Energy Savings Opportunity Scheme (ESOS): what businesses need to know

Large organisations should be aware of their obligations under the Energy Savings Opportunity Scheme (ESOS), a mandatory UK energy assessment programme designed to help businesses identify opportunities to improve energy efficiency and reduce energy costs.

What is ESOS?

The Energy Savings Opportunity Scheme requires qualifying organisations to measure their energy consumption, identify areas where energy savings can be made and notify the regulator that they have complied with the requirements of the scheme.

The aim is to encourage businesses to understand how energy is used across their operations and identify practical ways to improve efficiency.

Who needs to comply?

ESOS generally applies to UK organisations that, on the relevant qualification date:

• Employ 250 or more people; or
• Have an annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million.

Businesses that are part of a corporate group should note that if one company within the group qualifies, the entire UK group may fall within the scope of the scheme.

Public sector bodies are generally exempt.

What does compliance involve?

Qualifying organisations must:

• Calculate their total energy consumption.
• Identify areas of significant energy use.
• Carry out energy audits or use an approved alternative compliance route, such as ISO 50001 certification.
• Identify practical energy-saving opportunities.
• Obtain director-level approval of the assessment.
• Submit a compliance notification to the regulator.

Key ESOS deadlines

ESOS operates in four-year compliance cycles. The current phase is Phase 4, with a qualification date of 31 December 2026 and a compliance deadline of 5 December 2027.

Businesses that may fall within the scope of the scheme should review their position well in advance of these dates.

Why is ESOS important?

While compliance is a legal requirement for qualifying organisations, ESOS can also deliver significant business benefits. An energy assessment can help organisations:

• Reduce energy consumption and operating costs.
• Improve sustainability performance.
• Strengthen environmental credentials.
• Support long-term carbon reduction objectives.
• Identify opportunities for operational efficiencies.

Penalties for non-compliance

Organisations that fail to meet their ESOS obligations may face financial penalties. Regulators also have the power to publish details of non-compliant businesses.

As a result, organisations should assess their status early and ensure that any required audits, assessments and reporting processes are completed on time.

How we can help

If you believe your business may be affected by ESOS, we can help you understand your obligations, review your qualification status and direct you to appropriate specialists to support compliance. For further information, please contact us.