The Energy Savings Opportunity Scheme (ESOS): What It Is, Who It Applies To, and How to Comply in 2025 and Beyond

Written by: Energy Guardians

Last Updated: August 10, 2025

The Energy Savings Opportunity Scheme (ESOS) is one of the UK’s cornerstone regulations for improving energy efficiency in large organisations. Introduced in 2014 and now in its fourth compliance cycle, ESOS requires companies to measure energy use, identify energy-saving opportunities, and report compliance to the UK regulator.

With Phase 3 of ESOS now completed (deadline: 5 June 2024) and Phase 4 underway, it is essential that organisations understand not just the basic compliance requirements, but also the follow-up actions, penalties, and how ESOS connects to broader sustainability and net zero objectives.

What Is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a mandatory UK government scheme designed to:

• Promote energy efficiency in large organisations

• Identify cost-effective ways to reduce energy consumption

• Support national carbon reduction targets

ESOS is managed by the Environment Agency (England), SEPA (Scotland), Natural Resources Wales, and DAERA (Northern Ireland).

Under the scheme, qualifying organisations must:

1. Measure total energy consumption across buildings, industrial processes, and transport

2. Audit significant energy uses

3. Identify practical opportunities for energy savings

4. Notify the regulator of compliance

   
   

Who Must Comply With ESOS?

ESOS applies to any UK-based undertaking or group that met at least one of the following conditions on the qualification date of the phase (e.g., 31 December 2022 for Phase 3):

• ≥ 250 employees, or

• Annual turnover > £44 million and balance sheet total > £38 million

Exemptions include:

• Small and Medium-sized Enterprises (SMEs)

• Public sector bodies

• Organisations fully covered by ISO 50001 (Energy Management System) certification across 100% of energy use, provided they notify the regulator.

The ESOS Phases Explained:

ESOS Phase	Compliance Period	Qualification Date	Compliance Deadline	Notes
Phase 1	6 Dec 2011 – 5 Dec 2015	31 Dec 2014	5 Dec 2015	First ESOS phase; now complete.
Phase 2	6 Dec 2015 – 5 Dec 2019	31 Dec 2018	5 Dec 2019	Completed; enforcement action began for late submissions.
Phase 3	6 Dec 2019 – 5 Dec 2023	31 Dec 2022	5 June 2024 (extended)	Deadline extended from Dec 2023 to allow for upcoming changes in Phase 4.
Phase 4	6 Dec 2023 – 5 Dec 2027	31 Dec 2026 (expected)	5 Dec 2027 (expected)	New rules expected: Net Zero plans and public disclosure may apply.

Each phase requires submission of a new energy audit or ISO 50001 certification update, regardless of past compliance.

Phase 3: Key Features and Follow-Up Requirements

Although Phase 3 has closed, it introduced important changes that continue to affect organisations now and into Phase 4.

Key Changes Introduced in Phase 3:

• Standardisation of audit methodologies

• Requirement to submit Energy Intensity Ratios

• Greater alignment with net zero planning

• Mandatory follow-up actions (see below)

Phase 3 Follow-Up Actions (Now Mandatory)

For organisations not fully certified under ISO 50001, three follow-up actions are now mandatory after Phase 3 compliance:

1. Action Plan

Due: 5 December 2024

Details what energy-saving measures will be implemented from audit findings. Must be board-approved.

2. Progress Report 1

Due: 5 December 2025

Covers progress on implementing the Action Plan, with data and board sign-off.

3. Progress Report 2

Due: 5 December 2026

Final update on what actions were implemented and the outcomes.

These submissions must be made digitally through the government’s online portal.

What to Expect in ESOS Phase 4 (2024–2027)

Phase 4 officially began on 6 June 2024, with the next compliance deadline on 5 December 2027.

Key Expected Features:

• Mandatory implementation reporting: Organisations must disclose what they did with the audit findings.

• Digital submission of data and evidence.

• Enhanced audit standards: More consistent and verifiable methodologies required.

• Net Zero integration: Stronger encouragement to align ESOS audits with decarbonisation planning.

Organisations should start preparing early by:

• Scheduling audits well before 2027

• Securing a registered Lead Assessor

• Developing systems to track energy-saving actions and benefits

The Role of ESOS Lead Assessors

Every ESOS submission (unless ISO 50001 certified) must be reviewed and signed off by an approved Lead Assessor, who ensures the audit complies with regulations and is technically sound.

Approved bodies include:

• Energy Institute (EI)

• IEMA

• CIBSE

• Other UK-recognised professional registers

Lead Assessors must work with internal teams to verify findings, evaluate opportunities, and ensure the quality of the report submitted.

Penalties for Non-Compliance

Failure to comply with ESOS, either by missing deadlines or failing to submit Action Plans and Progress Reports, can lead to significant penalties:

Type of Non‑Compliance	Fixed Penalty	Daily Penalty	Additional Enforcement
Failure to submit notification by deadline	Up to £5,000	Up to £500 per day (max 80 days).	Public naming on GOV.UK
Failure to maintain adequate records	Up to £5,000	Costs of EA auditing compliance.	Public naming
Failure to undertake ESOS assessment/audit	Up to £50,000	Up to £500 per day.	Enforcement notice; public naming
Continued non‑compliance despite notices	Up to £50,000	Up to £500 per day until action taken	Public naming
Submission of false or misleading information	Up to £50,000	—	Enforcement notices; public naming
Repeat offences within same phase	Cumulative penalties up to £90,000+	—	Increased reputational risk.

What This Means for Organisations

• Missed deadline: An initial fine of up to £5k, plus £500/day for up to 80 days, totalling up to £45k just for delay.

• No audit: Skipping the required energy audit could cost up to £50,000, plus daily fines until compliance.

• Inadequate records: Can trigger both financial penalties and a requirement to cover regulator audit costs.

• Misleading statements: Treated very seriously; same high penalty thresholds apply.

• Repeat breaches: Abuse can escalate to total fines exceeding £90,000 in a single compliance phase.

Benefits of ESOS (When Taken Seriously)

Although regulatory in nature, ESOS can deliver tangible business value:

• Lower energy costs from identified savings

• Improved operational efficiency

• Stronger ESG credentials and stakeholder confidence

• Strategic data to support Net Zero targets, SECR, and TCFD disclosures

When leveraged proactively, ESOS can inform long-term sustainability strategy, not just short-term compliance.

How Energy Guardians Can Help Your Organisation?

Meeting ESOS requirements is not just about ticking boxes, it is about uncovering opportunities for measurable energy and cost savings. Energy Guardians work as your dedicated partner to ensure you not only comply with ESOS but benefit from it.

We provide:

1. Comprehensive ESOS Audits:

Detailed site surveys, data analysis, and operational assessments to pinpoint energy waste and identify improvements with the highest ROI.

2. Expert Compliance Support:

   Managing the process end-to-end, from data gathering to submission, so you meet the 2025 deadline without stress.

   
   

3. Actionable Recommendations:

   Clear, costed roadmaps for energy savings, from low-cost quick wins to strategic capital investments.

4. Implementation Guidance:

Support in sourcing technology, securing funding, and verifying savings after projects go live.

5. Long-Term Energy Management:

Embedding energy efficiency into your operations, ensuring continuous savings year after year.

By working with Energy Guardians, you bridge the gap between compliance and performance improvement. With the next ESOS deadline fast approaching, our expertise ensures you stay ahead of regulations while unlocking lasting efficiency gains and cost reductions.

Delaying could mean rushed assessments, higher costs, or even non-compliance penalties. By partnering with Energy Guardians now, you will have the time to unlock real energy savings while meeting all regulatory requirements.

Call us today on (+44) 7843798078

Email us at Energyguardiansltd@gmail.com

Or visit https://www.energyguardiansltd.com/ to schedule your free initial consultation.

Do not wait until the deadline forces your hand; take control of your compliance and energy costs today.

References:

• UK Government ESOS Guidance

• Environment Agency Briefing on ESOS Reform (2024)

• Energy Institute

• IEMA