What is ESOS compliance and the ESOS energy audit ?
ESOS compliance is a mandatory energy audit and energy efficiency reporting scheme for large UK undertakings and their corporate groups.
Qualifying UK companies were required to notify the Environment Agency of their ESOS Phase 3 compliance by 06 August 2024.
We provide an overview and guidance on ESOS Phase 3 and Phase 4 compliance, approved changes and reporting.
Why use us for your ESOS compliance and energy audit requirements ?
Peace of mind that your ESOS consultant is a CIBSE accredited energy efficiency consultant and registered by the Energy Institute.
Our ESOS lead assessors have extensive experience of energy efficiency audits, identifying and developing practical and cost-effective energy reduction opportunities.
At Smart GreenTech Solutions we pride ourselves in providing a professional and personalised ESOS compliance service in London and across the UK.
Our ESOS lead assessor will determine your ESOS gap analysis, develop a structured approach to achieve ESOS compliance.
Energy consumption data collection was time consuming during all three ESOS Phases, which our user friendly processes and procedures streamline.
We will significantly reduce time and money spent on your ESOS audits and ESOS reporting to ensure timely ESOS compliance.
Identifying the key ESOS Phase 3 compliance milestones
The ESOS Phase 3 compliance period of the Energy Savings Opportunity Scheme ran from 06 December 2019 to 05 December 2023 and the compliance date was extended from 05 December 2023 to 06 August 2024.
Qualifying organisations needed to complete an ESOS audit or an alternative route to compliance and notify the Environment Agency online of compliance by 06 August 2024.
ESOS now includes additional compliance stages following the submission of the compliance notification which are highlighted below.
Action Plans
ESOS action plans need to be submitted within 12 months following the end of each compliance period, and for ESOS Phase 3 this was 05 December 2024.
The action plan needs to cover the 06 December 2023 to 05 December 2027 period and must be signed off by a board level director (or equivalent) and submitted via the MESOS reporting system.
Your action plan sets out what measures you intend to implement to improve energy efficiency.
For each measure included you will need to indicate the implementation date, estimated energy savings and how savings were estimated.
Annual progress updates
Your first progress update for the ESOS Phase 3 compliance period must be submitted by 05 December 2025, and the second update by 05 December 2026.
Progress updates relate to the 12-month period preceding the deadline.
The progress updates must be submitted through the MESOS online reporting system.
Your annual progress updates report on your progress against the measures included in your action plan.
You will have to indicate if the measures were implemented and the reduction in energy consumption achieved for each measure.
Approved ESOS changes
Read our summary of the approved changes to ESOS Phase 3 and Phase 4 here Approved changes to ESOS
You can also access an article on ESOS Phase 3 compliance and best practices here, where we review the lessons learnt from ESOS Phase 1 and Phase 2 and share our thoughts on how to get the most benefit from your ESOS audits and ESOS compliance journey.
What is the Energy Savings Opportunity Scheme – ESOS Regulations
The Energy Savings Opportunity Scheme Regulations is the UK Governments approach to implement the EU's Energy Efficiency Directive requirements.
ESOS is a mandatory energy audit and energy efficiency identification scheme for large UK undertakings and their corporate groups.
The ESOS objective is to increase energy efficiency leading to improved business profits, competitiveness and mitigating climate change.
What is the ESOS compliance qualification criteria
UK companies which satisfy at least one of the below ESOS qualification criteria on the qualification date, qualifies for ESOS.
ESOS Phase 3 qualification date was 31 December 2022 and the ESOS Phase 4 qualification date is 31 December 2026.
Condition 1 - 250 or more employees.
Condition 2 - annual turnover of more than £44 million AND an annual balance sheet of more than £38 million.
Balance sheet totals mean the aggregate of the balance sheet assets, before deducting current and long-term liabilities.
Therefore, it's the gross assets and not the net assets.
You qualify for ESOS if you satisfied the above qualification criteria for at least two consecutive accounting periods within the compliance period.
Read our article on understanding ESOS phase 4 qualification thresholds and criteria here.
Corporate grouping for ESOS qualification and participation
If one entity in a corporate group meets the ESOS qualification criteria for a large undertaking, then all the UK entities within that corporate group i.e. those with the same highest UK parent company will need to take part in ESOS.
Where there are more than one highest UK parent company, with the same overseas parent company, then each would participate.
Each participant and will notify the Environment Agency separately of compliance and should include all subsidiaries within their respective corporate group.
If there is more than one highest UK parent within a corporate group, then the highest UK parent groups can choose to aggregate and comply together.
Each parent company should agree in writing to participate together.
Copies of said agreements must be kept within the evidence pack.
Qualifying companies need to notify the Environment Agency of their compliance every four (4) years.
The compliance date for ESOS Phase 4 is 05 December 2027.
Qualification for ESOS is more than just meeting the qualification criteria on the qualification date.
Your total energy consumption over twelve (12) consecutive months must be calculated and must include the qualification date.
The earliest reference period for ESOS Phase 4 would be 1 Jan 2026 to 31 Dec 2026.
It must however be stressed that the actual ESOS audit can be conducted anytime during the ESOS compliance period.
The compliance period for ESOS Phase 4 runs from 06 December 2023 to 05 December 2027.
Total energy consumption for ESOS compliance
Under ESOS energy, total energy consumption includes all input energy used in buildings, industrial processes and transport.
Routes to ESOS compliance
ESOS participants can choose one or more routes to compliance, which must cover 95% of their total energy consumption.
For ESOS Phase 4 Display Energy Certificates and Green Deal Assessments has been removed as compliance routes.
The only available compliance routes for ESOS Phase 4 are indicated below.
• ISO 50001 certification
• ESOS audit
Your ISO 50001 certificate has to be valid on the compliance date to qualify as a route to compliance.
If you are thinking about using your ISO 50001 as a route to compliance, then please read our latest article on using the ISO 50001 Energy Management System as an alternative route to ESOS Phase 4 compliance here.
The role of an ESOS Lead Assessor
All lead assessors must be members of an approved ESOS lead assessor register.
Lead assessors can either carry out the ESOS audits themselves or check that the audits completed by others meet the requirements.
An ESOS lead assessor must review and sign-off the ESOS audit and consider whether it meets the scheme requirements.
Notification of ESOS compliance
Qualifying UK organisations need to complete and submit an online notification of compliance using the Manage your Energy Savings Opportunity Scheme (MESOS).
The MESOS online reporting system is used to submit your ESOS notification of compliance, Action Plan and annual progress updates.
Check out our ESOS compliance and related articles
Our articles include guidance on ESOS compliance, audits and reporting and how to improve your buildings energy efficiency.