Energy Savings Opportunity Scheme (ESOS): Phase 4

A quick recap: What is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a government initiative designed to enhance energy efficiency across large UK companies by auditing energy consumption and identifying cost-effective ways to reduce it.

We are now in Phase 4 of this 4-year cycle. The qualification date for Phase 4 is 31^st December 2026, with the compliance period underway following the completion of phase 3. Any organisation that qualifies for ESOS within this timeframe must meet the scheme’s requirements and submit their compliance notification by the final deadline of 5^th December 2027.

Organisations in scope must measure total energy consumption across buildings, transport and industrial processes, conduct energy audits, identify cost-effective energy saving opportunities and submit compliance notification to the Environment Agency.

Early preparation for ESOS Phase 4 requirements helps reduce compliance risk, avoid financial penalties and align energy strategy with wider net zero and decarbonisation objectives.

Do You Qualify for ESOS Phase 4?

ESOS applies companies in the UK that meet the certain criteria on 31^st December 2026, and you will need to comply if you have:

• More than 250 employees in the UK
• A turnover greater than £44m & a balance sheet over £38m
• Your company is part of a larger organisation, which falls into any of the above

Whole corporate groups also qualify if at least one UK group company meets these measures.

Key ESOS Phase 4 dates

Changes to Phase 4

The following changes have been announced as changes to Phase 4 as detailed in the government’s public ESOS consultation.

The Phase 4 guidance introduces several important updates that strengthen reporting and audit requirements:

• Mandatory reporting requirements: Participants must now report total energy consumption in kilowatt hours (kWh) and calculate energy intensity ratios for buildings, transport, industrial processes, and other uses. They must also provide estimated energy savings since their last compliance period.
• Enhanced assessment and audit rules: New participant checklists, expanded energy type definitions, updated estimation methods, and minimum audit standards have been introduced. This ensures greater consistency and accuracy in how savings opportunities are identified and reported.
• Action plans and progress updates: Reporting of action plans is maintain and expanded with further requirements on implementation updates needed, outlining planned energy efficiency measures and expected savings. Further progress updates will then be required in December 2028, 2029 & 2030 to track implementation & progress.
• Evidence retention: Records must be kept for two subsequent compliance periods, ensuring better traceability and accountability.
• New notification system: The Smart Survey system is being replaced by the MESOS platform, which includes expanded data requirements.
• Removal of alternative compliance routes: Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) will no longer be accepted as compliance routes in Phase 4.

Key ESOS Phase 4 dates

Following the recent changes to the ESOS scheme organisations that are required to complete the Energy Savings Opportunity Scheme, will also need to complete an ESOS Action Plan for submission.

Net Zero reporting & Phase 4?

Following a public consultation on changes to ESOS coupled with delays to the introduction of Phase 3 guidance, in order to give sufficient time for suggested changes, proposals around the introduction of mandatory net zero requirements have been postponed until Phase 5. However, voluntary reporting standards are provided.

Voluntary reporting of net zero assessments in Phase 4 follows a new PAS (Publicly Available Specification) standard that has been developed with the British Standards Institution (BSI). This will include new standards reviewing combined energy and decarbonisation assessments and outline the competencies for lead assessors and assessment teams.

How can we help?

Knight Frank offers a comprehensive ESOS compliance service, ensuring your organisation meets all regulatory requirements while identifying energy-saving opportunities.

Our expert team offers:

• Guidance on ESOS legislation and its implications for your business.
• Analysis of company and energy data to determine ESOS requirements, including portfolio benchmarking and defining the scope of works.
• The development of tailored plans, including asset-specific ESOS level energy audits, transport, and process reviews to uncover cost-effective energy-saving measures.
• Specific ESOS level energy audits, including investment grade interventions with estimated carbon and financial savings.
• The opportunity to go beyond compliance, by targeting high-risk assets and aligning energy audits as part of a Net Zero pathway.
• Preparation of a corporate summary report and evidence pack with energy and carbon savings, presented for board-level sign-off.
• Completion and submission of ESOS compliance to the Environmental Agency.
• Manage annual Action Plan Summary reporting including submission.

Working alongside the experts will ensure your Phase 4 work and action plan submission goes smoothly – get in touch with our experienced team today.

Find out more about our ESG consultancy services.