Established by the then Department of Energy and Climate Change (DECC) as a response to Article 8 of the EU Energy Efficiency Directive, ESOS is a mandatory scheme which targets large UK businesses and is designed to increase engagement with energy management systems and reduce consumption. The scheme is mandatory for large undertakings, however, the benefit for smaller businesses is also substantial. ESOS is now in its fourth phase, which started on 6th December 2023 and concludes on 5th December 2027. Phase 4 builds on the energy action plans and progress updates introduced in Phase 3. Organisations must now also report on their progress against those commitments as part of their Phase 4 submission.
Who Must Participate?
Participants must report on all energy consumption through buildings, industrial processes and transport over a 12-month period within certain deadlines. Reporting must be in line with ESOS standards and approved by a lead ESOS assessor. UK businesses which must partake have been defined as:
- 250 employees or more
- Has less than 250 employees but a turnover of more than £44 million and a balance sheet more than £38 million
- Being part of a larger corporate group
Penalties for Non-Compliance
- Disclosure of client information on the Environment Agency website
- £5,000 fine for failure to meet deadlines or adequate standards
- £50,000 fixed penalty for failure to conduct an ESOS assessment
- Fixed penalties of £5,000 for failure to comply with enforcement notices
- Up to £50,000 fines for making false statements
Qualification is assessed on 31st December 2026. The thresholds are unchanged from Phase 3.
How LGE Can Help?
LGE offers a comprehensive range of consultancy services, with our scope of services for ESOS being modular and following the below three steps:
- Pre-Desktop Analysis- A structured approach which targets the efficient compliance route through an initial meeting to establish all data, understanding organisational structure and boundaries and an examination of 12-month reference period
- Survey- Examines metering equipment and where energy is consumed, reviews general energy management policies and potential improvements to building fabric, studies existing heating arrangements, appraises existing energy controls and audits electricity usage
- Post-Survey- An ESOS compliant report will be provided to examine all energy saving options, with clear recommendations on a spreadsheet which are divided into low-cost and medium-high cost energy saving measures
ESOS Action Plan & Annual Updates
Action plans and annual progress updates were introduced in Phase 3, and they continue in Phase 4. The action plan sets out how a participant will implement the energy saving opportunities identified in its ESOS assessment and when, while the progress updates report whether those commitments are being met.
Your Phase 4 action plan is due by 5th December 2028, followed by annual progress updates. The 2026 amendments also require estimated energy savings to be reported for each individual measure, rather than as a single total.
All submissions must be made through the compliance notification system, with a company director confirming they have considered the submission and are satisfied with its contents. Failure to submit will result in businesses being recorded and published as an undertaking which does not intend to carry out energy saving action.
LGE can provide support through:
- Producing an action plan which communicates how a business intends to reduce energy consumption and when it intends to do it
- Reviewing your Phase 3 action plan and reporting on measures that were not implemented
- Explaining whether recommendations were made through ESOS assessments, what savings are expected to be achieved and how savings were estimated
- Producing annual progress updates which communicate on the actions taken during the 12-month period and confirmation of whether the actions were implemented by the set date
- Estimating savings achieved, measure by measure, and how savings were estimated
LGE’s comprehensive expertise in handling ESOS for clients in its previous phases means that we can ensure you are ahead of the curve when it comes to Phase 4 requirements. With the qualification date on 31st December 2026, now is the time to start collecting data. Speak to your account manager or contact us at info@lgegroup.com.