ESOS compliance: A four-step guide towards your share of £1.12 billion

By Dr James Crosby-Wrigley, Head of Sustainability at Advantage Utilities

The Phase 1 submissions deadline of the Energy Savings Opportunity Scheme (ESOS) – the mandatory energy assessment applying to medium and large businesses in the UK was in March. FMs will now be required to submit their first and second progress reviews on actions taken and savings made, and they can also benefit from a share of the £1.12 billion platter of reduced energy bills.

Published data shows that annual energy savings which can be associated with the ESOS programme are roughly 1.65TWh from buildings, 1.51TWh from industrial processes, and 0.52 TWh from fuel transport. For context, this is roughly akin to the entire yearly electricity consumption of Mauritius. If this continues, it is estimated that from 2024 to 2037, a total of 28TWh of energy will be saved, with those participating having a share of the significant financial savings and associated carbon emissions.

Past, present and future plans

Legislatively, the ESOS programme was initially driven by Article 8 of the EU Energy Efficiency Directive and after a dramatic exit from the EU, the UK continued the programme.

In the short term, compliance will be achieved through a number of phases. This year, we find ourselves post-Phase 3 submission and under a voluntary annual ‘Energy Action Plan’ and continued ‘Progress Review’ submission programme through to Phase 4. In the next two years, facilities managers will need to submit their first and second progress reviews on actions taken and savings made. With ESOS Phase 4 and ESOS 5 also on the horizon, what are the main reasons the government has continued this enforced compliance? Simply put, there are two:

• To enable enhanced financial sustainability by identifying cost-saving options
• To empower businesses to undertake carbon-reducing actions as part of the UK’s journey to net zero

But what will the future of the ESOS programme look like? Early news certainly indicates that there will be a Phase 5 (auditing 2027 to 2031). It will likely become more in-depth, with net zero considerations (e.g. PAS 51215-2:2025) included. Furthermore, there is an expectation that the scope of companies which are mandatory participants may increase.

Comply or fall behind

Although the Environment Agency, which administers ESOS where a company’s buildings, industrial processes, and transport are all appraised for their operational efficiency, has implemented a ‘name and shame’ approach through public disclosure of those who haven’t adhered to the requirements, there is no apparent financial or legally punitive implication for non-compliance. Therefore, many businesses will question – why should we comply? The answer is simple, they should comply, or they risk falling behind their competitors.

With the guidance of reputable and experienced ESOS professionals, the auditing and review process is painless while the adoption of the identified savings is exciting. When delivered properly, instantaneous financial savings can be observed and carbon emissions reduced. To realise these carbon and financial savings, as well as ensure compliance, businesses should take the following steps:

• Comprehensive energy audits – The first step in outlining effective compliance and reliable savings begins with understanding current energy consumption. In-depth energy audits where an organisation’s energy use is analysed across all sites.
• Addressing inefficiencies and uncovering opportunities – Enabling businesses to save on costs while improving sustainability. By highlighting practical energy-saving measures, businesses can have confidence in their roadmap to reduce consumption and boost operational efficiency.
• Expert compliance reporting – All aspects of reporting must be double-checked to ensure organisations meet their regulatory requirements accurately and on time. This includes collecting data as well as compiling evidence packs.
• Reporting and submission – Automated reporting and submission enables businesses to easily submit an ESOS notification to the Environment Agency where required.

Overall, the message of this document to facilities managers is simple. They are encouraged to comply and prioritise the ESOS process, champion and implement the identified energy and carbon savings solutions, taking pride in boosting their facility’s competitive advantage.