What is ESOS?
The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme operated by the UK Government since 2014. It requires qualifying organizations to identify energy-saving opportunities by auditing energy use across buildings, transport, and industrial processes. This includes physical site audits for a representative sample of the organization’s portfolio.
ESOS operates in four-year compliance phases. The current Phase 4 runs from 6 December 2023 to 5 December 2027.
A large undertaking, and therefore an organization required to comply with ESOS, is any UK undertaking that meets one or both of the following criteria:
1. Employee threshold
It employs 250 or more people. For a UK registered undertaking, this includes all employees contracted to the undertaking either in the UK or abroad regardless of hours worked. For non-UK registered undertakings with a UK establishment, employees are defined as individuals directly contracted to the undertaking and subject to UK income tax.
2. Financial threshold
The organization has an annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million.
Why do organizations need to comply with ESOS?
In 2012 the European Commission introduced the Energy Efficiency Directive (EED) which aims to reduce greenhouse gas emissions by at least 55%. Article 8 of the EED sets targets for energy savings and a reduction in energy consumption. In response, the UK Government established the Energy Savings Opportunity Scheme (ESOS), now in its fourth compliance phase, to help meet these shared targets. Following the UK’s exit from the European Union, ESOS was retained and written into UK law.
ESOS is targeted at large organizations due to their scale of energy consumption and corresponding environmental and financial impact. By requiring structured energy assessments and action planning, the scheme aims to reduce energy demand while supporting cost efficiency. One in three businesses achieve net cost savings as a result of the ESOS compliance. Additionally, the scheme has resulted in estimated energy savings of 1.65 TWh from buildings,1.51TWh from industrial processes, and 0.52 TWh of fuel efficiency savings annually from the combined qualifying businesses.
Qualifying organizations that fail to comply with ESOS may be subject to a number of financial penalties including a fixed penalty of £50,000 for failure to undertake an ESOS energy audit.
What are the main ESOS workstreams?
To ensure compliance with the Energy Savings Opportunity Scheme (ESOS), NUS provides end-to-end support across both desk-based analysis and physical site audits. ESOS compliance typically involves the following key workstreams:
Scoping
An initial review to confirm whether the organization falls within the scope of ESOS and to assess organizational group structure. ESOS operates on a “one-in, all-in” basis, meaning that if one entity within a corporate group qualifies as a large undertaking, all entities within the group must comply, either individually or as a single group.
Portfolio Review
Assessment of the organization’s site portfolio and associated energy and transport consumption to determine the sample of sites and transport activities to be audited and included in the ESOS report.
Site Audits
A physical site audit of the designated portfolio sample, carried out by experienced engineers with expertise in energy efficiency auditing.
Reporting
Preparation of the ESOS report based on site audit findings and desk-based analysis of electricity, natural gas and transport energy data.
Lead Assessor sign-off
Formal sign-off of the ESOS report by a certified Lead Assessor, qualified to sign off ESOS in the UK. This can be the same as the engineer who completes the audits, or different.
Overview of Findings
Presentation of the assessment findings and recommendations to the organization.
Submission to the regulator
Submission of the ESOS compliance notification to the Environment Agency, which remains the responsibility of the organization. NUS can provide support throughout the process.
Quality Assurance audit
The Environment Agency may conduct a random quality Assurance audit. NUS will provide support throughout this process.
What are the key deadlines?
- 6 December 2023 – 5 December 2027:
Phase 4 Compliance Period. - 5 December 2026:
Annual Progress Report 2 following compliance phase 3 - 31 December 2026 Qualification Date:
Organizations that meet the ESOS qualification criteria on this date are required to comply with ESOS Phase 4. - 5 December 2027:
Compliance deadline: The completed ESOS report must be submitted by this date.
How NUS Can Support?
NUS’s UK office has a dedicated Energy and Sustainability Services (ESS) team that carries out energy and carbon compliance, decarbonization road-mapping, and the implementation of on-site generation projects. The team supports compliance with the requirements of the Energy Efficiency Directive Article 8 (EED A8), the Energy Savings Opportunity Scheme (ESOS), Climate Change Agreements (CCA), Carbon Reduction Plans (CRP), and Streamlined Energy and Carbon Reporting (SECR).
To support clients in meeting ESOS compliance requirements, NUS provides dedicated in-house project managers and certified ESOS Lead Assessors, offering structured oversight from initial scoping through to submission. Please contact NUS via our website or email UKSustainability@nusconsulting.co.uk for more information.