The Government has confirmed the requirements for Energy Savings Opportunity Scheme (ESOS) Phase 4 (2023-2027) with minimal changes over those that were already introduced for Phase 3 (2019-2023).
Changes for ESOS Phase 4 that will be implemented:
- Removal of Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) as compliance routes
- Inclusion of progress against action plan commitments in ESOS assessments
- Requirement for explanations if action plan commitments have not been met.
This enables companies to proceed with fulfilling their compliance obligations, conducting energy audits, and updating their action plans without concern for additional regulatory changes affecting the completed work.
Department of Energy Security and Net Zero (DESNZ) will update ESOS guidance with these minor changes in due course, with the Legislative updates and MESOS Reporting System enhancements expected by early 2027, ahead of the Phase 4 compliance deadline on 5 December 2027.
Net zero reporting not to be mandatory for ESOS until Phase 5
The Government also confirmed that proposed net zero requirements are now planned to be included from Phase 5 (2027-2031) onwards and will not be mandatory for ESOS in Phase 4.
Following a consultation held by the previous Government in 2021 the changes were proposed to be included for Phase 4. However, due to delays in updates to the ESOS Phase 3 legislation, these requirements will now be introduced in Phase 5, This postponement gives DESNZ scope to better understand the impact of the Phase 3 changes already introduced and provide ample time for implementation.
Voluntary Net Zero Reporting
Voluntary reporting of net zero assessments to new PAS (Publicly Available Specification) standards that have been developed with the British Standards Institution (BSI) will be possible in Phase 4. The new standards include a process for combined energy and decarbonisation assessments and outline the competencies for lead assessors and assessment teams.
Timothy Holman, Head of Consultancy, TEAM Energy commented:
Organisations can use the benefits of ESOS to support their sustainability journey when weaved into a carbon reduction plan. Since we are well under way with Phase 4, organisations can continue to focus on their auditing and delivering against their ESOS Action Plans which will support their long-term net zero plans. They can also voluntarily adopt new PAS standards for net zero assessments in Phase 4.
Qualification Criteria changes not implemented in Phase 4
Additionally, the proposed change for the ESOS qualification threshold to align with Streamlined Energy and Carbon Reporting (SECR) will not be included in Phase 4 and the qualification criteria and date (31 December 2026) will remain unchanged.
Any changes to qualification thresholds will be addressed as part of ongoing work to consider ESOS’s role within the wider business energy and emissions reporting landscape.
Key takeaways from ESOS Phase 3 to secure early Phase 4 compliance
ESOS helps UK organisations to save a substantial amount of money through reduced energy bills due to improved energy efficiency and management. By the end of ESOS Phase 2 the scheme had already led to an estimated annual energy efficiency saving in the region of 3.0TWh. The changes that were made to Phase 3 of the scheme are estimated to add a further £1.12billion in energy bill savings on top of the £1.6billion worth of savings from the existing scheme over the next 14 years. Read this article in full.