The Energy Savings Opportunity Scheme (ESOS) is an energy assessment initiative introduced by the UK government to promote energy efficiency among larger organisations.
Under this scheme, organisations with 250 or more employees, or those meeting specific turnover or balance sheet criteria, have a mandatory requirement to undergo an energy assessment/audit every four years. This audit includes recommendations for energy-saving measures and is required to be verified by a qualified ESOS Lead Assessor.
We are currently in Phase 4 of ESOS with the key qualification deadline on 31 December 2026 and compliance deadline on 5 December 2027.
In the most recent ESOS Newsletter (Issue 33), the government confirmed that ESOS will also be extended for a fifth phase with mandatory net zero reporting being delayed until Phase 5 (2027-2031), but voluntary reporting options are available.
As the UK government intensifies its focus on achieving net zero emissions, ESOS compliance has become even more crucial.
The key requirements remain unchanged, with new rules on progress tracking and compliance routes. Businesses should act now to stay ahead, but new regulations on progress tracking and compliance routes have been introduced.
Mandatory Net Zero requirements postponed to Phase 5
DESNZ was planning on making Net Zero (carbon emissions reduction reporting) mandatory for phase 4 ESOS compliance, which would be due in Dec 2027. However, they have now decided to delay making it mandatory until 2031. You can however volunteer to report it, if you want!
They had also said they would align the qualification criteria (number of employees, turnover, balance sheet) between ESOS and SECR but are also delaying this.
Upcoming changes in Phase 4
Removal of certain compliance routes: Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) will no longer be accepted as compliance methods.
Action Plan accountability: Organisations will be required to report progress against their action plan commitments within their ESOS assessments.
These updates aim to provide businesses with adequate time to prepare for significant changes and to assess the impact of recent modifications implemented in Phase 3.
What does this mean for businesses?
This delay provides businesses with additional time to prepare for the anticipated net zero requirements while ensuring they meet their Phase 3 and 4 obligations without additional pressure.
Companies can use this time to understand the forthcoming changes, familiarise themselves with how net zero considerations will impact their operations, and integrate long-term sustainability strategies.
By reducing carbon emissions and aligning with the UK’s net zero targets, businesses can anticipate their compliance and benefit from lower energy costs.
Instead of facing immediate regulatory changes, businesses can now focus on meeting ESOS Phase 4 compliance deadlines while strategically incorporating net-zero principles at their own pace. This means ensuring they meet the qualification date of 31 December 2026 and submit their compliance reports by 5 December 2027.
With compliance deadlines already set, early action will help businesses streamline the reporting process and avoid last-minute compliance challenges.
Companies should also consider utilising this time to evaluate their energy efficiency measures and implement cost-effective measures that could reduce their operational expenses.
Investing in energy audits, efficiency technologies, and carbon reduction initiatives now can help businesses gain a competitive advantage when Phase 5 mandates are introduced.
How Valpak can help
To ensure compliance with the Energy Savings Opportunity Scheme (ESOS) companies should act now! We have developed a service to fulfil all of your ESOS compliance requirements. If you would like to find out more, please do not hesitate to contact us on 03450 682 572 or email [email protected]. If you’re unsure if your business needs to comply, why not visit our ESOS web page.
Alternatively, we are hosting a free “Managing Energy Reporting for ESOS & SECR” webinar on 27 May, which will discuss and explore the requirements of ESOS and detail the actions that need to be taken. Visit our events page to book online.
