The Energy Saving Opportunity Scheme (ESOS) is a mandatory energy assessment programme established by the UK government. It requires large organisations to regularly audit their energy use and identify cost-effective ways to improve energy efficiency. While ESOS is not directly a Net Zero initiative, it plays a crucial role in helping the UK meet its Net Zero targets by encouraging businesses to reduce energy consumption and carbon emissions. But who needs to comply? What steps must businesses take? And what happens if they don’t?

Who Needs to Take Action? Your business must comply with ESOS Phase 4 if it meets any of the following criteria on the qualification date (31 December 2026):

• Employs at least 250 people, or
• Has an annual turnover of £44 million and an annual balance sheet total of £38 million.

Initially, the Environment Agency considered lowering the turnover threshold to £36 million and the balance sheet total to £18 million for Phase 4. However, due to delays in introducing mandatory Net Zero reporting, these changes have been postponed for this phase.   What Does Compliance Involve? To comply with ESOS Phase 4, your business will need to:

• ✅ Conduct Detailed Energy Audits: These should cover buildings, industrial processes, and transport to identify areas of significant energy use.
• ✅ Develop an Action Plan: Identify and document energy-saving opportunities and establish a strategy for implementing them.
• ✅ Report Annually: Submit annual progress reports through the ESOS web portal, including reasons for any missed targets.
• ✅ Meet Auditing Standards: Reports must adhere to ISO 50002 or EN 16247 auditing standards.
• ❌ Avoid Using DECs or GDAs: Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) are no longer accepted for compliance.

 Key Deadlines to Remember

• Action Plan Submission Deadline: 5 March 2025
• Qualification Date: 31 December 2026
• Compliance Deadline: 5 December 2027

What Happens If You Don’t Comply? Failure to comply with ESOS requirements can result in significant financial penalties:

• Failure to Notify Compliance:
  • Up to £5,000 initial fine
  • Plus £500 per working day (up to 80 days) while non-compliance continues
  • Potential publication penalty, naming and shaming your business
• Failure to Keep Records:
  • Up to £5,000
• Failure to Undertake an Energy Audit:
  • Up to £50,000 initial fine
  • Plus £500 per working day of non-compliance (max 80 days)
  • Publication penalty
• False or Misleading Information:
  • Fines of up to £50,000

These penalties are not just about money—they also risk reputational damage and operational disruption.   Energy Audits: Cost or Investment? It’s easy to see ESOS compliance as a regulatory burden—but that would be a mistake. An energy audit should be viewed not as a cost, but as a strategic investment. It identifies areas where energy use can be reduced, leading to long-term savings that often pay back the initial investment within just a few years. Investing in energy efficiency means lower energy bills, a reduced carbon footprint, and improved sustainability credentials—all of which are increasingly valued by customers, investors, and regulators alike.   Final Thoughts If your business falls within the ESOS Phase 4 thresholds, now is the time to act. Don’t wait until the deadlines are looming—start planning early to ensure compliance and make the most of the opportunities for savings and sustainability. Need help with ESOS audits or compliance planning? Reach out to our team at Chamberlains Aqua & Energy Systems Ltd—we’d be happy to guide you through it.