The Energy Saving Opportunity Scheme (ESOS) affects large UK organisations, requiring them to undertake energy audits and report back to the Environment Agency.

Benefits for businesses

ESOS presents a real opportunity for businesses to improve energy and fuel efficiency, reduce carbon emissions and subsequently, reap financial benefits.

The energy audit route to ESOS compliance involves calculating a business’ total energy consumption for a 12-month period identifying the most significant areas, and at least 90% of the total energy consumption will be subject to ESOS compliant energy audits. The audits feed into a report of tailored recommendations setting out costed energy, fuel saving opportunities and good practice which would assist the company to make financial savings.

Phase 3

ESOS Phase 3 began following the Phase 2 compliance date of 5 December 2019, and we are now approaching the qualification date for Phase 3, 31 December 2022. Therefore, now is the time for businesses to act, to ensure they appoint a qualified and experienced lead assessor to carry out their report in time for the compliance deadline on 5 December 2023.

For ESOS Phase 3, the financial thresholds have been converted into GBP following the UK’s exit from the EU, so they are now lower than what applied in phase 2, leading more business to be obligated to comply within this phase.

Who is obligated?

A UK organisation is obligated to comply with ESOS phase 3 if on the qualification date it either:

• Employs 250 or more people, or

• Has an annual turnover in excess of £44m and an annual balance sheet total in excess of £38m, or

• Is an overseas company with a UK registered establishment which has 250 or more UK employees (paying income tax in the UK)

Video: The lowdown on ESOS Phase 3

To find out ‘everything you need to know’ on ESOS phase 3, watch Comply Direct’s 15-minute video created by their expert sustainability team…

Watch ESOS Phase 3 video HERE

ESOS regulations under review

The ESOS Regulations have been under consultation and the government response detailing changes for Phase 3 and Phase 4 of the scheme was released in August 2022.

The main aims of this consultation were:

• To increase the number of ESOS participants that take action to reduce energy use by raising the quality of their ESOS audit

• To increase the carbon and cost savings from ESOS by increasing the number and scope of ESOS recommendations taken up by participants

• To ensure that ESOS recommendations are consistent with the UK’s net zero commitments

Many changes will apply from Phase 4 of ESOS, however, there are some significant developments which will affect Phase 3 of the scheme. For example, ESOS reporting will become more standardised, with additional requirements expected for Phase 3. These are mainly around group structure, qualification, and routes to compliance.

Furthermore, from Phase 3, the government intend to change the energy consumption de-minimis from 10% down to 5%; this is to allow organisations to identify further ways to reduce energy consumption. In some cases, this change may require more site audits to be conducted than would have been for Phase 2.

For more information on changes to the requirements, and how this may impact businesses for Phases 3 and 4, please see full details HERE.

To find out more about ESOS Phase 3 and determine if your business will be obligated to comply, contact Comply Direct’s expert team on solutions@complydirect.com or call 01756 794951