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Bolstering the Energy Savings Opportunity Scheme

The Energy Savings Opportunity Scheme (ESOS) has now been in place since 2014, with qualifying businesses required to report on their energy performance every four years.

12 August 2022

The Energy Savings Opportunity Scheme (ESOS) has now been in place since 2014, with qualifying businesses required to report on their energy performance every four years.

Now in its third four-year cycle, Phase 3 will come to an end on December 5th, 2023.

Under the scheme, businesses of a certain size are mandated to assess their total energy consumption over a one-year timescale within the reporting period, before sharing the findings with the administrator of the scheme.

In England this is the Environment Agency, while the Scottish Environment Protection Agency, Natural Resources Wales and the Northern Ireland Environment Agency administer the scheme elsewhere in the UK.

Failing to complete an ESOS assessment when required to do so can result in significant fines, but the key benefit is that such a close examination of a business’s energy use can identify new ways to reduce consumption and improve sustainability, unlocking additional savings and accelerating progress towards net zero.

The Department for Business, Energy and Industrial Strategy (BEIS) recently published the official Government Response to a consultation aimed at bolstering the effectiveness of ESOS.

The forthcoming Energy Bill will include powers to make changes to ESOS to strengthen the reporting requirements and resultant guidance that it generates for businesses.

Many of these changes are expected before the Phase 3 compliance deadline, while others will be introduced in Phase 4.

Changes that will directly impact on Phase 3 will be introduced ahead of the December 2023 deadline.

This is the result of a joint project between BEIS, the Environment Agency, industry bodies, assessors and participants to enhance the reporting requirements and make ESOS a more comprehensive, in-depth look at net zero, sustainability and energy efficiency performance.

These will include:

  • A standardised template for compliance information in an ESOS report, generally comprising data that the participant should already have available
  • The reduction of the 10% de minimis exemption to up to 5%
  • The addition of an energy intensity metric in ESOS reports
  • Requirement to share ESOS reports with subsidiaries
  • Requirement for ESOS reports to provide more information on the next steps for implementing recommendations
  • Requirement for participants 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

Entering Phase 4, a new, net zero-focused element will be introduced. Not yet fully laid out, BEIS is working with the British Standards Institute (BSI) to design a new net zero audit standard.

This is expected to allow ESOS participants to implement the net zero aspect of their assessment into Phase 3 on a voluntary basis.

As many in the industry had predicted, the changes proposed will increase the compliance requirements of businesses that are mandated to complete an ESOS assessment.

With pressure mounting on the UK to accelerate collective progress towards a looming 2050 net zero deadline, the legislative burden is only likely to increase further.

Completing an ESOS assessment is designed not to catch businesses out, but to help them accurately identify the new technologies, energy management strategies and other innovations that will deliver the biggest impact on their energy costs, sustainability and net zero ambitions.

Inenco has guided more than 450 organisations successfully through their ESOS Phase 1 and 2 assessments, with a 100% Environment Agency Audit rate.

To find out more about how we can support your organisation, contact our team now on 08451 46 36 26 to speak to one of our experts.