Energy Savings Opportunity Scheme (ESOS)

Your organisation may qualify for ESOS Phase 4 if, on 31 December 2026, it is a large undertaking. A UK company is generally classed as a large undertaking if it:

• employs 250 or more people; or
• has an annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million.

ESOS can also apply to corporate groups where at least one UK group member meets the qualification criteria. UK establishments of an overseas company may also be required to participate where the wider global corporate group meets the ESOS qualifying criteria in the UK.

If you are close to the thresholds, or your organisation’s size has changed significantly, get specialist advice to establish whether you qualify.

Organisations that qualify must assess their energy consumption and identify cost-effective opportunities to improve energy efficiency. The assessment covers energy used by buildings, industrial processes, transport and other relevant energy uses.

For Phase 4, organisations must calculate their total energy consumption and identify areas of significant energy consumption. Where this approach is used, the significant energy consumption must account for at least 95% of the total.

An ESOS energy audit must be based, so far as reasonably practicable, on verifiable energy consumption data covering a 12-month period, and must include site visits. It must identify energy-saving opportunities and give the organisation enough information to consider the costs, benefits and payback of the recommended measures.

For Phase 4, ESOS compliance can be achieved through an ESOS-compliant energy audit or, where the requirements are met, an ISO 50001 certification route.

Display Energy Certificates and Green Deal Assessments can no longer be used as alternative compliance routes for Phase 4. Existing information from these assessments may still be useful when preparing an ESOS assessment.

An ESOS Lead Assessor reviews and signs off the assessment where required. The organisation then submits a notification of compliance through the Government’s Manage your ESOS Reporting (MESOS) system. A board-level director, or a person exercising management control within the participant group, must also sign off the assessment and notification.

Phase 4 places greater emphasis on what organisations actually do with the opportunities identified. Participants must report:

• Energy savings achieved since the previous ESOS assessment
• Measures implemented to achieve those savings
• The level of energy savings achieved
• Progress against previous action plan commitments
• Reasons why proposed measures have not been implemented

ESOS is no longer simply about completing an energy audit and filing a compliance notification. Organisations are required to demonstrate engagement with the energy-saving opportunities identified, through the action plan due in December 2028 and the progress updates that follow each December to 2031.

An ESOS assessment gives a detailed picture of where an organisation uses energy and where there may be opportunities to reduce consumption and operating costs. For organisations with multiple buildings, industrial operations or significant transport energy use, this can be valuable information for prioritising investment in energy efficiency. Vital helps identify practical opportunities and gives clear recommendations based on the organisation’s actual energy use.

Vital has provided ESOS compliance services since the scheme began in 2014, supporting organisations with their energy assessments and identifying practical opportunities to reduce energy consumption and operating costs. We work with clients across the UK on Phase 4 energy assessments, including the assessment of buildings and energy use and the identification of cost-effective energy-saving opportunities.

Our aim is to make the ESOS process as straightforward as possible while making sure the assessment gives useful information for future energy and investment decisions.