Energy Savings Opportunity Scheme (ESOS)
Ensure ESOS compliance with the creation of an ESOS audit and ESOS action plan to meet the UK Legislation.
What is ESOS?
The Energy Savings Opportunity Scheme (ESOS) is a UK energy legislation for meeting the EU Energy Efficiency Directive Article 8. ESOS came into force on 17 July 2014. ESOS is a mandatory compliance scheme for large organisations that met qualifying criteria with the goal of reducing EU energy consumption by 20% by 2020. ESOS compliance occurs every 4 years in four yearly phases and requires regular energy audits that help large businesses conserve energy. ESOS Phase 3 has just concluded and we are moving into Phase 4.
ESOS Phase 3 Action Plan Deadline – March 5, 2025
The Energy Savings Opportunity Scheme (ESOS) Phase 3 deadline passed on the 5th June 2024. The next ESOS deadline is the submission of the ESOS Action Plan on March 5th 2025 which is now a legal requirement as of November 2024.
Does my Organisation Need to comply to ESOS?
The criteria for ESOS compliance are for large organisations that met the following:
- More than 250 employees or
- A turnover of more than €50m (£44.1m) and an annual balance sheet total of more than €43m (£37.9m)
- An overseas organisation with over 250 employees in the UK
Organisations include corporate bodies and partnerships, and any unincorporated body that is conducting trade whether for profit or otherwise, are all subject to ESOS.
Public sector organisations are not subject to ESOS, although some universities with significant private funding may well be.
What does ESOS Require?
ESOS compliance requires the production of an energy audit of the entire operation’s energy consumption for the four year period. The first report for ESOS Phase 3 have passed and needed to be lodged with the Environment Agency by 5 June 2024.
The data used for ESOS Phase 3 reporting must cover a 12-month period known as your reference period. If you were to aim for the deadline of 5 June 2024, the latest your reference period can begin is 6 June 2023. Therefore you must ensure your organisation has either finished gathering its data for Phase 3 or is partway through gathering it.
The updated requirements for esos phase 3 now include:
- An energy audit that must cover 95% of your organisation’s energy – (known as the ‘de minimis’ rule and was previously 90%) and be reviewed and approved by a qualified ESOS Lead Assessor.
- Additional detail on the calculation of energy consumption which must include energy intensity ratios.
- An explanation of how site visits that are conducted for energy audits are representative of energy use (if not all sites are being audited).
- Ensuring all members of the corporate group have access to the ESOS report findings.
- The cost-benefit analysis and a plan for implementing energy saving opportunities.
- An overall action plan of the energy saving opportunities. This ESOS action plan has a deadline of 5 March 2024.
- Two annual progress updates in the 2 years following the action plan deadline.
To aid your ESOS compliance we also recommend you gain:
- Display Energy Certificates (DECs)
- Green Deal Energy Assessments
- ISO 5001 certification
Click here for more detailed information on preparing your ESOS assessment.
Avoid Serious Penalties
The Environment Agency (EA) will not hesitate to impose penalties for organisations who are mandated to comply with ESOS but did not participate or failed to meet the required standards. For each separate breach of the ESOS regulations expect the following penalties:
- Failure to notify: £5,000 plus £500 for each working day an organisation remains in violation regardless of whether the organisation has undertaken an energy audit.
- Failure to maintain records: £5,000, plus a “sum representing the cost to the compliance body of confirming that the responsible undertaking has compliance complied with the scheme,” which must be resolved.
- Failure to undertake an energy audit: £50,000 plus £500 for each working day an organisation remains in violation. There is more leniency for new entrants with a reduced of £5,000.
- Failure to comply with an enforcement/penalty notice: £5,000 plus £500 for each working day an organisation remains in violation
- False or misleading statement: £50,000.
- Non compliance being made public: the name of your organisation and the amount you were fined will be published on the EA to website.
Have you recieved an ESOS Phase 3 enforcement notice?
Speak to our energy experts to begin your compliance journey
Ensure ESOS Compliance With PES
Professional Energy Services can help your organisation ensure ESOS Compliance.
Our energy consultants have a wealth of industry experience in carbon compliance and coupled with our energy management software, we can perform the required energy audits to generate a consumption report and act as the required lead Assessor for ESOS compliance.
You will receive:
- Guarantee of compliance to ESOS including:
- ESOS Audit and consumption report
- ESOS Action Plan and Anual Progress Reports
- Energy saving strategies to implement
- Time back to focus on the day to day of running your business
- ESOS report findings to aid compliance to other carbon initiatives such as SECR
- Support you during any conversations with the Environment Agency
Reduce your energy costs at the same time as gaining compliance
Partaking in ESOS not only ensures compliance and avoids any penalties, it also allows your business to reduce its energy costs by reducing consumption. At Professional Energy Services we’ll help you to implement these energy saving strategies from your ESOS report so you can benefit from compliance and energy efficiencies at the same time.
Frequently Asked Questions on ESOS
No. ESOS helps to discover energy inefficiencies and waste with the goal of ensuring businesses to change behaviour to reduce energy consumption. It is not a direct tax on CO₂ emissions.
A smaller “undertaking” or organisation shall not be excluded from ESOS participation if it is part of a larger organisation containing at least one qualifying “large undertaking.”
For corporate groups that participate in ESOS, the highest UK level of that entity will be responsible for ensuring the group as a whole is ESOS compliant.
An accurate ESOS assessment requires an evaluation of 95% (formerly 90%) of an eligible organisations’s total energy usage. This figure can be presented in a number of ways, whether by fuel type, site, organisation, etc., provided that a fair approach is used for analysis. The energy you are choosing to exclude is referred to as your ‘de minimis energy consumption.’
There are two ways to decide how to perform ESOS with their own costs of either:
- In-house – performing the energy audit and obtaining an approved lead assessor certification via a professional registered body.
- Outsourcing – working with an energy consultant like PES
Both of these methods 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 ESOS in-house may be cheaper but comes with more complications of gaining approval of your lead assessor from the registered bodies and also your own team may be more prone to errors as not as experienced as a consultant and the cost of your own time to conduct your ESOS assessment.
However, regardless of cost if your organisation follows the energy-saving recommendations that an audit brings, your cost reductions on your energy bill will likely outweigh the cost of performing ESOS. The UK government has estimated organisations performing ESOS could save 13.5 times the actual cost of the energy audit.
ESOS Phase 3 deadline passed on the 5th June 2024. The next ESOS deadline is the submission of the ESOS Action Plan on March 5th 2025.
An ESOS assessment must be conducted every 4 years and we have just completed phase 3 of the four yearly cycle.
The original timeframes of the ESOS are in the table below when the scheme was launched in 17 July 2014.
| Phase | Qualification Date | Compliance period | Compliance Date |
|---|---|---|---|
| 1 | 31 December 2014 | 17 July 2014 – 5 December 2015 | 5 December 2015 |
| 2 | 31 December 2018 | 6 December 2015 – 5 December 2019 | 5 December 2019 |
| 3 | 31 December 2022 | 6 December 2019 – 5 June 2024 | 5 June 2024 |
| 4 | 31 December 2026 | 6 December 2023 – 5 December 2027 | 5 December 2027 |
Though the Environment Agency administers the scheme for the entire UK, it only regulates the scheme in England. For other UK territories, other bodies are responsible for overseeing regulation. For example, the Scottish Environment Protection Agency, Northern Ireland Environment Agency, and Natural Resources Wales regulate ESOS separately.
Offshore, the Secretary of State for Business, Energy and Industrial Strategy regulates ESOS.
No. An approved Lead Assessor should oversee the ESOS process. Approval comes from gaining membership by an approved professional body register. An in-house employee will either need to apply to qualify for this role, or a company will need to work with an external consultant.
No, an organisations’s ESOS report will not be made public. However your action plan will be in the public domain and you made include your energy use in this document.
No, penalty fees do not apply if an organisation fails to implement recommendations. The ESOS assessment and action plan are mandatory. However, implementing the energy consumption reducing strategies in place will reduce your energy spent and help an organisation recoup the cost of the ESOS assessment.
ESOS participants are responsible for all energy they consume, but not for energy that they supply to a separate third party such as a tenants renting part of a site/property that is metered. However, the landlord would be responsible for energy usage in common shared areas of a building.
Potentially. The government is currently working on several changes that will strengthen the ESOS scheme, including requiring organisations to publicly disclose their ESOS data and carry out a net zero assessment. These changes are still in consultation after the chance to provide feedback closed in September 2021.
You still need to comply to ESOS but you can potentially be efficient with the data from the energy audit and consumption report and reuse it for other carbon compliance schemes such as Streamlined Energy and Carbon Reporting (SECR).
You do not need to perform ESOS if your organisation is covered by ISO 50001 but ensure you submit a notification to the regulator.
Speak to a consultant about your ESOS Compliance