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Following the extended Energy Savings Opportunities Scheme (ESOS) phase 3 deadlines, there remain critical actions to be taken by businesses to remain compliant, warn Lead Assessors Matt Chadbourn and Sophie Sibley of Synergie Environ
Although the ESOS submission deadline has now passed, companies are still receiving enforcement notices from the Environment Agency, with some companies unaware that they even qualified for the scheme. As such, clear understanding of the requirements is more vital than ever. ESOS requires organisations to identify and quantify energy-saving measures and applies to companies with a headcount of 250+ people and/or a turnover above £44 million plus an annual balance sheet above £38 million. From Phase 3 of ESOS onwards, there are now extra requirements in addition to the traditional submitted report, the deadlines for which passed in December 2024. These are the ESOS Action Plans and ESOS Annual Progress Updates.
An action plan must set out what measures you, as a business, aim to implement to improve your energy efficiency. The Action Plan should include: when you plan to install the measures; whether these were recommended during your ESOS audit; the energy savings you expect to achieve due to implementing these measures over the next ESOS phase; a breakdown of the predicted savings by organisational purpose; and how these savings were estimated.
As a business, you do not need to justify why you chose one measure and not another. However, in each of your annual progress updates, you must provide an update on each of your chosen energy savings measures and provide explanation for any that have not been achieved.
Why must I do an Action Plan?
Not doing so could carry both financial and reputational consequences. The Environment Agency states that the purpose of the Action Plan and Progress Updates are to increase the participants’ accountability for reducing their energy use.
The ESOS scheme so far is estimated to have resulted in annual energy savings of 3.68 TWh across Buildings, Transport and Industrial Processes. The Phase 3 changes are predicted to unlock additional savings of 28TWh across all participants.
It is acceptable to submit an Action Plan that states you do not intend to carry out any actions to reduce your energy consumption. If, part way through your progress period, you then decide to implement measures, these can then be reported in the next progress update.
What should be included in the Action Plan?
An Action Plan can be any number of measures you wish to implement, and as mentioned previously this can be “none”.
Each measure in the plan should include:
- When you expect to have implemented the measure (month and year).
- Whether the measure was from an energy audit or from a different compliance route.
- An estimate of the energy you expect to save from this measure by the next compliance period (which ends on the 5th December 2027).
- The method and source of the data used for the estimations.
If the company’s compliance route was an energy audit signed off by an ESOS Lead Assessor, then much of this required information should be available from the audit. However, a notable addition is that the company must define the implementation timeframe for each action.
Note, all the content of the Action Plan is published. If you have commercially sensitive information, you will need to take this into consideration.
The UK government has also indicated that the requirements to report against action plan commitments annually will still go ahead, and that the burden will be on the company to explain and justify where commitments have not been met. Companies must therefore ensure that the energy saving projects in their Action Plans are realistic in their scope and timescale, have buy-in from all levels of management, and have a clear path to implementation identified.
How much time do I have?
Originally Action Plans were required to be submitted by the 5th December 2024. However, the Environment Agency have stated they will accept Action Plans that are submitted up to the 5th March 2025.
What’s the consequence of not submitting?
It is always advised to comply with Environment Agency requirements, as not doing so can incur heavy fines of up to £50,000, with additional daily penalties until compliance is achieved. Further, the Environment Agency publishes the names of companies that have not met their ESOS obligations. The Environment Agency will also be publishing all Action Plans – therefore if you do not submit one, it is assumed your non-compliance will also be published.
When will Net-Zero Requirements come into play?
It was the government’s initial intention for participants to include net-zero considerations in their Phase 4 ESOS audit (2023 – 2027). Due to Phase 3 delays, the government has decided to postpone this net-zero component to Phase 5 ESOS (2027 – 2031).
Companies should look to PAS 51215-1:2025 Energy and decarbonization assessment for guidance on producing a plan to achieve net zero.
The Phase 4 qualification date and criteria remain unchanged, and the qualification date is 31st December 2026. Companies would be wise to start preparing in advance of this date.
