ESOS Phase 3 submission deadline extended – what do you need to do?

The deadline for the Energy Savings Opportunity Scheme (ESOS) Phase 3 has been extended to the 5th June 2024, giving businesses longer to prepare for the submission deadline. But what is it that businesses need to do?

What is ESOS?

ESOS is a mandatory government energy assessment scheme that affects up to 10,000 UK businesses. It makes ‘energy audits’ mandatory for large companies. The purpose of these audits is to identify cost-effective energy savings opportunities in participant buildings, industrial processes, and transportation.

Who needs to comply?

As mentioned above, ESOS is mandatory for large companies. A large business is identified as having more than 250 employees in the UK, or it may have fewer than 250 employees but has an annual turnover of over £42.5m and a balance sheet exceeding £36.5m.

It’s also worth stating that a smaller business also needs to comply if it is part of a corporate group containing a large enterprise.

If your business doesn’t meet the ESOS criteria, you are not legally obligated to participate in the scheme. However, it is still worth considering energy efficiency measures as they can provide benefits to your business, including financial and environmental benefits.

What do you need to do?

ESOS works on a four-year cycle, with the qualification date for Phase 3 being the 31st December 2022. If you qualify as a large company on this date, you will need to prepare and submit your ESOS report by the 5th June 2024 (previously 5th December 2023).

Before you can submit your ESOS report, you will need to complete the following:

Gather 12 months of relevant energy and production data to help support the ESOS audit – The 12 months of data must include the qualification date, which is 31st December 2022.
Conduct an energy site audit – depending on how many sites you have you may need to conduct more than one audit.
From the audit you will need to have identified ways to improve the energy efficiency of your business.
The next step is to create your ESOS report that evidences your findings, and provides information on the next steps, which includes timescales.
Finally, if you’ve chosen to write the report yourself, you will need to get a qualified lead assessor to check and sign-off the report before publishing. Or you can hire an external lead assessor to do the whole audit and report, which is something we can help with.

After completing these steps, you can publish your ESOS report by the due date and notify the Environment Agency (EA) that you have complied (ESOS is regulated by the EA).

The whole ESOS submission process can take 8 to 12 weeks to complete, this timescale depends on how many sites need to be audited. It’s also important to keep in mind that the longer you wait, the more difficult it will become to find a qualified lead assessor, and what we have seen with previous deadlines, the longer you leave it, the more expensive it is to submit it on time.

So if you’ve yet to start your submission, now is the time to start thinking about what you need to do, as the June 2024 deadline will be here before you know it.

What happens if you don’t comply?

If you are an eligible company and you do not meet the ESOS criteria, then you risk being penalised by the EA. Your company will also be named publicly as part of the name and shame process. The EA also has the power to impose penalties for each separate breach of the ESOS regulations. These breaches include:

Failure to notify – initial penalty up to £5,000 plus an additional daily penalty of up to £500 for each working day remaining in breach.

Failure to maintain records – initial penalty of up to £5,000 plus a ‘sum representing the cost to the compliance body of confirming that the responsible undertaking has complied with the scheme’. You’ll also need to take steps to solve the breach.

Failure to undertake an energy audit – initial penalty of up to £50,000 plus an additional daily penalty of up to £500 for each working day remaining in breach.

Failure to comply with an enforcement/penalty notice – an initial penalty of up to £5,000 plus an additional £500 for each working day remaining in breach.

False or misleading statement – up to £50,000 penalty.

As you can see, these penalties are substantial sums of money, and once fined, you still need to comply with ESOS or the costs will only increase further.

What’s next for ESOS?

ESOS isn’t going away. The UK government has published plans to set stricter standards for the scheme to align more closely with the UK’s net zero target, and these changes will come into force in Phase 4. This makes it even more important for businesses to ensure they are complying with the scheme and that they are working towards a net zero future. For further information and support with net zero visit our Supporting Net Zero page.