What is ESOS?
The Energy Savings Opportunity Scheme (ESOS) was introduced to incentivise large UK based businesses to implement energy saving measures and help reduce the UK’s carbon emissions as we work towards becoming net zero by 2050. The scheme requires affected businesses to carry out energy surveys accompanied by cost-effective recommendations to reduce energy demand and improve their energy efficiency. It is a mandatory requirement for organisations that must comply to produce an audit over a 12-month period once every four years.
In July 2022, the UK Government published the results of the consultation into strengthening the quality of the ESOS Energy Scheme. Many of the proposals for Phase 3 are non-mandatory guidance, however with Phase 4 also being announced, it is expected they will be made mandatory for Phase 4.
Who needs to comply with ESOS?
Companies need to comply if they are:
- Registered or based in the UK or a UK establishment
- Employ 250 people or more or
- Have an annual turnover greater than £44m, and an annual balance sheet greater than £38m
SMEs and public-sector bodies are generally exempt from the ESOS scheme. It is expected that with the introduction of Phase 4 to the ESOS scheme, the Government will change the ESOS balance sheet and turnover thresholds to align with SECR, requiring more organisations to report on their ESOS.
ESOS Energy Scheme Compulsory Phases
We are currently in Phase 3 of the scheme. Audits must be completed and reported to the Environment Agency by 5 December 2023. However, if you need support with any of the Phases, we are here to help.
The timings of each ESOS phase is shown here:
|Qualification Date||4 Year Compliance Phase||Compliance Date|
|Phase 1||31 Dec 2014||6 Dec 2011 – 5 Dec 2015||5 Dec 2015|
|Phase 2||31 Dec 2018||6 Dec 2015 – 5 Dec 2019||5 Dec 2019|
|Phase 3||31 Dec 2022||6 Dec 2019 – 5 Dec 2023||5 Dec 2023|
With the publication of the ESOS Phase 3 consultation, several changes and additions have been made to the scheme with the aims of increasing the number of ESOS participants and increasing the carbon and cost savings made from the scheme.
Here are some of the key additions for Phase 3 organisations need to be aware of:
- The reporting will be standardised to improve the audit quality. Assessors will be required to use a new template that will be designed with stakeholders and made available in time for participants to make the necessary changes to reporting.
- With this, proposals for a standardised ESOS recommendations template will also be taken forward.
- Changing the de minimis exemption to up to 5% of total energy consumption, to help participants realise greater energy savings from areas of the organisation previously not included in audits.
- One of the proposals included mandatory thresholds for site sampling, however this has been delayed until Phase 4.
- However new guidance on site sampling will be provided for Phase 3 audits.
- Where available, an analysis of half-hourly energy data to be included in reporting.
ESOS reports will need to include an overall energy intensity metric within the overview section of the report in terms of kWh/m2 for buildings, kWh/unit output for industry and kWh/miles travelled for transport.
- There will be a requirement for additional data to be collected for monitoring and enforcement in ESOS reporting.
And finally, the requirement to set a target or action plan to be submitted after Phase 3, which organisations will be required to report on during Phase 4.
Yes, the UK Government has confirmed an introduction of Phase 4. It is expected that with this, the Government will change the ESOS balance sheet and turnover threshold to align with Streamlined Energy and Carbon Reporting (SECR) and therefore bring more organisations into scope.
The new Phase will also have a focus on energy efficiency and net zero, as well as emissions reduction trajectories and information to help organisation put together a net zero plan or help them meet their existing plans. The compliance year for ESOS Phase 4 will run in 2027.
Our team of CIBSE Accredited Low Carbon Assessors, Low Carbon Consultants and ESOS Lead Assessors can help you make the most of the ESOS energy scheme. They gained valuable insights during ESOS Phase 1 and 2 in supporting clients through the Environment Agency audit, which will benefit businesses in the ESOS Phase 3 compliance process.
Our team of lead assessors can support you in the following ways:
- Help you fully understand the ESOS scheme and what it means for your business
- Collate data for your building, transport and process energy use
- Analyse your data and energy consumption
- Review your portfolio to determine the number of energy surveys required within the site sampling requirements
- Carry out the building(s) energy surveys
- Produce the ESOS survey reports including cost-effective energy efficiency recommendations
- Maximise the ESOS scheme benefits
- Conduct the ESOS review, verification and sign-off
- Prepare the ESOS submission document, evidence pack and sign-off
- Review your ESOS audit results
- Respond to any queries or support on audits conducted by the Environment Agency.
If a qualifying organisation doesn’t meet the deadline, they can expect to receive a basic fine of £50,000, plus an additional fine of £800 per day up to a maximum of 80 days.
ISO 50001 as a route to ESOS compliance
The ISO 50001 Energy Management System can be used as a route to achieving ESOS Compliance. This can be a more cost effective solution for organisations with a large number of buildings to audit. By becoming certified to ISO 50001, you will be required to gather accurate data on energy usage with your organisation, which means that if your organisation is required to comply with the Energy Savings Opportunity Scheme (ESOS), you already hold the data needed and you do not need to carry out an ESOS assessment or appoint an ESOS lead assessor. However, you will need to tell the Environment Agency that you are compliant.
Speak to an ESOS consultant
Call 01908 690018 and find out how our consultants can help you make the most of the ESOS energy scheme