Phase 3 of the Energy Savings Opportunity Scheme (ESOS) was due to come to an end this year; however, this has now been extended to 5 June 2024. 

The extension of this deadline occurred as a direct response to stakeholders requests to help provide participants with adequate time to meet new ESOS Phase 3 requirements (which we explore below), and for assessors to conduct thorough evaluations. It will also accommodate time to have the changes passed through parliament, as well as provide the Environment Agency with adequate time to set up their new IT systems.

It's worth highlighting that notifications for Phase 3 compliance cannot be submitted until the finalised requirements have been legislated, and the IT system update currently under development has been tested and launched. Nevertheless, the Department assures participants that the system will be ready in time to meet the new notification requirements ahead of the extended compliance deadline.

In brief, the new proposed changes are:

• Introduction of a standardised template for compliance information in ESOS reports, which will be developed with stakeholders.
• Reduction of the 10% de minimis exemption to up to 5%, encouraging greater coverage of the scheme and improving data quality.
• Additional reporting to the scheme administrator (the Environment Agency) via the scheme portal, and other improvements in the quality of audits.
• The qualification criteria for Phase 3 will not change, but the thresholds are now set in GBP, and all businesses that are large (250+ employees OR with a turnover of £44m+ and a balance sheet of £38m+ on 31 December 2022) will need to comply.
• Stricter penalties for businesses that fail to comply with the scheme will be introduced.
• The addition of an energy intensity metric in ESOS reports.
• Requirement to share ESOS reports with subsidiaries.
• ESOS reports to provide more information on next steps for implementing recommendations.
• Participants will need to set a target or action plan following the Phase 3 compliance deadline, on which they will be required to report against for Phase 4.
• Collection of additional data for compliance monitoring and enforcement.
• The addition of a Net Zero element to ESOS audits will not become a requirement until Phase 4. However, the Department of Energy Security and Net Zero is currently working with BSI on the production of a new Net Zero audit PAS standard, which will enable ESOS participants to implement the proposal in Phase 3 on a voluntary basis.

It's important to note that while the compliance deadline has been extended, the qualification thresholds and dates remain unchanged. Therefore, any company or group that qualified as a large company for ESOS on 31 December 2022 (businesses with a turnover of in excess of €50 million or with 250 employees or more) must still comply with ESOS Phase 3.

What is ESOS?

The Energy Saving Opportunity Scheme (ESOS) is compulsory for large companies with turnover in excess of €50 million or with 250 employees or more, that must assess their energy use and set out an energy saving strategy. 

To be ESOS compliant, your business must have 12 months’ worth of data available to assess and submit (allowing time for the processing of both to happen). Our ESOS audits and inhouse energy audits undertaken throughout the last decade have shown that most organisations have considerable opportunities to save energy, costs and emissions.

Whatever industry you're in, here at NFU Energy we can take care of the whole process for you. Give us a call on 024 7669 6512 or email [email protected]