Energy Savings Opportunity Scheme (ESOS)

22 Aug 2024

What is ESOS?

The Energy Savings Opportunity Scheme, or ESOS, is a compulsory scheme aimed at improving energy efficiency in large UK organisations. It requires companies that meet specific criteria to conduct energy audits every four years. These audits assess the energy use in buildings, industrial processes, and transport, with the goal of identifying cost-effective energy-saving measures.

Is my company affected by ESOS?

The scheme applies to large UK undertakings and their corporate groups, including businesses, non-profits, and UK establishments of overseas companies. Organisations qualify for ESOS if, on the qualification date (31 December 2022 for phase 3), they either:

• Employ 250 or more people or have an annual turnover exceeding £44 million and
• An annual balance sheet total exceeding £38 million.

When do I need to conduct the ESOS by?

Organisations that qualify for ESOS must notify the Environment Agency by a specified deadline. For phase 3, the deadline was 5 June 2024, but there is a grace period until 6 August 2024 during which no enforcement action will be taken if compliance is met.

What do I need to do comply?

The following must be undertaken in order to comply with an ESOS assessment:

• Measurement of total energy consumption for buildings, industrial processes and transport
• Identification of areas of significant energy consumption, that account for at least 95% of your total energy consumption
• Appoint a 'Lead Energy Assessor' to oversee the ESOS Assessment
• Conduct detailed energy audits to identify cost-effective energy efficiency solutions for high consumption areas
• Notify Environment Agency of your compliance.

Your ESOS assessment must be reviewed by a Board level Director and approved by a ESOS Lead Assessor prior to reporting compliance to the Environment Agency.

ESOS will take account of some other energy management activities, e.g. ISO 50001, Green Deal Assessments (GDAs), Display Energy Certificates (DECs). However, you will still require a qualified Lead Energy Assessor to confirm these activities have met the minimum standards required (e.g. including transport energy if it is 5% or more of your energy use) before you can notify the Environment Agency of your compliance.

What happens if you do nothing?

• Failure to notify the EA of compliance - £5,000 plus £500 per working day you remain in breach
• Failure to maintain adequate records - £5,000 plus sum equivalent to compliance body costs
• Failure to conduct an adequate energy audit - £50,000 - plus £500 per working day you remain in breach

What if I do not qualify for ESOS phase 3?

If you have been contacted by the Environment Agency in the past, or you qualified for phase 1 and/or phase 2 but not for phase 3, you need to tell the Environment Agency you do not qualify. You can do this using the MESOS system.

For more information on meeting your compliance with ESOS please contact us on be-ambitious@lawrencegrant.co.uk