homenews and insights esos phase 3

Energy Savings Opportunity Scheme - Don't Delay

By Paul Kraus
03 January 2024

Product Development Manager

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The countdown is on. It’s now only 5 months until the 5 June 2024 deadline for companies to submit their mandatory Energy Savings Opportunity Scheme (ESOS) Phase 3 audit. Here, I pick out some key things to consider to help you and your business on the road to ESOS phase 3 compliance.

What is ESOS and who does it apply to?

A company is required to submit an ESOS audit if one or both of the following conditions apply.

  • It employs 250 or more people.
  • It has an annual turnover more than £44 million and an annual balance sheet total more than £38 million.

If your company met these criteria on 31 December 2022, then it qualifies for ESOS Phase 3 and an ESOS audit must be submitted by 5 June 2024 (previously 5 December 2023).

The previous qualification date for ESOS Phase 2 was 31 December 2018, so if your company has seen significant growth over the past 4 years then your business may meet the criteria for the first time. Likewise, businesses who submitted ESOS Phase 2 in December 2019 may no longer be required to complete an ESOS audit if headcount of turnover has fallen below the required level. In this instance they will need to submit a DNQ (Do Not Qualify) notice to the Environment Agency advising of this.

Five key tips to help you meet the ESOS Phase 3 deadline

Use existing energy assessment data

Assess existing energy audits to see how much of your company’s ESOS requirements are already covered. For instance, if your business meets the ISO 50001 Energy Management Standard you will automatically comply with ESOS Phase 3 requirements

Lead Assessor Review

Companies can opt to do the data gathering and site surveys internally, after which a Qualified Lead Assessor must review the energy audit and recommendations to reduce energy consumption.

Focus on the Evidence Pack

Part of the evidence pack that forms part of the assessment must include capital costs to implement energy savings measures, and the expected savings. he expectation is that ESOS Phase 4 criteria will focus on a company’s implementation of their Phase 3 plans to reduce energy consumption, carbon emissions, and energy costs.

Changes to ESOS Phase 3

The ESOS scheme is evolving with each phase. If you’re familiar with the ESOS assessment process, still be mindful of the changes since Phase 2, specifically:

  • Reduction from 10% to 5% in the proportion of energy consumption permitted to be excluded from the ESOS submission
  • Standardised audit and recommendations template.

Use a Qualified Lead Assessor

As mentioned earlier, it's essential to use a Qualified Lead Assessor. Data from the Environment Agency shows that 63% of Phase 2 submissions were compliant with remedials - meaning companies were required to take further actions to comply.

Start your ESOS journey today

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SSE Energy Solutions is best placed to partner with your business from ESOS assessment to transforming how your business uses energy through data-driven energy optimisation of buildings and large estates to reduce carbon emissions and lower your energy costs.