For UK businesses that qualify for the Energy Savings Opportunity Scheme (ESOS), compliance is legally required. Failure to meet obligations can result in financial penalties and the public disclosure of your organisation’s non-compliance.
Depending on the breach, ESOS compliance penalties can include an initial fine of up to £50,000, plus daily penalties of up to £500 per working day for up to 80 days.
Understanding where the risks lie and what your organisation needs to do to remain compliant is key.
In this guide, we cover the main ESOS penalties, what can trigger enforcement action, and the practical steps businesses can take to reduce their compliance risk.
What is ESOS?
ESOS is a mandatory energy assessment scheme for qualifying UK organisations.
It means that organisations in scope need to assess their energy consumption and identify opportunities to improve energy efficiency. Depending on the route to compliance, this means conducting mandatory energy audits covering areas of significant energy consumption.
Records must be retained, and a Notification of Compliance (NOC) must be submitted through the government’s Manage Your Energy Savings Opportunity Scheme (MESOS) system.
ESOS operates in compliance periods, and qualifying organisations must meet the requirements applicable to each period.
For a complete guide on ESOS Phase 4 and what businesses need to do now, you can read it here.
What are the penalties for ESOS non-compliance?
For not complying with ESOS, there are several types of civil penalties. The maximum financial penalty depends on the type of breach, and the Environment Agency will normally impose a penalty for each separate breach of the ESOS Regulations.
The exact enforcement response will depend on the circumstances of the breach and the regulator’s application of the ESOS Regulations and its enforcement policy.
What happens if you fail to notify the Environment Agency?
Qualifying organisations must notify the Environment Agency that they have complied with their ESOS obligations.
Failure to notify can result in:
- an initial penalty of up to £5,000
- an additional penalty of up to £500 for each working day that the organisation remains in breach after the penalty notice takes effect, subject to a maximum of 80 working days
- publication of details of the non-compliance.
It’s important to note that notification is not simply an administrative formality. The Environment Agency describes it as a key ESOS requirement and states that it will normally impose a penalty for failure to notify.
Can ESOS penalties be made public?
Yes. Publication is an important part of the ESOS enforcement regime.
Where a publication penalty applies, the regulator can publish details including:
- the person or organisation receiving the penalty
- the legal requirement that was not complied with
- the amount of any financial penalty imposed.
For businesses, this means ESOS non-compliance is a reputational risk as well as a financial one.
How can businesses avoid ESOS penalties?
The most effective way to reduce the risk of ESOS compliance penalties is to treat ESOS as an ongoing compliance process rather than a task to complete immediately before a deadline.
Businesses should:
- Confirm whether they qualify for ESOS – Review the qualification criteria for each compliance period, particularly following acquisitions, disposals or changes to corporate group structures.
- Assign clear responsibility – Establish who is responsible for ESOS compliance internally and make sure senior management understands the organisation’s obligations.
- Start collecting energy data early – Accurate energy consumption information is fundamental to the ESOS assessment process.
- Plan mandatory energy audits in advance – Where audits are required, allow sufficient time to gather information, assess significant energy consumption and complete the appropriate review and sign-off. This also ensures better auditor availability.
- Keep the records – Keep the records required to demonstrate how the organisation has met its ESOS obligations.
- Check information before submission – Establish internal review and approval processes to reduce the risk of incomplete, inaccurate or misleading submissions.
- Track every applicable deadline – Compliance notifications, action plans and progress updates should form part of the organisation’s wider compliance calendar.
- Respond quickly to regulator correspondence – If you receive a compliance or enforcement notice, address it promptly and seek appropriate advice where necessary.
Working with an ESOS consultant
For organisations with complex energy use, multiple sites, or limited internal resources, an experienced ESOS consultant can help manage the compliance process and reduce the risk of missed requirements.
McGrady Clarke provides end-to-end ESOS support, from establishing the scope of your assessment and collecting and validating energy data through to energy audits, preparation of the ESOS evidence pack, Lead Assessor sign-off and support with your MESOS portal submission.
A structured approach can help businesses meet compliance obligations on time while ensuring the ESOS process identifies practical opportunities to reduce energy consumption, costs, and carbon emissions.
What should you do if your business is already non-compliant?
If you identify a potential ESOS compliance failure, ignoring it is unlikely to improve the situation.
Establish exactly which obligation has not been met, collect the evidence available and determine what steps are necessary to remedy the breach.
Where an organisation cannot submit the required notification by the applicable compliance date, government guidance advises contacting the relevant regulator.
Taking corrective action and engaging appropriately with the regulator can also provide evidence of the organisation’s approach to compliance if enforcement action is considered.
FAQs
What is the maximum ESOS fine?
Some individual ESOS breaches carry an initial penalty of up to £50,000. Certain breaches can also attract additional penalties of up to £500 per working day for a maximum of 80 working days, as well as publication of the organisation’s non-compliance. Where an organisation commits multiple separate breaches of the ESOS Regulations, the Environment Agency will normally impose a penalty for each breach. This means the total financial penalty can be significantly higher where an organisation has failed to meet multiple ESOS obligations.
Can a company be fined for missing an ESOS notification deadline?
Yes. Failure to notify compliance can result in an initial penalty of up to £5,000, plus daily penalties of up to £500 per working day for a maximum of 80 working days and publication of the breach.
Is ESOS compliance mandatory?
Yes. ESOS is a mandatory scheme for organisations that meet its qualification criteria. Qualifying organisations must comply with the applicable requirements for each compliance period.
Who enforces ESOS?
ESOS is enforced by scheme regulators across the UK. The appropriate regulator depends on where the responsible undertaking is registered. The Environment Agency regulates relevant participants in England and performs certain scheme administration functions.
What is the penalty for failing to carry out an ESOS energy audit?
Where an organisation is required to undertake an ESOS energy audit and fails to do so, the financial consequences can be significantly greater. Undertaking an energy audit is a key requirement of ESOS. This breach impacts the integrity of the ESOS.
The potential penalties include:
- an initial penalty of up to £50,000
- an additional penalty of up to £500 per working day, for a maximum of 80 working days
- publication of the breach
- a requirement to complete an ESOS assessment to remedy the failure.
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