ESOS Phase 4 – What You Need to Know

The Energy Savings Opportunity Scheme (ESOS) has been extended for another four years. Following Phases 1-3, it’s no surprise that the next part of the scheme will be known as ESOS Phase 4. Read on as we explain everything you need to know and whether your business is eligible.

What is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a government directive that began in 2014. It is mandatory for certain businesses, to ensure they are making all efforts to increase their energy efficiency and reduce carbon emissions.

The Environment Agency is the scheme’s UK administrator and requires businesses to record and report on their energy consumption. This is split into Phases 1-4, with 1, 2 and 3 now completed.

ESOS Phase 4

The criteria for Phase 4 are similar to Phase 3. Businesses must be based in the UK, have more than 250 employees or have an annual turnover of £44 million. The Phase 4 compliance period will begin on 6^th December 2023, with the qualification date of 31^st December 2026 and final compliance date on 5^th December 2027.

A larger focus will be on reducing carbon emissions and the strategies needed. The ESOS assessor you are using must have more experience that the average employee in carrying out energy audits. Also, ensure that you employ someone who has knowledge on carbon reduction.

Some changes that come with ESOS Phase 4 include:

• A minimum threshold of audited buildings and energy consumption will be created.
• Information on carbon reduction will be available publicly.
• ESOS’s web portal will allow you to report progress annually, as well as record why goals haven’t been reached.
• You can’t rely on Green Deal Assessments and Display Energy Certificates (DEC) to prove your business is being compliant.
• Emphasis will be made that if your business is part of a corporate group and eligible, then this extends to the entire group automatically.

What your business needs to do

To comply with ESOS Phase 4, you must:

• Discover if you’re eligible. You may be by 2026 so make sure you factor that in, even if you aren’t eligible at the moment. If you don’t, you could risk being fined up to £50,000.
• Audit and record your total energy consumption.
• Audit and record your significant energy consumption (figures with huge room for improvement).
• Ensure that your report is reviewed by lead assessors and approved by directors before being signed off.
• Inform the environment agency that you have completed ESOS.

Benefits of ESOS Phase 4

We’ve covered the basic details of ESOS phase 4 and the obligations for eligible businesses, but why should you fulfil those obligations? We’ll start with the most important…

Staying compliant and avoiding penalties

If your business is UK-based with 250+ employees or an annual turnover of £44+ million, you’re obliged to undertake an energy audit. Failure to do so by the deadline can result in a fine of £50,000 plus £500 for every day you stay in violation. That can continue for up to 80 days, meaning the total maximum fine is £90,000.

There is some leniency for new entrants. If Phase 4 is your first ESOS encounter, the penalty may be reduced to £5,000. However, you can’t rely on leniency and £5,000 is still a significant financial hit to most businesses.

Saving money on energy bills

The Environment Agency didn’t launch ESOS just to create hassle for businesses. Its overriding aim is to make you more aware of energy output with a view to reducing energy consumption. By embracing ESOS, you can implement measures to reduce energy usage over time. At a time when energy prices are still sky high, this can lead to a significant cost saving on your energy bills.

Improving your eco credentials

Minimising your energy usage isn’t solely a cost-cutting measure. It also makes your business better for the environment. Using less energy will lower your company’s carbon footprint, so you’re contributing less to global warming and climate change.

In turn, this could mean keeping or attracting more customers. Deloitte found that 28% of customers stopped purchasing from brands because of sustainability concerns. By saving energy through ESOS, you could avoid customers leaving or attract more eco-conscious customers.

Gaining visibility

In addition to the other benefits, ESOS provides better visibility. Rather than letting your energy output go unmonitored, you’ll be staying on top of it and working to reduce your energy output. As a business owner or site manager, that provides much more peace of mind and makes your life a little bit less stressful.

Seeking assistance with ESOS Phase 4

The good thing about ESOS is that you don’t have to go it alone. Your lead assessor can be an internal member of staff, but they can also be appointed externally. This means you can contract ESOS specialists to help your business complete its obligations.

This is especially useful if Phase 4 is your first experience of ESOS. Or maybe you’ve tried to handle ESOS internally in the past and found it difficult to manage. Whatever the case, a tried and trusted ESOS lead assessor can help you maximise the benefits we’ve discussed above, including saving money, going greener and enjoying more peace of mind.

For more information, read our guide on how to choose between ESOS assessors.

How Volta Compliance can help your business

As a business, you are responsible for reporting your energy usage through ESOS. Volta Compliance has expertise in assisting customers with every element of assessment. Our dedicated team of electricians are on hand to carry out your energy audits and will even create a helpful strategy to ensure recommendations are implemented.

To get the ball rolling, call our friendly team today on 0113 436 0402 or email info@voltacompliance.com.