Routes to ESOS compliance

We are currently in Phase 3 of the Energy Savings Opportunity Scheme (ESOS), which ends in December 2023. At the time of writing (Dec 2022), there are four valid routes to compliance in Phase 3, although only two are encouraged.  

1. Energy audits

This route to compliance means carrying out a comprehensive assessment of your organisation’s energy use across all operations, including buildings, industrial processes and transport. You must appoint a qualified lead assessor to review your ESOS report. It is also possible but not mandatory to hire an assessor to do the report itself instead of doing it in-house. The point of building this detailed picture is to make it possible to identify possible areas of energy efficiency improvement. Originally there was no obligation to act on any of the suggestions in your ESOS report, but the direction of travel is to nudge businesses towards further action. For Phase 3, a relatively new requirement is that your ESOS report should include information on the next steps for implementing the suggestions. Up to now (December 2022), there has not been a template for what corporate data to submit in your ESOS report. But the government is currently working on this, and it is expected to be ready in time for businesses to use it for their Phase 3 reporting. Expect to include information such as corporate structure and reasons why you are in scope of ESOS. You will also be expected to include energy metrics – that is, how your energy consumption relates to other factors. This might be kWh/m² for buildings or kWh per miles travelled for transport. Best practice requires you to also use energy intensity metrics that are relevant to the purpose of your business – such as kWh per item produced for a factory, or kWh per hundred customers for a restaurant.

2. ISO 50001

ISO 50001 is an international standard for energy management systems. If your entire organisation is covered by the standard, you don’t need to do anything else to comply with ESOS (except provide proof of ISO 50001 certification to the Environment Agency). If you choose this route for your organisation’s ESOS compliance, you will need to act quickly to ensure your business receives its ISO 50001 certification before the December 2023 deadline. You will need to allow time for:

• Delays in finding and booking a qualified auditor
• An optional “pre-audit” check to help you spot any problems before the formal audit
• Your Stage 1 audit: information gathering and reviewing
• Your Stage 2 audit: a thorough investigation that could involve multiple site visits
• The possibility of failing your Stage 2 audit and needing to restart the process.
• Our blog post on ISO 50001 sets out the pros and cons of using this as a route to ESOS compliance.

3. Display Energy Certificates

Display Energy Certificates (DECs) show the energy performance of public buildings based on annual consumption. DECs are being phased out as a route to ESOS compliance. If 90% or more of your organisation’s total energy consumption is covered by DECs, they are still a valid compliance route for Phase 3, but they will be removed in Phase 4. In a recent ESOS consultation response (July 2022), the government says it would discourage organisations from using the DECs route in Phase 3, but understands that some organisations may have already commissioned DECs. There are also some important caveats to note:

• If a building has a total usable floor area of over 1,000 square metres, a DEC only lasts a year before its needs to be renewed.
• For floor areas between 250 and 1,000 square metres, the DEC is valid for 10 years – but to be a valid route to ESOS compliance, a DEC needs to have been issued within the relevant compliance period. (For Phase 3, that is between 6 December 2019 and 5 December 2023.)
• If DECs cover less than 90% of your organisation’s energy consumption, you will need to find alternative routes to compliance for the energy not covered.
• DECs are not available in Scotland and cannot be used as a compliance route to ESOS there. (England, Wales and Northern Ireland are fine.)
• Energy Performance Certificates (EPCs) are not the same thing as DECs. You cannot achieve ESOS compliance through EPCs.

4. Green Deal Assessments

Green Deal Assessments (GDAs) are energy audits of buildings, carried out through the government’s Green Deal scheme, which ended in 2015. Like DECs, the government says GDAs are still a route to ESOS compliance in Phase 3, but discouraged. They will be fully removed as compliance routes for ESOS in phase 4. The deadline for ESOS Phase 3 compliance is 5 December 2023. For more advice and information on ESOS, read our frequently asked questions, or if you have a question we haven’t answered, get in touch.