ESOS FAQs

ESOS FAQs

Simplifying the Energy Savings Opportunity Scheme

ESOS, your questions answered

Explore answers to common questions around the Energy Savings Opportunity Scheme (ESOS) to help you meet compliance requirements, understand changes to Phase 3 and Phase 4 legislation and streamline the process of the ESOS audit.

 

Companies need to comply with the ESOS legislation if they, or another UK-based company of their corporate group 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.

The Energy Savings Opportunity Scheme was introduced in 2014 to incentivise large UK businesses to implement energy saving measures. In the 2012 UK Energy Efficiency Strategy it was found that lack of information was a barrier to businesses to benefit from energy efficiency opportunities.

Overall, ESOS supports UK Government’s zero by 2050 target.

According to the Department for Energy Security and Net Zero (DESNZ) the most recent figure they have for the number of UK businesses in scope of ESOS is 11,900. This number is based on the number of compliance notifications submitted in Phase 2, which ended in December 2019. A more up-to-date figure will be available when the results from Phase 3 are published later in 2024.

Generally, no. Organisations recognised as a public body as defined by the Public Contracts regulations 2015 or the Public Contracts regulations (Scotland) 2015 are exempt from ESOS. There are some exceptions, for example some councils are thought of as Public Sector although they may have private funding which will fall within ESOS.

We are currently in Phase 3 of the ESOS scheme. The 4-year compliance phase runs from 6 December 2019 to 5 June 2024.

The ESOS Phase 3 deadline has been extended to 5 June 2024.

However, the Environment Agency will not take action against organisations that do not comply with this deadline, providing they register their account with the new IT system by 5 June 2024, and submit their notification of compliance by 6 August 2024. The regulatory enforcement extension period will end after 6 August 2024.

Published in July 2022, the outcome of the ESOS scheme consultation brought some changes into Phase 3 that organisations will need to comply with, including the announcement of a Phase 4.

There are some new requirements introduced to ESOS Phase 3 to increase the carbon and cost savings made from the scheme.

In Phase 3 of your ESOS submission you will need to:

  • Ensure at least 95% of your total energy consumption is covered, which has increased from 90% that was required in Phase 2
  • Provide more detail on the calculation of your energy consumption
    Share details of your ESOS report with all companies/undertakings of your organisation
  • Include specific information on how you plan to make energy saving opportunities throughout your business, this includes costs, benefits and how you plan to implement them
  • Explain how the site visits that were carried out is a representation of your organisation’s energy use
  • ESOS Phase 3 now requires all participants to produce an ESOS report, including those using alternative compliance routes such as the ISO 50001 energy management system

During Phase 4 you will now need to also:

  • Submit an energy saving Action Plan at the start of ESOS Phase 4 with annual predicted actions for the next four years
  • Submit a yearly Progress Update which will explore how successfully you are implementing your energy saving opportunities

The Environment Agency will publicly disclose your ESOS data, by publishing the information in your compliance notification, as well as publishing your Action Plan and Progress Reports

Across the 4 year cycle for ESOS compliance there are a few important dates. The ESOS phase 3 qualification date has passed, and the ESOS phase 3 deadline is 5 June 2024.

Additional ESOS UK dates are

  • ESOS Phase 4 compliance phase: 6 December 2023 – 5 December 2027
  • ESOS Phase 4 compliance date: 5 December 2027
  • ESOS Phase 4 qualification date 31 December 2026

It has been announced that the ESOS Phase 3 compliance deadline has been extended to 5 June 2024.

However, the Environment Agency will not take action against organisations that do not comply with this deadline, providing they register their account with the new IT system by 5 June 2024, and submit their notification of compliance by 6 August 2024. The regulatory enforcement extension period will end after 6 August 2024.

ESOS is a UK government scheme administered by the Environment Agency. Each country of the UK has a different regulator to handle ESOS compliance and enforcement.

  • England: The Environment Agency
  • Wales: Natural Resources Wales
  • Scotland: The Scottish Environment Protection Agency
  • NI: the Northern Ireland Environment Agency
  • Offshore (businesses whose activities are wholly or mainly offshore): the Secretary of State for Energy Security and Net Zero

There are various ways in which an organisation in scope can fail to meet its obligations for ESOS compliance. These include, but are not limited to:

  • Missing the deadline
  • Failing to carry out an energy audit
  • Carrying out a poor-quality audit
  • Keeping incomplete or inaccurate records
  • Publishing false information in your records.

The consequences will depend on how you have not met your ESOS regulations. In some cases, you will be required to take action to bring the ESOS reporting up to the right standard. If you are found to be non-compliant you 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.

The regulators have the power to waive enforcement action and penalties, and the Environment Agency has said it will not take action against organisations that do not comply with the ESOS Phase 3 deadline (5 June 2024), providing they register their account with the new IT system by that date and submit their notification of compliance by 6 August 2024. The regulatory enforcement extension period will end after 6 August 2024.

For ESOS Phase 3 there are four different routes to compliance:

  • Energy Audits
  • ISO 50001
  • Display Energy Certificates
  • Green Deal Assessments

Display Energy Certificates and Green Deal Assessments will not be valid routes to compliance in ESOS Phase 4.

The process of carrying out an energy audit includes the following steps:

  • Measure your total energy consumption over a consecutive 12-month period, the qualification date needs to be included within the selected timeframe.
  • Identify areas of significant energy consumption (at least 95% of your total energy consumption).
  • Calculate your energy intensity ratios.
  • Consider available routes to compliance.
  • Ensure areas of significant energy consumption (or total consumption) are covered by a route to compliance.
  • Appoint a lead assessor.
  • Complete the ESOS report.
  • Share the report and relevant documentation with group undertakings.
  • Get one or more board level directors to review the findings of the assessment.
  • Submit your notification of ESOS compliance through the Environment Agency website.
  • Keep records: your compliance notification, a copy of your ESOS report and any other relevant documentation.

It is the role of an ESOS Lead Assessor to sign off a company’s ESOS reporting. Lead Assessors are qualified, and listed on an ESOS approved register, to ensure an organisation’s compliance with the scheme.

Lead Assessors can carry out the ESOS assessment directly, including all audits, or they can supervise audits and check that they meet the requirements.

It is an ESOS Lead Assessor’s responsibility to oversee the entire ESOS assessment process, from approving the approach before auditing begins through to the final ESOS review and summary of ESOS energy saving opportunity recommendations.

A Lead Assessor will provide complete ESOS help and:

  • Assess energy use profiles
  • Choose an approach for sampling
  • Design an auditing process
  • Create a timetable for auditing
  • Identify energy saving opportunities
  • Calculate potential energy savings and cost savings from those opportunities
  • Presenting recommendations to stakeholders
  • Compiling all data in your ESOS evidence pack to prove your compliance

An ESOS evidence pack includes information about how you have complied with the scheme.

In relation to your organisation, you must include:

  • Contact details of the participating organisation
  • Details of any board level directors or equivalents who have reviewed the ESOS assessment findings
  • A written agreement to support any disaggregation or aggregation of group members
  • Written agreements to support any alternative responsible undertaking chosen (if it is different from the default highest UK parent company)

Specific ESOS assessment information to include:

  • The calculation for your total energy consumption and primary evidence of the calculation
  • A list of your identified areas of significant energy consumption
  • Calculations for your energy intensity ratios
  • Details of the energy audits undertaken, including the audit methodology used in your ESOS energy audits
  • Details of the energy saving opportunities identified
  • Details of the routes to compliance used to cover each area of significant energy consumption and, where applicable, evidence of the alternative routes to compliance (Display Energy Certificates, for example)
  • Details of energy savings achieved during the compliance period
  • A copy of your ESOS report
  • Written confirmation from the lead assessor to evidence that they reviewed the ESOS assessment
  • Contact details of your lead assessor and the name of their approved register
  • Written confirmation from the directors to evidence that they reviewed the ESOS assessment
  • A copy of your compliance notification submission (this will be available to download through the compliance notification system)

Your ESOS action plan and annual progress updates must also include:

  • A copy of the ESOS action plan and each annual progress update
  • Written confirmation from the directors to evidence that they reviewed the action plan and progress updates

If you are subject to a compliance audit by a scheme regulator, you may be asked to provide evidence from your evidence pack to demonstrate you are compliant. It is therefore important that you keep these records up to date and have access to them when needed.

There are a couple of ways to approach your ESOS, each will come with their own costs.

  • In-house: you can perform your own energy audit but you will still need to obtain an approved ESOS assessor to certify your ESOS review via a professional registered body.
  • Outsourcing to an ESOS service: working with dedicated ESOS consultants comes with the security of knowing an expert will be efficient and optimise the process to your business.

Both methods are suitable, and each have their own costs. Outsourcing may have a higher cost but comes with the security of knowing an expert will be efficient and able to create the task correctly. Conducting your own ESOS may be cheaper but comes with more complications of gaining approval of your ESOS assessor and your own team may be more prone to errors. You will also have to factor in the cost of resource time from within the business.

Our expert ESOS consultants are available to help you understand the latest ESOS legislation and advise on how to meet compliance criteria and submission deadlines.

No, an organisations ESOS report will not be made public. However certain elements of the ESOS audit submission are made public including corporate information and actual performance metric, actual energy reduction data such as estimated savings achieved since ESOS phase 2 (December 2019 until present), and disclosure of the potential energy savings identified as part of ESOS phase 3 audits.

The aim is by increasing disclosure and transparency, internal and external stakeholders will be able to scrutinise how a business is performing in terms of energy efficiency to drive greater action. From June 2024 the following information form the ESOS audit and report r will be made publicly available:

Information relating to the responsible undertaking

  • Registered name of the organisation
  • Registered office of the organisation
  • Principal place of activity
  • Company registration number
  • Trading name(s), or commonly known name(s), where different to the registered name
  • The parent company name, where relevant
  • Standard Industrial Classification (SIC) code
  • The qualification criteria met by the company on 31 December 2022.

Information relating to group undertakings

  • A corporate group structure chart setting out the relationship between the organisations covered
  • The highest UK parent company(s)
  • Any organisations within the corporate group participating separately
  • Any organisations that have ceased to be part of the corporate group between the qualification date and the compliance date
  • Whether or not the notification is on behalf of a trust or a franchisee group.

Information relating to the ESOS assessment report

  • Any alternative compliance route, such as ISO 50001 or DECs
  • Details of any estimations undertaken in the absence of verifiable data
  • The number of sites visited for each energy audit
  • The total number of sites covered by the energy audit
  • The reasons why the sites visited are considered ‘representative’.

Information relating to the energy consumption

  • Total energy consumption in kWh for the reference period
  • The significant energy consumption in kWh, where relevant
  • The percentage of total energy consumption that is covered (i.e. >95%)
  • An energy intensity ratio for buildings, transport, industrial processes and other energy. Using Information relating to energy savings opportunities identified through an energy audit
  • Estimated annual energy savings that could be achieved from implementing all opportunities identified.

Information relating to compliance using alternative routes

  • Assets and activities which fall under alternative compliance routes
  • Percentage of total energy associated with each route
  • Estimated potential annual savings which could be achieved under each alternative compliance route.

Information relating to energy savings achieved during the compliance period

  • An estimate of energy savings achieved since ESOS phase 2.

Information relating to the responsible officer

  • Job title of the responsible person for ESOS
  • Job title of the second responsible person for ESOS.

To conduct an Energy Savings Opportunity Scheme (ESOS) audit, organisations need to follow specific steps and gather relevant information. Here are the key requirements:

  1. Eligibility Check

  2. Appointing a Lead Assessor

  3. Data Collection

  4. Boundary Determination

  5. Energy Consumption Assessment

  6. Identify Significant Energy Users

  7. Energy Efficiency Measures

  8. ESOS Report Preparation

  9. Submission and Compliance

An Energy Savings Opportunity Scheme (ESOS) assessment is a mandatory energy assessment scheme for organisations in the UK that meet specific qualification criteria. 

Yes, a multi-national organisation operating in the United Kingdom (UK) must comply with the Energy Savings Opportunity Scheme (ESOS) if it meets the qualification criteria. 

The duration of an Energy Savings Opportunity Scheme (ESOS) audit can vary depending on the size and complexity of the organisation.

The Energy Savings Opportunity Scheme (ESOS) serves several important purposes:

  1. Energy Efficiency Improvement

  2. Carbon Emission Reduction

  3. Compliance with Regulations

  4. Financial Savings

  5. Competitive Advantage

Yes, your organisation must appoint an external ESOS Lead Assessor to oversee the Energy Savings Opportunity Scheme (ESOS) audit process. The ESOS Lead Assessor plays a crucial role in ensuring compliance with ESOS regulations and guiding your organisation through the assessment. 

Yes, non-profit organisations can still meet the definition of a large organisation and are subject to the Energy Savings Opportunity Scheme (ESOS) if they qualify based on the criteria.

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