Concept’s guide to ESOS Phase 4
Contents
- What is the Energy Savings Opportunity Scheme?
- Which organisations are in scope of ESOS?
- What if my organisation is part of a group?
- What do I need to do to comply with ESOS Phase 4?
- Do I need an ESOS Lead Assessor?
- What is the deadline for ESOS Phase 4 compliance?
- ESOS key dates
- What’s new in ESOS Phase 4?
- What is an ESOS Action Plan?
- What are ESOS Progress Updates?
- Will our ESOS report be publicly disclosed?
- What types of transport energy use are included
- What is an energy intensity ratio?
- Does ESOS require every site within the organisation to be surveyed?
- What if I supply energy to another organisation?
- Are there penalties if I fail to comply?
- Will ESOS non-compliance be made public?
- Will I be fined if I don’t implement the energy-saving recommendations?
- Support with ESOS compliance
- Get in touch
We are well into the compliance window for Phase 4 of ESOS – the Energy Saving Opportunity Scheme, which started on 6th June 2024. If your organisation is in scope, you can begin the process of gathering data and conducting energy audits.
We’ve written this guide to help you understand your obligations and what’s new to Phase 4. For further advice or support, get in touch with our qualified ESOS Lead Assessors.
What is the Energy Savings Opportunity Scheme?
ESOS is a mandatory energy assessment scheme for large organisations in the UK. It requires businesses to carry out an assessment of their total energy use, across their buildings, transport and industrial operations, and identify opportunities for energy efficiency.
Organisations that qualify for ESOS must carry out ESOS assessments every four years. They must then produce an Action Plan, setting out which (if any) energy saving measures they plan to implement. Yearly Progress Reports are required for the subsequent two years after the Action Plan is published.
Organisations with a certified ISO 50001 Energy Management System can use it to demonstrate full or partial compliance with ESOS requirements, provided it covers all significant energy use at the certified sites and meets the scheme’s requirements.
Which organisations are in scope of ESOS?
ESOS affects “large UK undertakings” and their corporate groups. This means businesses, not-for-profit bodies and other non-public-sector organisations that:
- employ 250 or more people, or
- have an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million
If you meet this definition on the qualification date of 31 December 2026, you are in scope.
The scheme largely excludes the public sector – that is, public bodies, which must adhere to the UK Public Contracts Regulations 2006 (England, Wales and Scotland).
What if my organisation is part of a group?
If a corporate group contains at least one undertaking in the UK which meets the qualification conditions, its entire UK operation must take part in ESOS. In many cases, the highest UK parent company is responsible for coordinating compliance, although groups with overseas parent companies or more complex structures may have different reporting arrangements.
What do I need to do to comply with ESOS Phase 4?
There are several steps to ESOS compliance, which we’ve broken down here:
- Understand your corporate structure. The first step is identifying which companies in your organisation are in scope of ESOS, and which company is responsible for overall compliance. This may be complex if you are part of a large corporate group or have an overseas parent company. Once this has been confirmed, you can compile a complete list of the sites and assets that fall in scope.
- Calculate your total energy consumption – across your buildings, transport and industrial processes. You’ll need 12 consecutive months of verifiable data, which must include the qualification date of 31 December 2026. So, you can start data gathering as early as 1 January 2026.
- Identify areas of significant energy consumption. These are the assets and activities that amount to at least 95% of your total energy consumption. These are the areas you will need to audit. You can exclude the other 5% (known as your ‘de minimis’ energy consumption).
- Develop a compliance strategy. This will set out which sites you plan to audit and how the chosen audits give you compliance.
- Carry out your ESOS energy audit & assessment. Carry out an audit of your organisation’s significant energy consumption (95%), including visits to a “representative sample” of sites. Then, analyse your energy consumption and efficiency.
- Identify energy saving opportunities. Identify measures which you can take to improve energy efficiency and recommend those which are realistic and cost-effective to implement. New for Phase 4: you must also report on progress against targets and action plan commitments set in Phase 3. This means identifying savings achieved since 6th June 2024.
- Complete your ESOS report and submit compliance notification. Your report is a record of your ESOS assessment including audits, energy saving recommendations and an estimate of energy savings achieved. This needs to be signed off by a Board director. You must keep an evidence pack in case you are audited.
- Produce an Action Plan, which lays out which energy-saving measures you will implement, and when.
- Report on Action Plan progress annually for three years. The three-year reporting requirement is new to Phase 4 (it was two years under Phase 3). Progress update deadlines are in December 2029, 2030 and 2031.
Do I need an ESOS Lead Assessor?
Yes – you will need a Lead Assessor unless you have zero energy consumption, use less than 40,000 kWh of energy or have an ISO 50001 energy management system which covers 100% of your total energy consumption.
Your chosen Lead Assessor will consider whether the assessment meets ESOS requirements. They must be a member of an approved professional body register. An in-house employee will either need to apply to one of these approved bodies, or you’ll need to work with an external consultant, such as Concept. Get in touch with one of our approved Lead Assessors for support.
What is the deadline for ESOS Phase 4 compliance?
The deadline for ESOS Phase 4 compliance is 5th December 2027. That’s the last day you can submit a notification of compliance to the Environment Agency, via the online portal (known as MESOS).
There are other deadlines to be aware of too – see below.
ESOS key dates
| Milestone | Deadline |
| Phase 3 Progress Update 2 | 5 December 2026 |
| Phase 4 Qualification Date | 31 December 2026 |
| Phase 4 Compliance deadline | 5 December 2027 |
| Phase 4 Action Plan deadline | 5 December 2028 |
| Phase 4 Progress Report deadlines | 5 December 2029 5 December 2030 5 December 2031 |
What’s new in ESOS Phase 4?
The official government guidance for ESOS Phase 4 was published in July 2026. There are several changes to Phase 4 compared to Phase 3:
- Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) will no longer be accepted as ESOS compliance routes.
- Organisations must report on the energy savings they have achieved. The Phase 4 ESOS report and notification must include details of the measures implemented during the compliance period, the energy savings achieved by each measure, and the energy-saving category for each measure. Only the total energy savings across all measures will be published; savings from individual measures will not be published.
- Organisations must review Phase 3 Action Plan commitments and explain if measures weren’t taken. If a measure included in the Action Plan was not implemented, the ESOS report and notification must identify the measure and explain why it was not implemented. This information will not be published.
- Progress Updates will continue for three years after the Phase 4 Action Plan deadline. Following the December 2028 Action Plan deadline, organisations will need to submit an annual Progress Update in December 2029, 2030 and 2031. This extends the Progress Update requirement from two years to three.
- Organisations using ISO 50001 as their sole compliance route have fewer reporting requirements. Where an organisation’s ISO 50001 certification covers all of its total or significant energy consumption, as applicable, it will not need to produce an ESOS report or appoint a Lead Assessor.
What is an ESOS Action Plan?
Your Action Plan explains which energy saving opportunities you plan to implement, how and when you will implement them, once you’ve completed your ESOS assessment and report. It should cover:
- what you intend to do to reduce energy consumption
- when you intend to do it
- whether it was recommended through your ESOS assessment
- what energy savings you expect to achieve over the four-year period covered by the action plan
- how you estimated these expected savings
- you could also suggest intervention points for measures that can’t be implemented now.
This could be, for example, when renewing a transport/equipment lease or when replacing existing equipment.
The action plan must be signed off by a board level director (or equivalent). The Phase 4 Action Plan deadline is 5 December 2028.
What are ESOS Progress Updates?
Following submission of the Action Plan, you must submit annual Progress Updates against your Action Plan commitments in the three subsequent years.
Phase 4 Progress Update deadlines are 5 December 2029, 5 December 2030 and 5 December 2031.
Will our ESOS report be publicly disclosed?
Since Phase 3, there has been a strong emphasis on public disclosure of information. Aside from personal or commercially sensitive details, the Environment Agency will publish most of the information provided in your compliance notification, including your total/significant energy consumption, an estimate of the total energy savings achieved during the compliance period, and potential energy consumption/cost reductions that could be achieved.
Your Action Plan and subsequent Progress Reports will also be made public.
What types of transport energy use are included?
Transport energy usage to be included under ESOS is that where the participant has been supplied with the fuel direct. So, it excludes, for example, company travel by rail or air, but company cars and grey fleet (employees’ own vehicles used on company business) would be included where the employee claims the cost of fuel from the employer organisation.
What is an energy intensity ratio?
This was a new requirement for Phase 3 and it is still applicable for Phase 4. An energy intensity ratio defines your energy consumption within the context of an appropriate metric. For example, you must set out your energy use in terms of kWh per m2 for buildings, kWh per unit output for industry (e.g. energy use per tonne of flour), and kWh per miles travelled for transport.
Does ESOS require every site within the organisation to be surveyed?
Not necessarily – the guidance asks for a “representative sample” of sites. If your organisation has multiple, similar sites (like ten stores of similar size and operating hours), a few sample sites can be surveyed and findings extrapolated.
What if I supply energy to another organisation?
The supply rules indicate that participants are responsible for all energy they consume, but not, for instance, energy that is purchased for supply to a separate third party, such as a tenant occupying part of a site, provided it is measured/metered. Landlords are responsible for the energy in common parts of multi-occupant buildings, however.
Are there penalties if I fail to comply?
Yes. The EA has strengthened its enforcement approach in recent years and says it will impose penalties for each separate breach of the ESOS regulations:
- Failure to notify: an initial penalty up to £5,000, plus a daily penalty of up to £500 for each working day the organisation remains in breach. This penalty will apply regardless of whether (or not) the organisation has undertaken an energy audit.
- Failure to maintain records: an initial penalty of up to £5,000, plus a “sum representing the cost to the compliance body of confirming that the responsible undertaking has compliance complied with the scheme”. The organisation must also take steps to remedy the breach.
- Failure to undertake an energy audit: an initial penalty of up to £50,000, plus a daily penalty of up to £500 for each working day the organisation remains in breach. The organisation must also take steps to remedy the breach. Note that there is a more lenient approach for new entrants, however: a lower initial penalty of up to £5,000.
- Failure to comply with an enforcement/penalty notice: an initial penalty of up to £5,000; plus up to £500 for each working day the organisation remains in breach.
- False or misleading statement: up to £50,000.
Will ESOS non-compliance be made public?
Yes. If you don’t comply, it is likely that the name of your organisation, the amount you were fined and the reason for the penalty will be published on the Environment Agency website.
Will I be fined if I don’t implement the energy-saving recommendations?
No. ESOS does not require organisations to implement the energy-saving opportunities identified. But you do need to submit an Action Plan. If you choose not to take forward any of the recommended measures, the Action Plan can simply state this.
You risk enforcement action if you do not comply with ESOS scheme obligations, which are:
- Complete a compliant ESOS assessment
- Obtain Lead Assessor sign-off (unless an exemption applies).
- Submit your compliance notification
- Prepare and submit an ESOS Action Plan (even if it simply states you do not plan to implement energy-saving measures)
- Keep the required records and evidence pack
- Report on progress against the Action Plan, annually for two years
If the Environment Agency identifies a compliance issue, it will usually give organisations the opportunity to correct it. However, persistent or serious failures can result in enforcement action, including financial penalties and the publication of non-compliant organisations.
Support with ESOS compliance
Concept’s consultants include accredited ESOS Lead Assessors, and we are already supporting our clients with Phase 4 compliance.
Our ESOS clients span a diverse range of sectors, and we’ve had a 100% success rate since the scheme launched in 2014.
If you would like support with ESOS, or advice on your obligations, please get in touch.
Want to know more about ESOS Phase 4?
For advice on Phase 4 requirements and support with compliance, get in touch with our approved Lead Assessors.
- info@conceptenergy.org
- 01256 303620
- Farleigh Rd, Basingstoke, RG25 2JL
