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Frequently asked questions and answers concerning the EED energy audit (Article 8)

In 2012, the European Energy Efficiency Directive (2012/27/EU), also known as the EED, was

established. The aim of this Directive is to help to realise the European target set in 2007 to reduce

European energy consumption by 20% by 2020. This should contribute to a reduction in

greenhouse gas and air pollutants, to a decrease of energy costs, and to lower dependence on

import of fossil fuel. This Directive contains commitments of Member States as well as companies

that have been implemented in national laws and regulations. One of these concerns the obligation

for larger companies to carry out an energy audit, which is implemented in the provisional

regulation of implementation Articles 8 and 14 Energy Efficiency Directive (in Dutch: Tijdelijke

regeling implementatie artikelen 8 en 14 Richtlijn energie-efficiëntie)

This document containing frequently asked questions and their answers is meant to facilitate the

execution of Article 8 of this Directive. It will help enterprises, enforcers, and advisors to interpret

the Directive. The document will be regularly updated according to experiences and new

developments. Previous versions of this document have been agreed upon by representatives of

businesses, enforcers and advisors (the Netherlands Enterprise Agency). No legal rights can be

derived from this document. Enterprises and competent authorities take full responsibility for

decisions taken.

Index

1. What is the objective of an energy audit?

2. Target group of the energy audit:

a) Who is responsible for conducting an energy audit?

b) Does an audit need to be carried out if an enterprise is part of an international concern with

over 250 employees in total, or with a total revenue > € 50 million a year as well as an

annual balance total > € 43 million?

c) How is the audit obligation dealt with for concerns or enterprises consisting of more than

one entity?

d) Which exemptions are applicable?

e) Which alternative energy or environmental management systems constitute an exemption?

f) Who is responsible for the energy audit when a building is let?

g) What happens when an enterprise exceeds the financial or personal criteria during the

course of the year?

h) What is the relationship between the EED energy-audit and the approved energy-saving

measures (“Erkende Maatregelenlijsten”)?

i) Are educational institutes obliged to carry out an energy audit?

j) Should franchise owners be taken into account when determining the size of an enterprise?

3. What are the criteria for an energy audit?

a) Which criteria are applicable?

b) What does the enterprise need to provide?

c) How should transport be taken into account?

d) What are possible cost-efficient energy saving measures?

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4. Monitoring, enforcement and deadlines

a) Who is authorised to conduct an audit?

b) When does the audit need to be done?

c) How are audits verified?

d) What are the sanctions?

e) How is confidential business information dealt with?

f) Which rules take precedence where multiple entities and competent authorities are

involved?

Appendix: Step by step guidance and flow diagram to determine the EED energy audit

obligation

1. What is the objective of an energy audit? - The energy audit is a systematic procedure taking place every four years. It aims to

collect sufficient information concerning the enterprise's current profile on energy

consumption in order to identify possible cost efficient energy saving options, but also to qualify and report on its results.

- The Directive intends to increase awareness and insight into possible savings

opportunities with the energy audits. 2. Target group of the energy audit

a) Who is responsible for conducting an energy audit? - The energy audit applies to large enterprises. These are enterprises that are not covered

by the SME-category as described in the Directive. Large enterprises are enterprises with over 250 employees, or with a total revenue of more than € 50 million a year and an annual balance total of more than € 43 million.

- See the step by step guidance in the appendix to confirm if these conditions are met. b) Does an audit need to be carried out if an enterprise is part of an international concern

with over 250 employees in total, or with a total revenue > € 50 million a year as well as an annual balance total > € 43 million?

- An audit only needs to be conducted where the Dutch entities fall within the large

enterprise definition (i.e. > 250 employees etc.) c) How is the audit obligation dealt with for concerns or enterprises consisting of more than

one entity? - If one of the entities has over 250 employees (or a total revenue of > € 50 million a year

and an annual balance total of > € 43 million), all (Dutch) entities of that concern are required to audit. The audit is also required, if none of the entities on their own meet the criteria, but together they will.

d) Which exemptions are applicable? Long term agreements

- In 2012, companies that participate in the long term agreements LTA3 and LEE (in Dutch: MJA3 and MEE) have handed in a new plan for energy efficiency for the period of 2013-2016. Because of this, these enterprises have already met the requirement to carry out an energy audit before December 5, 2015. Energy and environmental management systems

- Article 3 of the Directive states that a business is exempted of the obligation to carry out

an energy audit, if the applied energy management system is certified according to European and international standards, and includes an energy audit that meets the minimum criteria, as referred to in appendix VI of the Directive. For example, this applies

to the ISO 50001 system for energy management. The ISO 14001 system for environmental management only pays limited attention to energy, which makes an additional module such as the ISO 14051 necessary for an exemption. Other (future) certified systems may be eligible for exemption concerning the energy audit obligation

audit. This, however, is up to the competent authorities to judge. - See also question and answer 2.e and 2.h.

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e) Which alternative energy or environmental management systems constitute an exemption? A number of energy and environmental management systems address energy audits whereby these constitute a full or partial alternative for the EED energy-audit. Whether this is the case and to what extent these alternatives apply is up to the discretion of the competent authority.

To support the use of environmental systems in relation to the EED energy-audit obligation, a number of factsheets have been developed (in Dutch). These can be found on: www.rvo.nl/eed ( > energie-audit > alternatieve invulling met keurmerk). These factsheets specify to what extent the system meets the requirements of the EED energy-audit obligation, including guidelines for the competent authority. All the systems under

consideration pay attention to energy audits. Administrators of other systems certified by an independent body including an energy audit component, which largely corresponds to the requirements of the EED Directive, can contact RVO.nl. The system will then be evaluated.

f) Who is responsible for the energy audit when a building is let? If a building constitutes an important part of the enterprise's business, it must be included in the energy audit. Energy-saving measures in buildings can be taken both by the owner

(technical installation / insulation) and the tenant (behavioural measures, equipment). Obviously, an enterprise can take more measures if it also owns the property. Where an enterprise rents the building the energy audit will mainly relate to the matters to which the enterprise does have influence.

g) What happens when an enterprise exceeds the financial or personal criteria during the course of the year? If an enterprise exceeds the headcount or financial criteria, this does not immediately affect the status (SME / non-SME). The enterprise retains the status of the beginning of the year, and will lose the status if it exceeds the criteria over two consecutive financial years.

h) What is the relationship between the EED energy-audit and the approved energy-saving measures (“Erkende Maatregelenlijsten”)?

If an enterprise is using the approach based on approved energy-saving measures (“Erkende Maatregelenlijsten”) the competent authority can provide a (partial) exemption

to the audit obligation. Where an enterprise is regulated by Article 2.15 of the Activities decision, Environmental

Management Act (the so-called category A and B companies), the enterprise can choose to follow the approved measures approach by carrying out measures from the approved measures list for its specific industrial (sub)sector. In the EED energy-audit report enterprises must include the following:

1. The drafting of an energy balance of the annual energy use and a schematic overview of all existing energy flows (including transport). 2. An overview of all relevant approved measures (where the relevance should be determined on the basis of the reference situation, and the technical and economic conditions that are mentioned in the approved measures list). 3. An overview of possible cost-effective energy-saving measures in the field of transport management.

If the enterprise (at entity level, local) uses <200,000 kWh electricity and <75,000 m3 natural gas annually, it is sufficient to report the annual energy use instead of (1). There are currently (July 2016) approved measures lists published for the following sectors: metal, plastics & rubber, automotive repair sector, datacentres, offices, healthcare, education, agriculture, sports & recreation, automotive, hotels & restaurants,

parts of the food industry (fruits & vegetables processing industry, soft drinks, water & juices producers, baking & confectionary industry). A list for the retail sector is expected to be available in short term. More information on the approved measures approach can

be found on www.infomil.nl/energie.

i) Are educational institutions obliged to carry out an energy audit?

In the step by step guidance the question in step 2 refers to the conducting of economic activities. Formal, regular education is not an economic activity. However, for example,

with courses or company training educational institutes can be in competition with other providers of commercial training. To this extent an educational institution can run an

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economic activity. The competent authority ultimately determines whether a company or a school fall under the EED audit obligation.

j) Should franchise owners be taken into account when determining the size of an enterprise?

As a franchise owner operates independently (the franchisor has no financial ties with or control over the franchise owner), only the numbers of employees, turnover and balance sheet total need to be taken into account to determine if the enterprise is considered a large enterprise.

3. What are the criteria for an energy audit? a) Which criteria are applicable? - The energy audits referred to in Article 8 shall be based on the following guidelines:

(a) be based on up-to-date, measured, traceable operational data on energy consumption and (for electricity) load profiles; (b) comprise a detailed review of the energy consumption profile of buildings or groups of buildings, industrial operations or installations, including transportation;

(c) build, whenever possible, on life-cycle cost analysis (LCCA) instead of Simple Payback Periods (SPP) in order to take account of long-term savings, residual values of long-term investments and discount rates;

(d) be proportionate, and sufficiently representative to permit the drawing of a reliable picture of overall energy performance and the reliable identification of the most significant opportunities for improvement.

b) What does the enterprise need to provide? - According to Article 2 paragraph 3 (sub a), an enterprise has to give a detailed overview

of all existing energy flows within the enterprise as well as the extent and distribution to function and conversion, where applicable, to other energy carriers. This concerns, for example, energy consumption of buildings or groups of buildings, industrial processes and installations, transport and heat included. According to the guidelines of the Directive, this overview needs to be “proportional” and “sufficiently representative” to give a reliable overview of energy use and possible saving methods (see appendix VI EED). A remaining

part of about 10% of the total energy use is in practice still acceptable under normal circumstances.

c) How should transport be taken into account? - The Directive states that energy consumption by transport should also be taken into

account in the energy consumption overview (see previous question). This concerns

transport that is part of the enterprise's assets or is considered part of its core business. The enterprise's nature does not matter, for example whether it is a trading or production company. What matters is whether transport is part of the enterprise's own business (if that is the case, the enterprise will have influence on the energy use by applying, for example, more efficient motors, different fuels, or more effective logistic planning). If transport has been outsourced, the transport provider will have to include the transport in case of an audit requirement. Commuting of employees is excluded from the audit

requirement. - The answer to the question depends on whether including transport is necessary to give a

“sufficiently representative” and “proportional” overview of the enterprise's energy consumption.

- Participation in the program Lean & Green may be interpreted as part of transport in an energy audit by the competent authority (see also answer and question 2e).

d) What are possible cost-efficient energy saving measures? - Following question 3a, it says that energy audits should make detailed and validated

calculations for potential energy saving measures possible. - A description of the possible cost-efficient saving measures means that insight needs to

be provided as to what measures will be cost-effective for a certain enterprise. The

Directive has not specified cost-efficiency on this particular point. In the Dutch context, the current framework is followed, meaning measures with a payback time of < 5 years. When determining the energy audit, attention needs to be paid to the circumstances of the enterprise that will influence the cost-effectiveness of the measures.

4. Monitoring, enforcement and deadlines a) Who may execute the audit? - The enterprise itself, or an external consultant commissioned by the enterprise. b) When does the audit need to be done?

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- The Directive states that the energy audits has to have been carried out before December 5, 2015.

- The report on the energy audit should be sent to the competent authorities1 four weeks after completing the audit.

- Henceforth, the energy audit needs to be carried out every four years.

- Competent authorities will send the audit report (and the results of the cost-benefit

analyses) to the Netherlands Enterprise Agency (RVO.nl). c) Who checks on the execution? - Competent authorities judge whether an enterprise meets the obligation and quality

requirements.

- Competent authorities will send the audit report and the results of the cost-benefit

analyses to the Netherlands Enterprise Agency (RVO.nl). RVO.nl monitors the progress and quality of the report and cost-benefit analyses, and report their findings to the responsible ministries.

d) What are the sanctions? - The deadline of December 5, 2015 is part of the Directive and the Netherlands is required

to maintain this date in prescriptive regulation. Enforcement is the responsibility of the competent authorities and they will handle it adequately, as they do with other

commitments concerning the law on environmental management. To do this, competent authorities use the national enforcement strategy (see, in Dutch:

http://www.infomil.nl/onderwerpen/integrale/handhaving/landelijke/introductie/ ). Competent authorities are expected to consult with the enterprise in question, if the enterprise appears to have difficulties meeting the obligations of the Directive.

- Competent authorities are authorised to impose sanctions such as penalties - as a last

resort – if commitments are not met. e) How is confidential business information dealt with ? - The Circular on confidential treatment of enterprise, production, or personal information

explains how to handle requests for excess to information from companies. http://wetten.overheid.nl/BWBR0025641/geldigheidsdatum_09-07-2015

- If, according to the enterprise, certain business and production information should not be public, they will inform the governing body that this information should be treated confidentially (Article 10, paragraph 1, sub c of the Information Act – WOB). If the governing body receives a request on the basis of Article 3 of the Information Act, they will evaluate whether the information is truly confidential.

- For competitive reasons, extra importance is given to confidentiality concerning

information from which energy use of individual processes and /or products may be

derived. This guarantees confidentiality of business information. f) What is the approach in case of more entities and competent authorities? - The document “Rapportage EED - adviesdocument” is published on www.rvo.nl/eed

(>energie-audit >uitvoering en indiening energie-audit), most recent version is dated July 2016.

- This is an advisory document; it guides, but is not an obligation. It describes how energy audits in the context of EED Article 8 can be carried out.

- The document describes under "Uniform vestigingen" the approach for audits of enterprises with a large number of similar, uniform entities.

- In summary the approach is: full energy-audits for entities with an energy consumption of > 75,000 m3 of natural gas per year or > 200,000 kWh electricity per year (so called large consumers); a sample of 3 full audits for medium consumers (between 25,000 and

75,000 m3 natural gas per year and between 50,000 and 200,000 kWh electricity per year) and a sample of 3 simplified audits for locations with a natural gas consumption <25,000 m3 per year and a power consumption of <50,000 kWh per year. In the case of the samples, audits for the entities performing low, medium and high on energy efficiency

must be carried out. - The audit reports will be sent to the competent authorities of the entities where audits

have been carried out. - The competent authority of an entity that is not one of the samples shall have access to

all three reports of the sample of the group with the same size and an enterprise report.

The enterprise report contains a list of measures from which it must be clear what the

1 English explanation of competent authorities http://rwsenvironment.eu/subjects/environmental/system-environmental

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cost-effective measures are for the entity concerned (see also Rapportage EED -

adviesdocument).

- An enterprise report provides an overview of energy consumption (energy purchased) per entity as well as the policy choices regarding energy usage and transport for the

enterprise as a whole. In addition, the report gives an aggregate list of measures for all individual entities (see Rapportage EED - adviesdocument).

- An entity report gives insight into the local situation and the energy savings potential for the specific location.

- Enterprises operating nationwide with many entities under several competent authorities, may qualify for a Core Team service (Kernteam EED). For these enterprises a customized approach is developed. This Core Team consists of multiple environmental agencies and

municipalities (see also www.rvo.nl/eed >energie-audit >concernaanpak).

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Appendix: Step by step guidance and flow diagram for audit obligation (Article 8 EED)

I. Introduction

The following step by step guidance and flow diagram helps to answer the question whether your

enterprise is or is not obliged to carry out an energy audit according to the regulation “Tijdelijke

regeling implementatie artikelen 8 en 14 Richtlijn energie-efficiëntie”. This temporary regulation is

partly based on the Environmental Management Act. The term ‘inrichting’ (indicating an entity with

relevant impact on the environment) is key in the Environmental Management Act. The term is also

significant for the in the Activities Decree on saving energy (section 2.6). Because of this, the term

‘inrichting’ is also used for the audit obligation. The Energy Efficiency Directive, however, does not

use this term. In order to implement the EED Article 8 as effective and complete as possible, the

choice has been made to adopt the term “inrichting” as well as definitions for SME / non-SME

enterprises

II. Relevant articles “Tijdelijke regeling implementatie artikelen 8 en 14 Richtlijn

energie-efficiëntie”

Article 1 Definitions in this regulations: ( … )

• inrichting: entity with relevant impact on the environment, as referred to in Article 1.1,

paragraph 1. Environmental Management Act ( … )

onderneming: an entity with relevant impact on the environment, as referred to in Article 1.1, paragraph 1, Environmental Management Act, is also seen as an enterprise as referred to in title I of the appendix to Recommendation 2003/361/EG of the European Commission on May 6, 2003 (Ph 2003, L 124). The enterprise does also not belong to the category of small and medium sized enterprises, as referred to in Article 2, point 26, of the Directive.

• Directive: Directive 2012/27/EU of the European Parliament and Council on October 25,

2012 concerning energy efficiency, up to amendment to Directive 2009/125/EG and 2010/30/EU, and the repeal of Directive 2004/8/EG and 2006/32/EG (PhEU 2012, L 135);

( … ). Article 2

1. The person in charge of the enterprise, ensures that:

a. the enterprise carries out an energy audit on December 5 2015 latest, and at least every four years after that. b. a report is made of the energy audit.

(…).

Article 3 An enterprise is exempt of the obligation as stated in Article 3, paragraph 1, if: a. the enterprise participates in the Long Term Agreements on energy efficiency 2001-2020

(MJA3), or in the Long Term Agreements on energy efficiency for ETS-businesses (MEE). b. it applied an energy management system, as referred to in Article 1, paragraph 11 of the

Directive, which is certified according to European and international standards and includes

an energy audit that meets the minimum criteria, as referred to in appendix VI of the Directive.

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III. Step by step guidance and flow diagram to determine audit obligation

Step 1: Do you operate an “inrichting” (entity with relevant impact on the environment)

according to Article 1.1, paragraph 1, Law of Environmental Management?

The question whether you are operating an inrichting within the Environmental Management Act,

needs to be answered first.

Article 1.1, paragraph 1, Environmental Management Act defines the term “inrichting” as follows:

every economic or in size appearing economic activity undertaken by a person that operates within

certain restrictions. The knowledge centre Infomil (www.infomil.nl) offers help to determine if your

enterprise can be considered as an inrichting.

If the answer is ‘no’: you are not obliged to audit.

If the answer is ‘yes’: proceed to step 2.

The user guide to the SME definition of the European Commission was consulted to create the following steps. This document contains further details and also many examples to clarify the following steps. See: http://ec.europa.eu/growth/smes/business-friendly-environment/sme-definition/index_en.htm When the term ‘enterprise’ is mentioned in the following steps, this will always refer to the term ‘enterprise’ as mentioned in the Energy Efficiency Directive and the Recommendation 2003/361/EG and does not refer to the term ‘inrichting’.

Step 2: Can the “inrichting” be considered an enterprise as referred to in Title I of the

appendix to the Recommendation 2003/361/EG of the European Commission?

The next question is whether the inrichting can also be considered an enterprise, as this term is

used in European law.

The recommendation states that every unit, whatever its legal form, exercises economic activities

is considered an enterprise. The deciding factor, therefore, is the economic activity and not the

legal form.

Supplying goods and services for a fee on a market is in principle an economic activity.

Governments, private companies, and healthcare can also exercise an economic activity. In the

end, the interpretation of the term ‘economic activity’ depends on the circumstances of the case:

there is no ready-made, generally applicable definition of economic and non-economic activities.

In general, it can be said that one runs an inrichting, one will in most cases also running an

enterprise as referred to here. Just to clarify: an enterprise may consist of more than one

inrichtingen.

If the answer is ‘no’: you are not obliged to audit.

If the answer is ‘yes’: proceed to step 3a.

Step 3a: Is the enterprise an autonomous enterprise as referred to in Article 3,

paragraph 1, title I of the appendix to Recommendation 2003/361/EG of the European

Commission?

An enterprise is autonomous if:

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• the enterprise owns no shares of other enterprises, and other enterprises own no shares of your enterprise.

• the enterprise owns less than 25% of the shares or voting rights of one or more enterprises, or other enterprises own less than 25% of the shares or voting rights of your enterprise.

Please note: you do NOT need to include foreign enterprises when judging this steps and the steps following.

If the answer is ‘no’: proceed to step 3b. If the answer is ‘yes’: proceed to step 4.

Step 3b: Is the enterprise a partner enterprise as referred to in Article 3, paragraph 2,

title I of the appendix to Recommendation 2003/361/EG of the European Commission?

A enterprise is a partner enterprise if: • the enterprise owns more than 25% of the shares or voting rights of other enterprises, or

other enterprises own more than 25% of the shares or voting rights of your enterprise. • the enterprise is not connected to other enterprises, which means that the voting rights

of the enterprise in another enterprise (and vice-versa) is no more than 50% (see also step 3c).

If the answer is ‘no’: proceed to step 3c. If the answer is ‘yes’: proceed to step 4.

Step 3c: Is the enterprise a linked enterprise as referred to in Article 3, paragraph 3, title

I of the appendix to Recommendation 2003/361/EG of the European Commission?

Two or more enterprises are linked if they have one of the following connections: • an enterprise owns a majority of the voting rights of the shareholders or members of the

other enterprise. • an enterprise has the right to appoint or dismiss a majority of the members of the

supervising or governing body of the other enterprise. • an enterprise can exercise a dominant influence over another enterprise because of an

agreement between the enterprises or a provision in the statutes of one of the enterprises. • because of an agreement, an enterprise can have some say over the majority of the voting

rights of shareholders or members of the other enterprise. If the answer is ‘no’: proceed to step 3a. If the answer is ‘yes’: proceed to step 4.

Step 4: Does my enterprise qualifies as a large enterprise?

A large enterprise has: • 250 or more employees (FTE). • an annual turnover of more than €50 million and a balance sheet total of more than €43 million.

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The fourth step consists of determining the number of employees, the annual turnover, and the balance sheet total. Number of employees This concerns full-time, part-time, and seasonal personnel and:

• employees; • people who work for the enterprise as contractors and who are considered employees

according to national law; • owner-managers; • partners who exercise a regulated activity within the enterprise and enjoy financial benefits

form the enterprise. To determine staffing, use figures from the last approved financial annual report. If the enterprise does not yet have the annual report, a realistic estimation based on the relevant figures of the current financial year has to be made. If your enterprise is a partner enterprise, you will need to add a percentage of the staff of the other enterprises to your own staff. The percentage to be used is the percentage of shares or voting rights – only take the highest – that you or other enterprises own. If your enterprise is a linked enterprise, you will need to add the complete number of staff of the other enterprise or enterprises to your own staff. Annual turnover and balance sheet total The annual turnover is determined by calculating the income your enterprise has received by means of sale or providing services in the last year. The annual turnover does not include VAT or other indirect taxes. The balance sheet total is the total worth of the most important assets in your enterprise. To determine the annual turnover and the balance sheet total, use the figures from the last approved financial annual report. If the enterprise does not yet have an annual report, make a realistic estimate based on the relevant figures of the current financial year has to be made. If your enterprise is a partner enterprise, you will need to add a percentage of the annual turnover or balance sheet total of the other enterprise to your own annual turnover or balance sheet total. The percentage to be used is the percentage of shares or voting rights – only take the highest – that you or the other enterprise own. If your enterprise is a linked enterprise, you will need to add the annual turnover or balance sheet total of the other companies to your own annual turnover or balance sheet total. If the answer is ‘no’: you are not obliged to audit. If the answer is ‘yes’: proceed to as part of the agreement

Step 5: Does your enterprise participate in the long term agreement energy efficiency

2001-2020 (LTA3 or MJA3) or the long term agreement energy efficiency for ETS-

businesses (LEE or MEE)?

If an enterprise participates in the LTA3 (MJA3) or LEE (MEE) long term agreement, that enterprise is exempted of the obligation to carry out an energy audit under Article 3 of the Directive. Such an enterprise already carries out an energy audit as part of the agreement. If the answer is ‘yes’: you are not obliged to audit. If the answer is ‘no’: proceed to step 6.

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Step 6: Does your enterprise apply an energy management system, as referred to in

Article 1, paragraph 11 of the Directive, which is certified according to European and

international standards and includes an energy audit which meets the minimum criteria,

as referred to in appendix VI of Directive 2012/27/EU?

If an enterprise applies a certified energy management system which meets the minimum criteria, that enterprise is exempted of the obligation to carry out an energy audit under Article 3 of the Directive. The enterprise already carries out an energy audit as part of the energy management system. If the answer is ‘yes’: you are not obliged to audit. If the answer is ‘no’: you are obliged to audit.

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Schematic flow diagram to determine the EED energy audit obligation

*) See in English: http://rwsenvironment.eu/subjects/environmental/system-environmental/ **) If your enterprise is a partner enterprise (see step 3b) , you will need to add a percentage for employees / annual revenue / balance total of the other enterprise(s). The percentage to be used is the percentage of shares or voting rights – only take the highest – that you or the other enterprise own. If your enterprise is an linked enterprise (see step 3c), you will need to add the number of employees / annual revenue / balance total of the others enterprise(s) to your own.