As energy efficiency becomes increasingly important, the Government’s Energy Savings Opportunity Scheme (ESOS) offers business leaders, corporate groups, as well as building and facilities managers a clear framework to assess and improve energy consumption across their organisations. The scheme is being phased in with ESOS Phase 3 currently underway. Complying with ESOS Phase 3 not only ensures regulatory adherence, but also presents an opportunity to reduce operational costs and achieve sustainability goals.
By taking proactive steps now, businesses can access financial and environmental benefits, ensuring a competitive edge while preparing for future phases. This guide outlines how to make the most of ESOS compliance, in particular focussing on formulating your own ESOS Action Plan and turning it into a strategic advantage for your organisation.
Understanding ESOS and Its Importance
What is ESOS?
The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment programme established by the UK government. It requires large organisations that meet the qualification criteria to identify cost-effective energy-saving measures, supporting the nation’s efforts to enhance energy efficiency and reduce carbon emissions. Compliance with ESOS ensures businesses take proactive steps towards sustainability while also achieving potential cost savings.
ESOS operates in four-year compliance phases, with Phase 3, the third compliance period of the scheme, currently underway. It requires large organisations to assess energy use, identify efficiency opportunities and submit an ESOS Action Plan (with progress reporting) by the extended deadline of 5th March 2025.
Why are ESOS Action Plans critical for Phase 3?
Action Plans are essential in ESOS Phase 3 as they provide a structured approach to implementing identified energy-saving opportunities. These plans not only ensure compliance with regulatory requirements but also demonstrate a commitment to environmental stewardship. By prioritising actionable recommendations, businesses can streamline improvements, reduce operational costs and support the UK’s broader net-zero targets. An effective Action Plan transforms ESOS compliance into a strategic advantage.
ESOS Phase 3 Deadlines and Requirements
Who needs to submit an ESOS Action Plan?
Organisations with over 250 employees or those exceeding an annual turnover of £44 million and a balance sheet total above £38 million as of 31st December 2022 are obliged to comply with ESOS by submitting an Action Plan.
Key documents and components for compliance
Compliance involves conducting energy audits across buildings, processes and transport to identify cost-effective energy-saving measures. Audits must be based on 12 months of verifiable data, beginning no earlier than 6th December 2018 for the Phase 3 compliance period.
Organisations are required to prepare an ESOS report, which must be shared with the Corporate Group where applicable. After having undertaken an ESOS assessment and having checked that your organisation is compliant with its’ obligations, your organisation must then use the Managing your ESOS system to submit a notification of compliance to the Environmental Agency. For Phase 3 onwards, organisations are required to also develop an ESOS Action Plan outlining recommended improvements, and submit annual progress updates.
Submission deadlines and compliance timeline
The compliance notification deadline for the current (third) compliance period was originally 5th June 2024, with Action Plans due by 5th December 2024. However, the Environment Agency extended the grace period for submissions to 5th March 2025. Timely compliance ensures regulatory adherence and cost-saving benefits. Annual progress reports deadlines are due 12 months after the ESOS Action Plan deadline and then 12 months after the submission deadline for the first progress update i.e. 5th December 2025 and 5th December 2026.
How to Create an Effective ESOS Action Plan
Assess energy consumption and efficiency opportunities
To begin, analyse your organisation’s energy consumption across all areas. Use data from the ESOS audit to identify inefficiencies and areas with the highest energy-saving potential. A detailed assessment provides the foundation for targeted improvements.
Evaluate ESOS recommendations
Examine the recommendations from your ESOS compliance audit to determine which measures align with your organisation’s goals. Prioritise actions that offer the greatest return on investment and long-term savings while considering ease of implementation and operational impact.
Set clear, realistic goals and timelines
Establish specific, measurable goals that reflect your organisation’s energy efficiency priorities. For each recommendation, create a timeline that outlines when and how it will be implemented. Realistic planning ensures steady progress and maintains accountability.
The ESOS regulations stipulate that progress updates must be submitted 12 months after the action plan deadline, with another update required 12 months thereafter. These updates will be made publicly accessible, so it is essential that your action plan is both realistic and achievable.
Include voluntary measures to maximise benefits
While compliance is mandatory, consider including voluntary measures to enhance energy efficiency further. These could involve adopting renewable energy sources, upgrading technology or introducing behavioural changes among staff. Voluntary actions can demonstrate leadership in sustainability.
Break down energy savings by area and sector
Segment your ESOS Action Plan to show potential savings by category, such as heating, lighting, transport or machinery. Breaking this down by sector provides clarity on the impact of each initiative and helps track progress effectively.
Common Challenges and Solutions
Overcoming technical barriers to energy efficiency
One of the main challenges is overcoming technical barriers, such as outdated equipment or complex infrastructure. To address this, invest in energy-efficient technologies, conduct regular maintenance and explore energy-saving solutions that suit your operations. Working with specialists can help overcome these barriers.
Addressing financial constraints with available funding or incentives
Financial limitations can hinder the implementation of energy-saving measures. However, various funding opportunities and government incentives are available to offset the initial costs of energy efficiency projects. Look for grants, low-interest loans or tax incentives to help finance upgrades and improvements.
Ensuring continuous improvement and long-term compliance
Achieving compliance is not a one-time effort. Ensure continuous improvement by regularly monitoring energy consumption, reviewing the effectiveness of implemented measures and updating your Action Plan as necessary. Setting long-term energy goals and incorporating energy management into your organisation’s culture will help maintain compliance and drive sustainable change.
Maximising the Impact of Your ESOS Action Plan
Leveraging energy savings to achieve broader sustainability goals
An effective ESOS Action Plan not only reduces energy consumption, but can also contribute to wider sustainability objectives. By implementing energy-saving measures, you help lower carbon emissions, reduce operational costs and ultimately demonstrate your commitment to environmental responsibility. Aligning your energy strategy with broader sustainability goals can enhance your organisation’s reputation and competitiveness.
Preparing for future ESOS phases
Planning for future ESOS phases ensures ongoing compliance and improvement. By continuously tracking energy use, identifying new opportunities for savings and updating your ESOS Action Plan regularly, you can stay ahead of regulatory changes and further reduce energy consumption. Proactively preparing for future phases ensures that your organisation remains energy-efficient and continues to meet evolving ESOS requirements.
Complying with ESOS Unlocks Immediate Benefits
By creating a comprehensive Action Plan and adhering to deadlines, businesses can not only meet regulatory requirements but also gain significant long-term savings and environmental benefits. Overcoming challenges like financial constraints and technical barriers, while preparing for future phases, ensures that energy efficiency remains a key focus. Through continuous improvement and proactive planning, organisations can maximise the impact of their ESOS Action Plan and maintain long-term compliance.
The experts at Cube Controls are uniquely skilled in assisting clients with ESOS related work, both deploying cost effective tools to analyse energy usage and suitable mitigating measures to bring energy usage down. Contact us today to discuss how we can help you with your ESOS Action Plan.
Cube Controls is an established and experienced supplier of Building Management Systems, specialising in the design and set up of bespoke environmental and energy control programmes for commercial buildings and property.
To find out how Cube Controls can support you at all stages of design and consultancy, installation and modification and maintenance of your building management systems contact our expert and friendly team on 01903 694279 or sales@cubecontrols.co.uk.
