ESOS Phase 3 – everything you need to know

Energy Procurement and Management

With the closing date for the consultation process for ESOS Phase 3 now expired, here’s a reminder about the scheme and who is eligible.

What is ESOS?

ESOS stands for the Energy Savings Opportunity Scheme and was introduced by the UK government’s Department of Energy and Climate Change (DECC) on 17 July 2014 to help promote business energy efficiency.

It is a mandatory energy assessment scheme for organisations in the UK that meet the qualification criteria and is administered in the UK by the Environment Agency.

Eligible companies must undergo an assessment of energy use and energy efficiency opportunities and submit an energy report to the Environment Agency every four years.

Who is eligible?

You must take part in ESOS if your organisation, or any UK undertakings in your group, qualifies as a large undertaking on the qualification date.

The ESOS definition of a ‘large undertaking’ is:

  • You have over 250 members of staff, or
  • A turnover of over £44.1m, or
  • An annual balance sheet of over 43 million Euros (£37.9m), or
  • You are an overseas organisation with over 250 employees in the UK, or
  • Your company is part of a larger organisation, which falls into any of the above.

What are the benefits?

The scheme is estimated to lead to £1.6 billion net benefits to the UK (ESOS Impact Assessment DECC0142, 24 November 2014), with the majority of these being directly felt by businesses as a result of energy savings.

There are also many other business benefits to improving energy efficiency, such as improved working conditions for staff, improved customer experience, more efficient processes, reduced maintenance costs, and improved business image.

Energy efficiency is also a key measure for the UK in meeting interim carbon budget targets. BEIS’s head of business and industrial energy efficiency, tax and reporting, Gary Shanahan, noted that ESOS has helped UK businesses collectively save 3TWh of energy each year, on average, since Phase 1 commenced in 2014.

What was the aim of the recent consultation?

The Department for Business, Energy and Industrial Strategy (BEIS) ran a consultation process to seek views on government proposals to update and improve the Energy Savings Opportunities Scheme (ESOS).

Depending on the outcome, come net-zero targeting might be incorporated into the scheme, and the scheme might also apply to medium-sized businesses.

What are the penalties for failing to comply?

Fines for non-compliance can be up to £90,000. The Environment Agency has handed out hundreds of enforcement notices in the first two phases with the names of the companies falling foul of the deadline named on a list. So as well as a financial cost, there is reputational damage to consider as well.

When is the ESOS 3 deadline?

The 5 December 2023 deadline may seem distant but gathering energy consumption data can be time-consuming, especially for companies spread over a number of sites or those who have undergone a number of significant changes between phases.

If entering ESOS as a first-time company, it is also wise to start the process early.

Become EM-Powered in the face of energy price rises

EM-Powered - Monthly Consumption

With industry experts warning that the recent surge in energy prices might be a sign of things to come, it is more important than ever for businesses to manage their energy costs more effectively.

Proactive energy procurement and the introduction of energy efficiency measures are two ways of tackling the problem of rising energy costs but, first, companies need to fully understand their energy consumption behaviour.

A reliable way of doing this is through the use of an energy management portal, such as our own bespoke software, EM-Powered.

With its ability to collect and aggregate live energy data, EM-Powered enables users to quickly put an estimated cost against energy consumption, making it an invaluable asset at times when the market is shifting so quickly.

Also, EM-Powered enables facilities managers and business owners a better understanding of which times and which areas of the operational side of their business use the most energy, enabling them to identify potential savings areas.

Reporting these findings to a wider audience could not be easier, either, as PDF documents with all the necessary information can be downloaded in PDF format and tailored to the user’s needs.

Given a five-star rating by one of our long-established clients, Restore, EM-Powered is available to all Energy Management customers.

Prime Minister Johnson in green energy pledge

Wind Turbines

As he prepares to host world leaders next month at a crucial UN climate summit, Prime Minister Boris Johnson has vowed to shift all energy production in the UK to ‘clean’ sources by 2035.

By going totally green, the U.K would be at the forefront of the drive towards a decarbonised global economy as fossil-fuelled power stations would become totally redundant.

The renewables goal would also offset the U.K’s reliance on imported energy, which has left the country vulnerable to sharp spikes in energy prices.

“Looking at what we can do with other renewable sources, carbon capture and storage, with hydrogen, potentially we think we can get to complete clean energy production by 2035,” the UK leader said.

“It will mean that for the first time the UK is not dependent on hydrocarbons coming from overseas, with all the vagaries in hydrocarbon prices and the risks that poses for people’s pockets.

“The consumer will be reliant on our own, clean power generation which will help us also to keep costs down.”

With renewables, especially offshore wind, set to play a key role in the shift to clean power, Johnson’s words will have to be followed by swift action.

Recent analysis found UK renewables growth is at its slowest since 2010, inhibiting the green energy procurement options available to customers.

The U.K needs more days like Easter Bank Holiday Monday in April which was declared the greenest yet in terms of energy production. A combination of sunny and windy conditions led to 80 percent of the energy generated coming from low-carbon sources.