Energy Savings Opportunity Scheme (ESOS) Phase 4

ESOS was first introduced in 2014 and 12 years later we’re about to go into Phase 4 having had amended Regulations come into force on 22nd July this year. There have been numerous changes to the Scheme over the previous three phases and this tightening of the duties associated with the Regulations has continued into Phase 4.

What has not changed
• The thresholds whereby ESOS obligations come into force, have remained constant since 2014 – ie. organisations employing 250 people or more and / or have an annual turnover in excess of £44m and an annual balance sheet total in excess of £38m.
• For any organisation meeting the threshold they are required to complete an ESOS assessment which measures the total energy consumption (of their buildings, transport, operational processes and other uses not otherwise included).
• The assessment must be completed by an accredited Lead Assessor (could be an internal or external person so long as they’re a member of an approved register of assessors).
• The report must contain costed energy saving opportunities.
• The report must be signed off by the Company Board.
• The report must be submitted to the Environment Agency.

Reporting on the Impact of Energy Saving Measures Taken
Initially an ESOS report was submitted to the EA with no obligation or requirement to implement any of the actions identified. The assumption was that if the Company Board had costed options for how they could save energy (and thus money too) they would of course, implement them. The reality however, was often that the ESOS report stayed in a drawer once signed until the next Phase when the Lead Assessor could pull out the previous report and review the costed options again.

So ESOS developed and in Phase 3 obligated organisations had not only to file a specific ESOS Action Plan, but also report on progress of achievement of those actions on an annual basis. This review and action planning process has been tightened further for Phase 4.

In Phase 4 companies must include an action plan review in their ESOS report, including of the Phase 3 actions. This review will not be published but must:
a) identify measures in the Phase 3 plan that have not been implemented, and are not expected to be implemented, before 5th December 2027 (the end of the compliance period for Phase 4); and
b) provide an explanation of why those measures were not implemented.

For the tighter Phase 4 Action Plan and Annual Progress Reviews, the following information will be required:-
a) estimate of energy savings achieved;
b) the measures implemented to make savings;
c) the energy saving category (buildings, transport, operations, etc) for each measure;
d) the estimated energy savings achieved by the implementation of each measure (in kWh).

All in all, the drive is on to really push an identification of action to reduce energy consumption and to push companies to explain the reasons for why the actions have not achieved the reductions anticipated. Plans for Net Zero targets within an ESOS report have been delayed to Phase 5 but it is clear of the direction being taken –
• understand the detail of your energy consumption;
• plan action to reduce this;
• monitor the planned actions; and
• have real figures of savings (both fiduciary and kWh) achieved.

Compliance Routes
Phase 4 also sees a tightening of the possible routes to compliance and having a Green Deal Assessment or a Display Energy Certificate are no longer acceptable routes. Only ISO50001 is now an option as an alternative compliance route, with the following provisos –
a) a certificate must have been issued on or after the start date of the compliance period (6th December 2023 for Phase 4). Also, the certificate must remain valid on the compliance date (5th December 2027 for Phase 4).
b) where an ISO 50001 certification does not cover either the significant or total energy consumption, you must also carry out an energy audit to the extent that both those compliance routes together cover the significant or total energy consumption.

If you want to know more about ESOS please do call Deb Cairns-Stoll on 01743 343403 or email deb@e4environment.co.uk .