What is ESOS compliance and the ESOS energy audit ?
Qualifying companies and corporate groups containing qualifying companies in the UK, have to notify the Environment Agency of their ESOS Phase 3 compliance by the revised deadline of 06 August 2024.
We provide an overview of the Energy Savings Opportunity Scheme – ESOS Regulations and guidance on the approved ESOS Phase 3 changes, compliance, the ESOS audit and associated ESOS reporting.
Why use us for your ESOS compliance and energy audit requirements ?
Peace of mind that your ESOS lead assessor is a CIBSE accredited energy efficiency consultant and registered on the Energy Institutes Register of Energy Efficiency Experts.
Our ESOS lead assessors have extensive experience of conducting energy efficiency audits, identifying and developing practical and cost-effective energy efficiency reduction opportunities.
We pride ourselves in providing a professional and personalised ESOS compliance service in London and across the UK, and our ESOS lead assessor will work with you to determine your ESOS gap analysis, develop a structured approach to suit your business requirements, conduct the ESOS audits and provide you with an ESOS compliant report and evidence pack.
We will also support you with the registration of an ESOS Phase 3 account within the new Manage your Energy Savings Opportunity Scheme (MESOS) reporting system and submission of your notification of compliance to the Environment Agency.
Energy consumption data gathering has proven to be problematic and time consuming during ESOS Phase 1 and Phase 2, and to overcome this and reduce your time and effort associated with this, we will provide you with a user friendly template which centralises and optimises energy consumption data capturing, analysis, benchmarking and reporting for ESOS and SECR, to significantly reduce time and money spent on your ESOS audit and ensure timely ESOS compliance.
Identifying the key ESOS Phase 3 milestones
The ESOS compliance period for Phase 3 of the Energy Savings Opportunity Scheme, commonly known as the ESOS Phase 3 compliance period lasts for four years and the compliance period was from 06 December 2019 to 05 December 2023. The compliance date was extended from 05 December 2023 to 06 August 2024.
The Environment Agency and Regulators of the Devolved Administrations will not take enforcement action against organisations which qualified for ESOS Phase 3 provided that the organisation satisfied both of the following conditions:
- registration of an ESOS account in the new MESOS reporting system by 05 June 2024, and
- complete and submit your online notification of compliance by 06 August 2024
The regulatory enforcement extension period will cease after 06 August 2024.
The qualification date for ESOS Phase 3 was 31 December 2022, which remains unchanged.
Qualifying organisations need to complete an ESOS audit or an alternative route to compliance and notify the Environment Agency online of compliance by 06 August 2024.
ESOS now includes additional compliance stages following the submission of the compliance notification: ESOS action plans and ESOS annual progress updates.
You must submit an ESOS action plan in the 12 months following the end of each compliance period. The action plan in relation to the ESOS Phase 3 compliance period must be submitted by 05 December 2024.
The period covered by the action plan is the four years following the compliance period (which coincides with the subsequent compliance period). So, for the ESOS Phase 3 compliance period, the subsequent action plan covers the period from 06 December 2023 to 05 December 2027.
The action plan must be signed off by a board level director (or equivalent) and submitted via the MESOS reporting system by the action plan deadline.
You must then submit a progress update in the 12 months following the action plan deadline, which for the ESOS Phase 3 compliance period means the deadline for the first progress update is 05 December 2025, and then a second update in the 12 months following the first deadline, which means the deadline for the second progress update is 05 December 2026. Each progress update relates to the 12-month period preceding the deadline.
You must submit your progress update by the relevant progress update submission deadline through the MESOS reporting system.
We have provided a summary of the approved changes to ESOS Phase 3 from the Department of Energy Security and Net Zero (formerly BEIS) on strengthening ESOS, which can be accessed here Approved changes to ESOS
You can also access an article on ESOS Phase 3 compliance and best practices here, where we review the lessons learnt from ESOS Phase 1 and Phase 2 and share our thoughts on how to get the most benefit from your ESOS audits and ESOS compliance journey.
What is the Energy Savings Opportunity Scheme – ESOS Regulations
The Energy Savings Opportunity Scheme Regulations 2014 - ESOS Regulations is the UK Governments approach to implement the requirements of Article 8 of the EU's Energy Efficiency Directive (2012/27/EU).
ESOS is a mandatory energy audit and energy efficiency identification scheme for large UK undertakings and their corporate groups, with the objective of increasing energy efficiency to improve business profits and competitiveness as well as mitigating climate change.
What is the ESOS qualification criteria
ESOS Phase 3 applies to large undertakings and groups containing large undertakings in the UK which satisfies at least one of the conditions below on the qualification date of 31 December 2022;
Condition 1 - it employed 250 or more people.
Condition 2 - it had an annual turnover of more than £44 million AND an annual balance sheet of more than £38 million.
The balance sheet totals mean the aggregate of the amounts shown as assets in the balance sheet, before deducting both current and long-term liabilities. Therefore, it's the gross assets and not the net assets.
Please note that an organisation qualifies for ESOS Phase 3 if it satisfied the above qualification criteria for at least two consecutive accounting periods within the compliance period.
Corporate grouping for ESOS qualification and participation
Where one entity in a corporate group meets the ESOS qualification criteria for a large undertaking, then all the UK entities within that corporate group i.e. those with the same highest UK parent company will need to take part in ESOS.
In the event where there are more than one highest UK parent company, which share the same overseas parent company, then each would form one participant and will notify the Environment Agency separately of compliance and should include all subsidiaries within their respective corporate group.
However, where there is more than one highest UK parent within a corporate group, then the highest UK parent groups can choose to aggregate and comply together under the same notification, whereby each parent company should agree in writing to participate together and copies of said agreements must be kept within the evidence pack.
ESOS Phase 2 was the second compliance period of the ESOS Regulations and ran from 6 Dec 2015 to 5 Dec 2019, and qualification was based on the status of an organisation on 31 Dec 2018, and every four (4) years after that for each subsequent compliance period.
Qualification for ESOS Phase 3 is more than just meeting the qualification criteria on 31 December 2022, and you can access the article here to learn more about the ESOS Phase 3 qualification criteria and to check if your organisation qualifies.
ESOS requires that your total energy consumption over a reference period of twelve (12) consecutive months be calculated and must include the qualification date of 31 December 2022 for ESOS Phase 3, so the earliest reference period for ESOS Compliance Phase 2 would be 1 Jan 2022 to 31 Dec 2022.
It must however be stressed that the actual ESOS audit can be conducted anytime during the ESOS compliance period for the respective Phases, but the reference period for calculating the energy consumption must include the qualification date and end before the compliance date for the respective Phases i.e. include 31 December 2022 and end before 5 December 2023 for ESOS Phase 3.
Total energy consumption
Under ESOS energy, total energy consumption includes all input energy used in buildings, industrial processes and transport.
Routes to compliance
ESOS Phase 3 participants can choose one or more routes to compliance that cover a minimum of 95% of their total energy consumption, as indicated below;
• ISO 50001 certification
• Display Energy Certificates - DEC
• Green Deal Assessments
• ESOS audit
If you choose to comply with ESOS in full or in part using any of the above certifications, then the certificate has to be valid on the compliance date of a compliance period i.e 05 December 2023 for ESOS Phase 3.
If you are thinking about using your ISO 50001 as a route to compliance, then please read our latest article on using the ISO 50001 Energy Management System as an alternative route to ESOS Phase 2 compliance here.
The role of an ESOS Lead Assessor
All lead assessors must be members of an approved ESOS lead assessor register.
Lead assessors can either carry out the ESOS audit themselves or check that the ESOS audit and assessments done by people who are not ESOS lead assessors meet the requirements.
Overall an ESOS lead assessor must review and sign-off the ESOS audit and consider whether it meets the requirements of the scheme.
Notification of ESOS compliance
For ESOS Phase 3, qualifying UK organisations need to complete and submit an online notification of compliance using the Manage your Energy Savings Opportunity Scheme (MESOS) IT system to their national scheme administrator - the Environment Agency in England, SEPA in Scotland and NIEA in Northern Ireland, by 06 August 2024.
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