A quick guide to ESOS Phase 3 changes
The deadline for Phase 3 of the Energy Savings Opportunity Scheme (ESOS) was recently extended to 5th June 2024.
The extension gives organisations more time to meet new reporting requirements, aimed at strengthening the scheme and driving greater action on energy efficiency.
The underpinning legislation to make this happen is still subject to legislative scrutiny (and is currently passing through Parliament). That said, we are likely to see them in place well before the end of this year, ahead of the compliance deadline.
ESOS Phase 3 changes at a glance
In the current phase of ESOS you will now need to:
- Include a summary template of compliance information in the ESOS report.
- Include additional data in the compliance notification – (the Environment Agency has set out a list which you can find here).
- Cover at least 95% of your total energy consumption (the “de minimis” rule has changed from 10% to 5%).
- Include energy intensity ratios in your reporting.
- Share ESOS reports with subsidiaries.
- Provide more information on next steps for implementing recommendations.
- Set a target or action plan following the Phase 3 compliance deadline, and report against this for Phase 4.
- Provide additional data for compliance monitoring and enforcement.
What changes are coming in Phase 4?
ESOS currently just covers energy consumption, but Phase 4 will introduce a wider ‘net zero element’ to ESOS audits. Reports will need to include an assessment of actions needed to meet future net zero commitments. The government is currently working with BSI on the production of a new net zero audit PAS standard to facilitate this. As well as this, we’ll see the following updates:
- Changing the ESOS balance sheet and turnover thresholds to align with SECR. Organisations would be in scope of ESOS if they meet at least one of the SECR qualification criteria: at least 250 employees, a balance sheet of at least £18 million, or turnover of at least £36 million.
- Mandating action on audit recommendations. Firms will need to provide an explanation if targets and goals have not been met.
- ESOS reporting will be required to follow an existing auditing standard such as ISO 50002 or EN 16247.
- Display Energy Certificates (DECs) and GDAs will be removed as compliance routes for ESOS.
For more information, read our simple guide to ESOS Phase 3, or get in touch with us for advice. We are approved by the Environment Agency to act as ESOS assessors and have been helping organisations comply with the scheme since it began, almost ten years ago.