report by Energyst Media, have shown that while some businesses will undertake no or low cost measures, financing energy efficiency projects remains difficult for many organisations.
In a consultation published yesterday the government set out options for reducing the raft of overlapping business energy taxes.
Part of the consultation also raised the prospect of better financial incentives for energy efficiency, with further details set to follow. Options mooted in the consultation include feed-in-tariff style subsidies, supplier obligations and competitive fund allocation. The consultation also suggested that “government could match-fund’ investments in energy efficiency and low carbon measures; and/or that there could be a link to audits (e.g. ESOS) whereby businesses could claim an incentive to cover the cost of implementing actions highlighted by audit reports, or in return for more reporting”.
The consultation states that government is open to considering such proposals, which would be funded through increases in taxation and would have to represent best value for money.
The finance headache
Businesses and energy managers will likely welcome any such moves.
Interviewed for the recent Financing Energy Efficiency report, energy managers told Energyst Media that getting budgets for measures with payback periods longer than two years was challenging. Financiers said that businesses were missing out by taking a short term view because it meant that more costly measures – which could deliver much greater efficiency – could not be bundled up with less costly measures and financed externally.
Solving the Esos apathy?
By incentivising energy efficiency measures – and linking incentives to Esos – the government could also solve the apparent apathy to the scheme. As of last month, only 152 firms had notified the Environment Agency of Esos compliance. Some 14,000 businesses have been sent reminders by the Agency that the deadline for compliance is 5 December.
While the EA has said it will set out enforcement procedures next month, some have started to question whether the scheme can be effectively enforced.