How to Ensure a Successful ESOS Action Plan

November 21, 2024 | Alex Dovey | Blog

Now that phase 3 has concluded for the Energy Savings Opportunity Scheme (ESOS), businesses need to look to the next ESOS deadline. This latest requirement put upon businesses is the creation and submission of an ESOS action plan and annual progress updates, which will follow on to their phase 4 submission.

What is an ESOS Action Plan?

An ESOS action plan is a document that outlines how an ESOS participant plans to improve their energy efficiency and reduce their carbon emissions based on their ESOS audit. It specifies the energy-saving measures they’ll take and the expected savings over time. These measures should be implemented before the next ESOS assessment. The action plan also offers organisations the chance to set energy reduction targets they wish to achieve by the next assessment, however, meeting these targets is optional.

The ESOS action plan should include the following:

Finding from the Phase 3 audit.
All energy-saving measures intended for implementation before the next compliance date. These need to be detailed with full costings and return on investment predictions and state whether each action was recommended through the ESOS assessment or other schemes.
A summary of the expected savings by purpose (buildings, transport, industrial processes, and other energy use).
The intended month and year for when each energy saving measure will be put into action.
The total expected energy savings over the four-year period covered by the action plan up to 5th December 2027 if all actions are implemented, including the data sources and methodologies used to calculate these cost saving estimates.
A commitment to providing yearly progress reports (see below).
Confirmation that the action plan has been reviewed and approved by a board-level director or equivalent, ensuring accountability and commitment.

What is an Annual Progress Update?

The annual progress updates act as reports where organisations publicly disclose what they have accomplished from their action plan for each relevant 12 month period. The first report will cover from the 6^th December 2024 to 5^th December 2025, and the second annual progress report will be from 6^th December 2025 to 5^th December 2026. Organisations may wish to also include any additional energy reducing actions that were not mentioned in the original action plan they undertook, however this is optional. These updates encourage continued commitment to the energy saving measures organisations have outlined in their action plans.

Each update should include:

Implemented Actions: A list of energy-saving measures from the action plan that have been executed in the past 12 months.
Pending Actions: Identification of actions not yet implemented but scheduled during the reporting period.
Energy Savings Achieved: Estimates of energy savings resulting from implemented actions, including data sources and calculation methods.

When is the action plan deadline?

The deadline of the action plan has been pushed back from an original end date of 5th December 2024 to 5th March 2025. The Environment Agency has since confirmed there will be no further extensions to the deadline. It is advised that the work is commenced in a proactive manner within three months of the deadline. Remember that while late submissions are accepted until 5th March 2025, organisations are encouraged to still meet the original 5th December 2024 deadline to ensure full compliance.

What if I have already set energy saving targets under other schemes?

If you’ve already set targets or action plans to reduce your energy use under other mandatory or voluntary schemes besides ESOS, it’s a good idea to include those measures in your ESOS action plan. This way, your action plan becomes the master document of all the actions you’re taking and the energy savings you expect by the end of the compliance period. Some of these other schemes could be:

Climate Change Agreements (CCAs)
Streamlined Energy and Carbon Reporting (SECR)
UK Emissions Trading Scheme (ETS)
Science-Based Targets Initiative (SBTi)
Carbon Reduction Plans (required when bidding for major government contracts)

You do not need to explain why you included specific measures in your action plan. However, in the two annual progress updates, you must identify which measures you have implemented from the action plan and which ones you have not implemented by their set deadlines. Keep in mind that the scheme administrator will publish both the action plan and the progress updates.

Is an ESOS Action Plan and Updates Compulsory?

Submitting an action plan is now a legal requirement for all organisations as November 2024 as stated in the updated official government guidance. Prior to this update, the guidance stated that if an organisation did not submit an action plan it would be recorded and publicly displayed they were not planning on conducting any energy saving measures. The idea being that it would have a negative impact on an organisation’s ESG perception. However, the environmental agency has now deemed non-submission as not an option.

Consequences of Not Submitting an Action Plan

If you don’t submit an action plan by the deadline, it will be recorded and published that you don’t intend to carry out any energy-saving actions. While the current guidance doesn’t specify penalties or fines for failing to submit an action plan, it’s unclear whether additional financial penalties might be imposed under the new legal requirements. The Environment Agency (EA) hasn’t clarified this yet, and it’s possible that non-compliance could result in a fine in your Phase 4 submission. By staying compliant, your organisation can avoid potential penalties down the line and continue a positive environmental social governance (ESG) image.

It is worth remembering that both the action plan and annual progress updates will be published by the Environment Agency within six months of the respective deadlines. This transparency underscores the importance of accuracy and commitment to the measures within the documents.

Is a Lead Assessor Required to Assist in Creating the Action Plan and Annual Updates?

A lead assessor does not need to complete the action plan. However, it is advisable that the lead assessor who completed phase three follows on to complete the action plan. A board-level director (or equivalent) must sign off the action plan, and it must be submitted via the compliance notification system by the deadline.

What If You Do Not Plan to Implement Energy-Saving Measures During the Four-Year Period?

If you do not intend to take action to reduce energy consumption before the next compliance date, you can submit a notification stating this. This decision will then be recorded and published. Remember everything is in the public domain so your decision may negatively influence your ESG image.

If you later decide to apply energy-saving measures, you can submit annual progress updates noting these actions.

What Measures Should Be Included in Your Action Plan?

Your action plan should outline the energy-saving measures you plan to implement. These actions can come from various sources. They might be energy-saving opportunities highlighted in your ESOS audit, measures suggested through alternative compliance methods, or additional initiatives you’ve decided to undertake to reduce energy consumption.

While renewable energy projects and heat decarbonisation measures aren’t classified as energy-saving under ESOS guidelines and aren’t required to be included, you have the option to add them to your action plan. These could be:

Renewable energy projects
Heat decarbonization efforts
Carbon reduction plans
Net-zero roadmaps

Including these extra measures can showcase a broader commitment to sustainability and might enhance your organization’s reputation. By adding these initiatives, you’re making your efforts public and highlighting the steps you’re taking beyond ESOS compliance.

Why should I comply with ESOS?

Implementing energy-saving measures can help save your organisation money and reduce your carbon footprint. Staying compliant is now a legal requirement and also helps you protect your brand image as non-compliance is publicly disclosed. By embracing these new ESOS requirements, you’re not just ticking a regulatory box. You’re setting your organisation up for long-term savings on energy bills and showcasing your commitment to sustainability—which can be a big plus with customers and partners.

Obtain ESOS Compliance with Professional Energy Services

Navigating the complexities of calculating energy consumption and predicting future usage can be challenging. That’s why it’s recommended to have an energy consultant handle the work required to compose and submit your action plan.

Start preparing your ESOS action plan now, and you’ll not only stay compliant but also set the stage for significant energy savings. Professional Energy Services has been undertaking ESOS reports since Phase One requirements for numerous FTSE 100 and FTSE 250 companies.

For more information or guidance regarding ESOS, SECR, and ESOS action plans, feel free to contact us and a member of our team will be in touch shortly.