Understanding ESOS Phase 3 & 4: Legal Requirements and Deadlines
The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for large organisations in the UK. It aims to identify cost-effective energy-saving measures to help businesses reduce their energy consumption and carbon footprint.
ESOS Phase 3: Key Requirements and Deadlines
Qualification Criteria: To qualify for ESOS Phase 3, an organisation must meet the definition of a large undertaking as of 31 December 2022. This includes:
- Employing 250 or more people, or
- Having an annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million1.
Compliance Deadlines:
- Notification of Compliance: Organisations had to submit their notification of compliance by 5 June 20241.
- Action Plan Submission: The deadline for submitting the ESOS action plan is 5 December 2024, with a grace period extending to 5 March 20252.
Audit Requirements: Organisations must conduct comprehensive energy audits covering at least 95% of their total energy consumption. These audits should identify significant energy-saving opportunities and be carried out by a qualified ESOS lead assessor3.
Reporting and Disclosure: Participants are required to produce an ESOS report, an action plan, and annual progress updates. High-level recommendations must be publicly disclosed to ensure transparency and accountability1.
ESOS Phase 4: Looking Ahead
Qualification Criteria: The qualification date for ESOS Phase 4 is 31 December 2026. Organisations meeting the size criteria on this date will be required to comply with Phase 4 regulations2.
Compliance Deadlines:
- Notification of Compliance: The deadline for Phase 4 compliance is 5 December 20274.
- Action Plan Submission: While the exact deadlines for action plans in Phase 4 are not yet finalised, it is expected that similar timelines to Phase 3 will apply5.
Audit and Reporting Requirements: Phase 4 will continue to build on the strengthened requirements introduced in Phase 3. Organisations will need to conduct detailed energy audits, develop action plans, and provide annual progress updates. The focus will remain on identifying and implementing cost-effective energy-saving measures5.
Legal Implications and Penalties
Failure to comply with ESOS requirements can result in significant penalties. The Environment Agency, as the scheme administrator, is responsible for enforcement and can issue civil sanctions, including financial penalties, for non-compliance1. It is crucial for organisations to adhere to the deadlines and ensure all required documentation is accurate and submitted on time.
Next Steps
ESOS Phases 3 and 4 represent critical steps in the UK’s efforts to enhance energy efficiency and reduce carbon emissions. By understanding the legal requirements and meeting the deadlines, organisations can not only avoid penalties but also benefit from significant energy and cost savings. Proactive compliance with ESOS can lead to a more sustainable and economically efficient future for businesses.
If you have any questions or need further assistance with ESOS compliance, feel free to reach out to our sustainability team.
1: GOV.UK – Energy Savings Opportunity Scheme (ESOS) 3: GOV.UK – Comply with the Energy Savings Opportunity Scheme (ESOS): phase 3 4: Concept Energy – Guide to the Energy Savings Opportunity Scheme (ESOS) 2: Energy Advice Hub – ESOS Phase 3: What You Need to Know 5: Energy Advice Hub – ESOS Phase 4: What We Know So Far
