Power and renewables

Energy-efficiency: ‘Mandatory by law, but above all an opportunity’

Transitioning to Efficient Electrification

Complying with Article 8 of the EU Energy Efficiency Directive (EED) may sound boring, but it is quite the opposite. More than 45,000 companies in the EU must comply with this directive, and in many countries the deadline is 5 December 2019, otherwise they risk a fine. Necessary evil? Perhaps. But above all, it is an opportunity for companies to get serious about energy efficiency and savings.

Article 8 of the EU EED states that large companies must conduct an energy audit every four years, to map their current energy consumption and to identify potential savings. Think of questions like: What are your biggest energy consumers? Are there trends and fluctuations to discover? Is there unnecessary energy consumption? How can you improve your energy performance?

Energy Saving

Answering these questions can reveal opportunities for energy efficiency and savings.  EU benefits from these savings, because the objectives set by the European Commission for energy efficiency are ambitious: 32.5 percent by 2030. The business community plays a crucial role in achieving that objective. Rules on energy efficiency are therefore increasingly being enforced and must be complied with by an ever-larger group of companies.

In the past, only energy-intensive companies were obliged to do the audit, but that is now a different story. Nowadays every company with at least 250 employees, or with more than € 50 million turnover and a balance sheet total of more than € 43 million must carry out an energy audit every four years.

Risking a fine

In 2015 (the first compliance period in many countries) and the years after, many companies were not aware of the fact that they were expected to do the audit. In many cases, Article 8 of the EED has not been complied with, without significant consequences. Countries such as Germany and the UK have been checking compliance and the quality of the audits, but as far as I know, very little has happened in other member states. In many countries, the next audits must be completed by the end of 2019 and I do expect more checks and penalties for non-compliance to arise in this second audit period: authorities, auditors and companies have had enough time to get fully prepared now.

But even if it is on the agenda, compliance with the Article 8 requirements is not always easy. For multinationals, compliance with the EED is extra complex. The EU member states must translate this directive into national legislation. Each member state has given the directive its own twist, resulting in different requirements, timelines and possible penalties in each country. In other words: a multinational that operates in twenty-eight countries must meet twenty-eight different requirements, or even thirty if they are present in all three Belgian regions (Flanders, Wallonia and Brussels). And that is complicated.

I do not expect this lack of uniformity in legislation to change quickly. If the EU proposes a new directive, 28 member states must agree. Therefore, such directives are usually deliberately vague– otherwise it will never reach agreement. It is up to individual member states to then make the guidelines concrete.

Getting started

It is easy (and will likely remain easy) not to comply with the Article 8 of the EED. My advice for companies is: get started as soon as possible. But what is the first step? That is our so-called compliance check. In other words, do you, as a company, have to comply with Article 8 of the EED? You first have to find out, for each country separately.

When you have done the compliance check, you should start collecting all relevant data from 2018 for the affected sites. For example, a travel agency often has dozens of offices in many locations, which all may have to undergo an audit. Then the effort quickly becomes very large. Those who wait until November also have a considerably smaller chance of finding someone who is accredited to do the necessary audits.

Seizing opportunities

DNV also advises companies to view Article 8 not only as a must, but above all as a genuine opportunity; an opportunity to make your own business processes more sustainable and save on energy costs. After an energy audit, it often emerges that significant energy savings can be realized without major investments. Think of adjusting the temperature or pressure for certain equipment. With these quick wins, companies can, in many cases, reduce their energy bills by more than ten percent.

Nevertheless, we observe that companies have not yet taken this opportunity. Many companies do not go beyond meeting the requirements: delivering the required report, with as little money and effort as possible. Energy is simply not a priority for some. They do not see a business case and are not convinced that the time, effort and money required for an audit are quickly repaid in the form of energy savings. That is regrettable and a missed opportunity.

At DNV we do compliance checks for companies, helping them to identify the countries where they have to comply with which requirements. Based on this check, which typically results in reducing the audit effort to about 30% of sites, they can get started with an energy audit programme. Have a look how we can get you started and further support you with all audits around Europe

Anke Brems 
Senior Consultant Sustainable Energy Use Europe.

This blog is derived from an interview from DuuzaamBedrijfsleven with Anke Brems