Internet Explorer 11 (IE11) is not supported. For the best experience please open using Chrome, Firefox, Safari or MS Edge

Changes to Energy Audit and Management Obligations

Energy audit, management and reporting obligations for Irish enterprises are changing under the revised Energy Efficiency Directive. Depending on the level of their energy consumption, enterprises may be required to carry out energy audits, prepare and publish energy action plans or put in place energy management systems. Our Planning & Environment team gives an overview of the key obligations on the horizon.


In this article, we review the changes to the energy audit and energy management system obligations that are coming under the recast EU Energy Efficiency Directive[1] (the Directive).

Under the previous version of the Directive (2012/27/EU), “enterprises that are not SMEs” are required to carry out an energy audit every four years.

The revised Directive is set to change the scope of this obligation. The application of the obligation will no longer depend on the size of the enterprise, ie whether it is an SME or not. Instead, the scope of the obligation will be entirely dependent on an enterprise’s average annual energy consumption.

In addition, the revised Directive introduces new requirements to implement energy management systems and prepare energy action plans.

Who do the obligations apply to?

Energy thresholds

Articles 11(1) and 11(2) of the revised Directive require that:

  1. Enterprises with an average annual consumption higher than 85 TJ of energy over the previous three years, taking all energy carriers together, must put in place an energy management system (EMS)[2] by 11 October 2027.
  2. Enterprises without an EMS in place and below the 85 TJ threshold must comply with certain requirements if they have an average annual consumption higher than 10 TJ of energy over the previous three years, taking all energy carriers together. Such enterprises must carry out energy audits (EAs)[3] every four years. The first audit is due by 11 October 2026. Following each EA, they must prepare and publish an Action Plan which sets out how they will implement the recommendations.

Enterprises with an average annual consumption higher than 85 TJ are described by the European Commission as “large energy users”. However, the Commission appears to anticipate that even “smaller companies” may meet the lower 10 TJ threshold.[4]

Member States must transpose the provisions of Article 11 into national law by 11 October 2025. These provisions do not have direct effect in Ireland until they are reflected in transposing national legislation. The Irish transposing legislation has not been published as yet.

An “enterprise”

The term ‘enterprise’ is not defined in the revised Directive. However, the Commission’s recommendation[5] on Article 11 (the Recommendation), notes that the term is defined widely in other EU publications to include “any entity engaged in an economic activity, irrespective of its legal form”.

In the context of the revised Directive, the Commission considers this to mean that:

  • Only enterprises within the territory of a Member State are obliged to comply. However, when assessing their energy consumption, all “linked enterprises” within the territory of the EU should be included, and
  • Enterprises which are partly or wholly owned or controlled by public bodies are also covered by the obligations of Article 11(1) and Article 11(2).

The term “linked enterprises” is not defined in the Directive or the Recommendation. However, the Recommendation includes some worked examples and a recommended approach for calculating the average energy consumption of enterprises with complex structures.

How is ‘average energy consumption’ calculated?

The average energy consumption of an enterprise is based on the preceding three-year period, taking all of an enterprise’s energy carriers together. The term “energy carrier” is not defined in the Directive or the Recommendation.

The Irish transposing legislation is not yet available. In practice, it is likely that enterprises will be required to self-assess their energy consumption and report to a national authority. The Recommendation states that, in order to identify enterprises that come within the scope of Articles 11(1) and 11(2), Member States may require all enterprises to report every year on their annual energy consumption to a national authority. However, this is not included in the text of the Directive. It remains to be seen whether Ireland will adopt this approach in the transposing legislation.

Member States have some discretion to establish their own rules on how ‘average annual consumption’ is to be calculated. We would expect this to be detailed in the Irish transposing legislation, along with accompanying guidance.

The Recommendation proposes a recommended calculation method, which may be adopted by Member States but is not mandatory. This method largely relies on the energy bills invoiced to the enterprise, but states that a “more accurate estimate” should be used if available.

The Directive sets deadlines of 11 October 2026 for the first EA and 11 October 2027 for the first EMS, if required. This means that all enterprises should assess their energy consumption for 2023, 2024 and 2025 in order to ensure that they are aware of which obligations, if any, will apply to them.

Action plans

An enterprise that has carried out an EA in accordance with the revised Directive must also prepare a concrete and feasible “Action Plan”.

The Action Plan must identify measures to implement each recommendation made in the EA, provided it is technically or economically feasible to do so.

The revised Directive contains limited detail on the contents of the Action Plan. It does not include a specific obligation on the enterprise to implement the measures set out therein, or to achieve certain levels of energy saving. The Recommendation states that it is Member States that must define the content of the Action Plan, so we expect more detail on this to be available in the Irish implementing legislation. The Recommendation suggests that the Action Plan “could provide a structured summary of energy performance improvement actions (EPIAs) which are part of the energy audit”, but this is a recommendation rather than a mandatory requirement.

The Action Plan must be submitted to the enterprise’s management. The Action Plan, and its implementation rate, must also be published in the enterprise’s annual report and made publicly available. However, this is subject to both EU and national law protecting trade and business secrets and confidentiality.

The Recommendation encourages Member States to avoid duplication of reporting. It advises that Member States should allow enterprises to fulfil the requirement to publish an Action Plan by integrating the necessary information into their Climate Transition Plan, as required under the Corporate Sustainability Reporting Regulations 2024 if applicable.

Exemptions

An exemption from the EMS and EA requirements applies to enterprises that implement an “energy performance contract” (EPC) or an “environmental management system” (EnvMS). However, this is subject to the relevant EPC or EnvMS incorporating the necessary elements of the Directive.

Penalties

The Directive requires Member States to impose penalties for infringements. We expect penalties to be set out in the Irish implementing legislation.

Non-mandatory measures and encouragement

The Directive also provides that Member States should introduce measures designed to encourage enterprises to go further in their reporting or report on a voluntary basis. For example, Member States must “bring to the attention of SMEs” concrete examples of how an EMS could help their business. They must develop programmes to encourage enterprises that are not subject to the EMS or EA obligations to undergo energy audits.

Conclusion

The revised Directive raises the bar in terms of energy efficiency targets and obligations. It changes the criteria which determine whether enterprises are required to carry out energy audits, and introduces new requirements to implement an EMS and an Action Plan. This means that more entities, including SMEs, could now be caught by the obligations, while some entities might be facing a new obligation to implement an EMS or prepare and publish an Action Plan.

The Directive also provides scope for Member States to introduce additional measures to encourage all enterprises to report on their energy use and undergo energy audits on a voluntary basis.

Recent EU legislation has required increased reporting of sustainability metrics, including energy efficiency. Reporting and data collection is often viewed as the first step towards improved sustainability and efficiency. The next step after measurement is management. The requirement to implement energy management systems and disclose energy audit action plans increases the emphasis on this next step. Given significant energy costs, the requirements could create long-term value for enterprises that identify energy-saving opportunities.

It is up to Member States to decide how to transpose these obligations into national law. The Irish transposing legislation is awaited so it remains to be seen exactly how these measures will apply in Ireland. These provisions must be transposed into national law by 11 October 2025. Enterprises have until 11 October 2026 to comply with EA obligations, and until 11 October 2027 to comply with EMS obligations. However, as the energy consumption threshold is calculated over a three-year period, enterprises should already have procedures in place for recording their energy consumption dating from at least 2023. This is so they can determine whether they will be subject to these EA and EMS obligations when they come into force.

For more information, contact a member of our Planning & Environment team.

People also ask

What is an energy management system?

Under Article 11(1) of the revised Energy Efficiency Directive 2023/1791, enterprises with an average annual consumption higher than 85 TJ of energy over the previous three years, taking all energy carriers together, must implement an energy management system (EMS). An EMS is a set of interrelated or interacting elements of a strategy which sets an energy efficiency objective and a plan to achieve that objective. It includes the monitoring of actual energy consumption, actions taken to increase energy efficiency, and the measurement of progress.

What is the deadline for putting energy management systems in place?

Article 11(1) of the revised Energy Efficiency Directive 2023/1791 requires enterprises with an average annual consumption higher than 85 TJ of energy over the previous three years, taking all energy carriers together, to put in place an energy management system (EMS) by 11 October 2027. The Irish transposing legislation is awaited so it remains to be seen what deadline will be transposed into national legislation.

What is an energy audit?

Under Article 11(2) of the revised Energy Efficiency Directive 2023/1791, enterprises with an average annual consumption higher than 10 TJ of energy over the previous three years, taking all energy carriers together, must carry out an energy audit (EA). An EA is a systematic procedure with the purpose of obtaining adequate knowledge of the energy consumption profile of a building or group of buildings, an industrial or commercial operation or installation, or a private or public service. It identifies and quantifies opportunities for cost-effective energy savings. It also identifies the potential for cost effective use or production of renewable energy.

There is some discretion available to Member States as to what must be covered by an EA. However, to ensure a high quality, Member States must establish transparent and non-discriminatory minimum criteria for EAs, including EAs which are carried out as part of an EMS. These criteria must accord with Annex VI of the revised Directive. The criteria must also take account of relevant European or international standards.

Who can carry out an energy audit?

Energy Audits may be stand alone or be part of a broader environmental audit, but must be either:

  1. Carried out in an independent and cost-effective manner by qualified or accredited experts, or
  2. Implemented and supervised by independent authorities under national legislation.

In relation to 1. the EA may be carried out by in-house experts or energy auditors, provided that the Member State concerned has put in place a quality assurance scheme for EAs. The Recommendation also provides that these persons should not be directly responsible for any of the energy sectors, eg buildings, processes, transport, that are subject of the EA.

What is the deadline for carrying out energy audits?

Article 11(2) of the revised Energy Efficiency Directive 2023/1791 requires enterprises with an average annual consumption higher than 10 TJ of energy over the previous three years, taking all energy carriers together, to carry out an energy audit (EA) by 11 October 2026. Subsequent EAs must be carried out at least every four years. The Irish transposing legislation is awaited so it remains to be seen what deadline will be transposed into national legislation.

When will the revised Energy Efficiency Directive take effect?

The revised Energy Efficiency Directive 2023/1791 came into force on 11 October 2024. Member States have until 11 October 2025 to transpose it into national law.

The content of this article is provided for information purposes only and does not constitute legal or other advice.


[1] Directive (EU) 2023/1791 of the European Parliament and of the Council of 13 September 2023 on energy efficiency and amending Regulation (EU) 2023/955 (recast)

[2] An energy management system is a set of interrelated or interacting elements of a strategy which sets an energy efficiency objective and a plan to achieve that objective. It includes the monitoring of actual energy consumption, actions taken to increase energy efficiency, and the measurement of progress. It is defined in the revised Energy Efficiency Directive 2023/1791. Please refer to the ‘People Also Ask’ section for further information.

[3] An energy audit is a systematic procedure with the purpose of obtaining adequate knowledge of the energy consumption profile of a building or group of buildings, an industrial or commercial operation or installation, or a private or public service. It identifies and quantifies opportunities for cost-effective energy savings. It also identifies the potential for cost-effective use or production of renewable energy. It is defined in the revised Energy Efficiency Directive 2023/1791. Please refer to the ‘People Also Ask’ section for further information.

[4] See European Commission Document “Questions and Answers - Making our energy system fit for our climate targets” 9 October 2023

[5] Commission Recommendation (EU) 2024/2002 of 24 July 2024 setting out guidelines for the interpretation of Article 11 of Directive (EU) 2023/1791 of the European Parliament and of the Council as regards energy management systems and energy audits



Share this: