We’ve put together the most frequently asked questions on ESOS, to help you meet compliance.
The Energy Savings Opportunity Scheme (ESOS) is a mandatory government scheme that requires businesses to identify energy-saving opportunities. Businesses in scope of ESOS have to carry out audits of their energy use every four years in order to identify potential energy-saving measures.

ESOS currently applies to any business classed as a “large undertaking”. For the purposes of the current ESOS phase (Phase 3) a large undertaking is any UK business that either:

  • employs 250 or more people; or
  • has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.
The most recent official estimate from the Department for Business, Energy & Industrial Strategy (BEIS) is that roughly 11,900 UK businesses are in scope of ESOS.

Yes, because non-profits can still meet the definition of a “large undertaking”. Charities, trusts and unincorporated associations may also meet the criteria. For more detail, see the official guidance on who falls in scope.

No. If your organisation meets the criteria to count as a public body (which is not necessarily a straightforward thing to determine) then you are not required to participate in ESOS.

If the UK-registered or UK-based part of your organisation is big enough to qualify as a large undertaking in its own right, then your organisation is in scope of ESOS. See the official guidance for more detail.

ESOS runs in four-year cycles, or phases. We are currently in Phase 3, which started in December 2019.

Each ESOS phase has two key dates: the qualification date and the compliance date.

The qualification date for the current phase is 31 December 2022. If your organisation counts as a “large undertaking” on that date, you are in scope of ESOS and must comply with the scheme, even if your organisation subsequently changes size.

The compliance date for the current phase is 5 December 2023. If your organisation is in scope, this is the deadline by which you must notify the Environment Agency that you have complied with your ESOS obligations.

ESOS is a UK government scheme administered by the Environment Agency. Each country of the UK has a different regulatory body to handle ESOS compliance and enforcement.

  • England: the Environment Agency
  • Wales: Natural Resources Wales
  • Scotland: the Scottish Environment Protection Agency

NI: the Northern Ireland Environment Agency

There are various ways in which an organisation in scope can fail to meet its obligations under ESOS, including but not limited to:
  • Failure to undertake an energy audit
  • Failure to maintain records
  • Making false statements in your records
  • Failure to notify the Environment Agency of your organisation’s compliance by the compliance deadline.
There are penalties for organisations that do not meet their obligations, which vary depending on exactly how the organisation has failed. Failing to undertake an energy audit or publishing misleading statements in your ESOS reporting could incur a penalty of up to £50,000, as well as fresh fines for each day that it takes the organisation to remedy the situation. The regulators do have the power to waive enforcement action and penalties, and in the past there has been some leniency. However, now that the scheme is in its third phase, such leniency is much less likely. See our February 2022 blogpost on how the Environment Agency is strengthening its approach to ESOS enforcement.

There are several ways to comply with ESOS:

  • Energy audits
  • ISO 50001
  • Display Energy Certificates
  • Green Deal Assessments

The official ESOS guidance lists seven steps in the process of carrying out an energy audit:

  • measure your total energy consumption
  • identify areas of significant energy consumption
  • consider available routes to compliance
  • ensure areas of significant energy consumption are covered by a route to compliance
  • appoint a lead assessor (There is an exception for the minority of organisations that have zero energy responsibility under the ESOS rules.)
  • get one or more board level directors to review the findings of the assessment
  • make a notification of ESOS compliance online

ESOS reporting makes a distinction between your organisation’s total energy consumption and its significant energy consumption. This means there are different reference periods for each, although both periods must consist of 12 consecutive months.

For total energy consumption, the reference period must include the qualification date for the relevant phase of ESOS and end before the compliance deadline for that phase.

So, for Phase 3, your reference period for total energy consumption must include 31 December 2022 (the qualification date). This means that the earliest date it could start would be 1 January 2022. It must end before 5 December 2023 (the compliance date). This means that the latest it could start would be 5 December 2022.

For significant energy consumption, you can take any consecutive 12 months of data from between 6 December 2019 and 5 December 2023. But the data should be no older than 24 months by the time you do the audit (so for an audit carried out on 1 August 2022, the data should not be from any earlier than 1 August 2020). You should also avoid potential overlaps and make sure that the data in your reference period has not already been included in your Phase 2 audit.

Your ESOS energy consumption calculation should include all sources of energy consumption, including building use and transport. You must use the same unit of measurement for all your calculations: either an energy unit such as kWh, or energy spend in pounds sterling. (It isn’t acceptable to record your energy consumption in terms of CO2 or CO2 equivalent, because these are not measures of energy.)

The government publishes tables of conversion factors that allow you to calculate the kWh for each litre of petrol burned in your company vehicles. Alternatively, you can state your company’s petrol and diesel consumption in terms of spending and give the calculations in pounds sterling.

No. You must carry out site visits as part of your ESOS energy audit, but you don’t have to visit every site in your organisation.

You can instead take a sampling approach – whereby you split your portfolio into different building types, e.g. office, warehouse, retail etc. – and visit one of each. You can apply the findings to the rest of the sites that are identical or very similar.

Your ESOS lead assessor can help you determine a suitable site visit sampling approach.

Your ESOS reporting must be signed off by an officially approved ESOS lead assessor. It is fine if this person is an employee of your organisation, provided that they are on one of the approved registers for ESOS lead assessors.

The lead assessor may carry out all the energy audits and reporting themselves, or you may get others to do this work and then bring the lead assessor in to check that it meets the ESOS requirements.

The official ESOS guidance includes a list of approved registers for ESOS lead assessors. At BiU, we have a team of qualified and certified ESOS lead assessors, accredited by the Association of Energy Engineers, the Energy Institute and CIBSE.

government evaluation of ESOS Phase 1 found that businesses spent on average 15 days of staff time on their Phase 1 data-gathering and reporting. The average may be less for Phase 3, now that organisations in scope know what is involved and are used to collating their energy usage information.

Unsurprisingly, larger and more complex organisations tend to need more time for ESOS compliance activity than smaller ones.

The most time-consuming part of ESOS compliance tends to be supporting the lead assessor by supplying the information requested, accompanying them on site visits and so on.

Under ESOS, energy is defined as all forms of energy products, including:

  • combustible fuels
  • heat (excluding your organisation’s surplus heat from industrial processes)
  • renewable energy
  • electricity
  • fuel used in transport

There are no fuel type exemptions in ESOS, although some consumption may be deemed de minimis and therefore excluded from the report.

You only need to include data on transport that your company operates, e.g:

  • Fuel used in company cars on business use
  • Fuel used in fleet vehicles which you operate on business use
  • Fuel used in personal/hire cars on business use
  • Fuel used in private jets, fleet aircraft, trains, ships, or drilling platforms which your organisation operates.

If your employees take trains, flights or taxis for business use, that are not operated by the company, then you don’t need to report on these. You also don’t need to report on fuel used by subcontractors in transporting goods.

For advice on how to start gathering transport data, read our guide.

The point of ESOS is to help organisations identify opportunities for energy saving. So under ESOS, organisations should take responsibility for energy use they actually control. This means that tenants in a building should take responsibility for the energy they consume through the operations of that business, but not for energy uses associated with shared areas of the building such as lifts, heating and so on.

The most useful tool for separating out the different areas of energy use is sub-metering. BiU has extensive experience of helping organisations use sub-metering to take control of their energy use. To find out more, get in touch.

There is no template because your organisation’s ESOS data does not need to be presented in any particular format, and because there are multiple routes to compliance. All routes to compliance require you to keep clear records of how you have met the compliance criteria in what the guidance calls an “evidence pack”, but there is no set format for this.

The only element of the process that follows a specified format is notifying the Environment Agency of compliance, which is done through a webform. (The webform for Phase 3 is not yet live.)

Yes. To gain financial value from the audit, it’s a good idea to select an ESOS lead assessor who is also capable of helping you to implement the identified energy saving measures.

At BiU, we can help you to build a cost-effective carbon reduction strategy and gain a return on investment from your ESOS audits.

Some companies offer a ‘shared savings’ energy efficiency scheme, whereby the upfront cost of an energy saving project is covered by the supplier or a third party financing company. The customer then repays the cost through an agreed percentage of the energy savings achieved. The idea is that energy efficiency projects can be cost neutral for an organisation in the short term, and in the long term they benefit from lower energy bills. Your Lead Assessor may have a similar offer or be able to recommend a company that offers such a scheme.
No. Although the point of the scheme is to encourage organisations to identify opportunities for saving energy, there is currently no requirement to actually implement any of the energy-saving measures identified by your audit. However, last year the government consulted on measures to strengthen ESOS, so it is possible that action on energy saving could become mandatory in Phase 4.

Your evidence pack for ESOS compliance should contain the following:

  • Contact details of the organisation doing the ESOS reporting;
  • Details of any board-level directors or equivalent who have reviewed the ESOS assessment findings;
  • Written confirmation from the director(s) to show that they have reviewed the ESOS assessment;
  • Contact details of your lead assessor and the name of the approved register of which they are a member;
  • Written confirmation from the lead assessor that they reviewed the ESOS assessment;
  • The calculation of your total energy consumption;
  • A list of your identified areas of significant energy consumption;
  • Details of the energy audits undertaken, including the audit methodology used in your ESOS energy audits;
  • Details of the energy-saving opportunities identified;
  • Details of the routes to compliance used to cover each area of significant energy consumption and, where applicable, evidence (e.g. certificates) of the alternative routes to compliance;
  • Written agreements to support any disaggregation or aggregation of group members;
  • If you didn’t choose the organisation’s highest UK parent organisation as the “responsible undertaking” for ESOS purposes, written agreements to support your alternative choice;
  • If you couldn’t provide a full 12 months of data, the reasons why not;
  • If you didn’t use verifiable data on energy use or energy expenditure to support your calculations, the reasons why you couldn’t;
  • The methodology you used for any estimates you’ve made of energy use or energy expenditure;
  • If your lead assessor has not used an energy consumption profile in your audit of an area of significant energy use, the justification for not doing so.

You must keep the evidence pack for the compliance period to which it relates and the two subsequent compliance periods.

Your lead assessor will have helped you decide on which measures to carry out, by giving you information on cost-effectiveness, ease of implementation and so on. Some lead assessors may also be able to help you move forward with the actual work, and it is a good idea to select one with this capability. (At BiU, we can fulfil the lead assessor role and also help you gain the best return on investment from your energy efficiency measures.)

Some energy efficiency measures have a good return on investment but cost a lot upfront. It is up to your organisation to choose how to fund this kind of measure. Some companies offer a “shared savings” finance model, where the supplier or a third-party finance company covers the cost of the work, then the organisation repays the cost through an agreed percentage of the energy savings achieved. Your lead assessor should be able to advise you on the best options for financing your energy efficiency work.
Although nobody welcomes more paperwork, there is a reason why the scheme has “opportunity” in the name. It was designed to help organisations cut their carbon footprint and energy bills in a cost-effective way. The original impact assessment estimated that ESOS will bring £1.6 billion in net benefits to the UK, and most of this benefit will be felt directly by businesses in the form of energy savings.
A spokesperson from the Department of Business, Energy and Industrial Strategy (BEIS) told the Hub: “Generally, all large businesses in scope of SECR would be in scope of ESOS too. ESOS is wider in that it covers all large private sector businesses (including smaller companies that are part of a group that includes one large business) and also includes businesses that aren’t UK incorporated.”
Last year the government consulted on a raft of potential changes to ESOS, including higher standards for energy data and a requirement for businesses to include a net zero strategy. At the time of writing (Feb 2022) we’re still waiting on the outcome. However, the intention is for the changes to be introduced during the current phase of ESOS (Phase 3).