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The Energy Savings Opportunity Scheme (ESOS) has long been a fixture in the UK’s energy efficiency landscape. As businesses gear up for ESOS Phase 4 (2023-2027) and deadlines approach for Phase 3’s tightened regulatory demands, ESOS compliance can no longer be treated as a box-ticking exercise. For finance and leadership teams, this phase is less about obligation and more about opportunity – the chance to reduce costs, boost resilience and stay ahead of shifting net zero regulations in the UK.
What is ESOS and Why Does It Matter?
ESOS is a mandatory energy assessment scheme for large UK undertakings. It requires organisations to conduct energy audits every four years and identify cost-effective energy reduction and efficiency opportunities, ultimately leading to decreased carbon emissions. Now in its fourth compliance period, ESOS Phase 3 came with critical ongoing changes that redefined what businesses must do to remain compliant – and competitive.
ESOS Phase 3: What’s Changed?
From extended scopes to increased scrutiny, here’s what’s new:
Action Plans: From Phase 3 onwards, organisations are now required to produce an Action Plan setting out the measures they intend to implement to improve energy efficiency for the four years following the compliance period (2023-2027). For each measure, organisations must specify when they intend to implement it, whether it was recommended through an ESOS audit, what energy savings (in kWh) the measure is expected to achieve over the four-year period and how the savings were estimated.
The Action Plan submission deadline was 5 December 2024, however, to assist with preparing this additional requirement, Action Plans submitted by 5 March 2025 were accepted by the Environment Agency (EA).
Progress Updates: Following submission of the Action Plan, organisations are required to submit an annual Progress Update against their action plan commitments in the two subsequent years (PU1 and PU2). In the Progress Update, organisations must provide an estimate of the energy savings that have been or will be achieved during the previous 12-month period for measures implemented since the Action Plan was submitted. These can be measures included in the action plan or new measures, but not those with future implementation dates. The deadlines for submitting PU1 and PU2 are 5 December 2025 and 5 December 2026, respectively.
Stricter Standards: The EA has tightened its expectations. This includes better data quality, more robust methodologies and clearer demonstration of energy-saving opportunities. All information submitted in the Action Plans and Progress Updates will be published by the EA six months after the submission deadlines and from Phase 3, the EA now has the power to enforce both financial and publication penalties for non-compliance.
ESOS Phase 4: What’s New?
Action Plans: Organisations must continue to produce an Action Plan following the submission of the compliance notification.
Progress against Phase 3 Action Plan commitments must be included within the Phase 4 ESOS assessment. Where Action Plan commitments have not been met, participants must provide an explanation why. This means it is key to actively work towards energy efficiency and keep track of your ESOS Action Plan progress.
Compliance Deadlines: The notification of compliance deadline for Phase 4 is 5 December 2027, and organisations must submit their assessment to the MESOS portal by this date to avoid penalties.
Removal of certain compliance routes: Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) will no longer be accepted as ESOS compliance methods.
Net Zero Focus and SECR Alignment: The UK government had previously announced that the scheme would be refocused to require Net Zero considerations as well as energy efficiency, and that the qualification criteria would be changed to better align with the Streamlined Energy and Carbon Reporting (SECR) framework. However, these changes have been postponed until Phase 5 (2027-2031).
Therefore, the current criteria for qualification, organisations with over 250 employees or annual turnover exceeding £44 million, will remain. Although Net Zero reporting is not mandatory, businesses can include Net Zero considerations in their Phase 4 audits as the functionality will be available in the MESOS portal, in preparation for Phase 5.
What Businesses Need to Do Now
Time is short. Organisations should have submitted their ESOS Phase 3 Action Plan by 5 March 2025 and be collating data for Progress Update 1 (PU1) due 5 December 2025. The MESOS portal functionality for PU1 submissions opened in mid-June, so businesses can already begin filing.
With annual ESOS submissions now required from Phase 3 onwards, these changes make it critical to get your energy audits in order, monitor your action plan progress and prepare documentation ahead of time.
1. Understand Your Scope
Start by clarifying which parts of your organisation are in scope. Are your group structures or overseas entities included? Early scoping avoids costly surprises.
2. Leverage Existing Data
Don’t start from scratch. Use SECR data, energy bills, procurement records and previous ESOS reports to inform your current audit. Platforms like True help centralise and analyse this data quickly, simplifying compliance and planning.
3. Treat ESOS as Strategic, Not Just Statutory
Your energy audit should be a springboard, not a spreadsheet. The insights from your ESOS report can reveal where your business is wasting energy, how you can reduce emissions and what projects offer real ROI. There are strong commercial benefits to delivering your ESOS Action Plans, if the plans are accurately modelled and executed strategically.
“Having True will be a one stop to understanding a site’s requirements and the energy initiatives they are reviewing with direct and accurate measurement of the true return on investments.”
- Colin Farrell, Trelleborg
4. Build a Business Case for Investment
ESOS is your gateway to green capital allocation. By quantifying potential savings and carbon reductions, you’re armed with credible data to justify sustainability investments to boards and stakeholders. As qualifying businesses are mandated to comply with ESOS, you can use this to support securing buy in from stakeholders for your projects.
“With True you can get that calculation in a matter of seconds.”
- Peter Vaughan, Oakland International
Ready to Get Ahead?
We’re hosting a free expert webinar diving into ESOS Phase 3 Progress Updates, delivering Action Plans and what businesses need to do to prepare themselves for Phase 4. It’s tailored for finance and operational leaders who want strategic clarity and actionable insights.
