ESOS Phase 3: A Practical Guide

In this guide, we will cover everything that businesses need to know about ESOS Phase 3 deadline building on our previous article explaining the differences between ESOS Phase 2 and ESOS Phase 3.

What is ESOS Phase 3?

ESOS (Energy Savings Opportunity Scheme) Phase 3 is the latest phase of the mandatory energy assessment and reporting scheme in the UK. It was launched on December 1, 2021, and will require eligible businesses to conduct energy audits and report on their energy consumption and savings opportunities every four years.

The scheme aims to help businesses identify cost-saving opportunities, improve energy efficiency, and reduce carbon emissions. By participating, businesses can benefit from expert advice on energy efficiency measures, reduce their energy costs, and enhance their sustainability credentials.

ESOS Phase 3 leverages the achievements of its predecessors, having conducted more than 10,000 audits and identified over 100 TWh of energy savings. It is expected that ESOS Phase 3 will continue to drive energy efficiency improvements across large UK businesses, reduce carbon emissions and costs, and improve sustainability performance.

Who is required to comply with ESOS Phase 3?

Businesses in the UK that meet the qualification criteria must comply with ESOS Phase 3. To qualify, a business must meet at least one of the following criteria:

• It employs 250 or more people.
• It has an annual turnover of £44 million or more and an annual balance sheet total of £38 million or more.
• It is part of a corporate group that includes an entity that meets either of the above criteria.

In addition, some public sector bodies may also need to comply with ESOS Phase 3 if they meet the qualification criteria.

It’s important to note that if a business is part of a corporate group, only the UK entity must be ESOS UK compliant. However, the group as a whole must provide information on their UK energy consumption to the entity that is responsible for compliance.

Businesses that are required to comply with ESOS Phase 3 must submit a compliance report to the Environment Agency by 5th December 2023. Failure to comply with ESOS Phase 3 can result in significant financial penalties.

What are the key requirements of ESOS Phase 3?

ESOS Phase 3 requires organisations to take the following steps:

1. Measure energy consumption: Organisations must measure their total energy consumption for a 12-month period, including buildings, industrial processes, and transport.
2. Identify areas for improvement: Organisations should find areas where energy consumption can be reduced and improved. These areas usually include using energy-efficient technologies, improving operational procedures, or changing building design
3. Complete an energy audit: Completing an energy audit is a critical component of compliance. An energy audit involves a systematic review of a company’s energy consumption, identifying areas of energy waste, and opportunities to improve energy efficiency. An audit typically includes a review of energy bills and data, a site survey to identify areas of energy consumption, and recommendations for improvement. The energy audit can help companies to identify cost-saving opportunities, reduce their carbon footprint, and improve their sustainability performance.
4. Report compliance: The reporting process involves gathering energy data, conducting energy assessments, and submitting reports to the scheme administrator. ESOS reporting helps companies to identify cost-saving opportunities, improve energy efficiency, and reduce carbon emissions. It also promotes the adoption of sustainable business practices, and compliance with legal requirements for eligible companies. Following the completion of this report by an ESOS lead assessor, the environmental agency are then notified.

What are the benefits of compliance?

Complying can bring several benefits to organisations, including:

• Reducing energy consumption and costs
• Improving energy efficiency and reducing greenhouse gas emissions
• Enhancing corporate social responsibility and reputation
• Identifying new opportunities for operational improvement and cost savings

What happens if organisations fail to comply with ESOS Phase 3?

Organisations that fail to comply with the requirements may face fines and other penalties. The Environment Agency has the power to issue fines of up to £50,000 for non-compliance, with an additional £500 per day for up to 80 days for continuing non-compliance.

How we can help?

At McGrady Clarke, we are dedicated to guiding our clients through the complexities of energy compliance, particularly in meeting the requirements of ESOS Phase 3. As a leading energy and sustainability consultancy in the UK, our expert team of in-house ESOS Lead Assessors and Decarbonisation Specialists work in tandem to ensure your organisation not only achieves compliance but also benefits from the valuable insights garnered through the assessment process.

Our holistic approach to ESOS Phase 3 compliance enables us to identify energy-saving opportunities, develop cost-effective strategies, and implement tailored decarbonisation solutions that align with your organisation’s sustainability goals. Our extensive experience with large and complex organisations across the globe allows us to provide bespoke, efficient and effective solutions for meeting requirements.

Our comprehensive ESOS Phase 3 services include energy audits, energy management system reviews, and assistance with implementing energy efficiency measures. We go beyond mere compliance by helping our clients leverage the full potential of assessments, translating findings into actionable steps towards a more sustainable and cost-effective operation.

Trust McGrady Clarke to navigate the complexities of ESOS Phase 3 compliance and unlock the potential of your organisation’s energy efficiency journey. Contact our experts today to learn how we can support your organisation in meeting and exceeding ESOS Phase 3 requirements.