The Energy Savings Opportunity Scheme (ESOS) Phase 3 is on the horizon, bringing with it new requirements and opportunities for businesses across the UK. In this blog post, we’ll break down the essentials of ESOS phase 3, covering the original deadline, the new extended deadline, notable changes from ESOS phase 2, and addressing whether there’s an ESOS phase 4 on the horizon.
Understanding ESOS phase 3: original deadline and extension
Originally, the deadline for compliance with ESOS Phase 3 was set for 5 December 2023. However, in response to requests from key industry stakeholders, the UK government extended the deadline to 5 June 2024. This extension provides businesses with additional time to gather the necessary data and complete their assessments.
The qualification thresholds and date have not changed; ESOS still applies to all organisations (and their corporate groups) that were classed as large undertakings on 31 December 2022.
Key changes for ESOS phase 3
- Standardised compliance information template
The government is keen to introduce a standardised compliance template within ESOS reports. This template will ensure uniformity and clarity in reporting.
- Revision of de minimis exemption
The de-minimis rule has been reduced from 10% to 5%. This adjustment is intended to encourage broader coverage under the scheme, resulting in more comprehensive data and improved overall data quality.
- Incorporation of energy intensity metric
To align ESOS reporting more closely with Streamlined Energy and Carbon Reporting (SECR) requirements, energy intensity metrics will be included. This metric will vary according to the sector: kWh/m2 for buildings, kWh/unit output for industry, and kWh/miles traveled for transport.
- Mandatory sharing with subsidiaries
To facilitate the seamless dissemination of crucial information and promote a culture of energy efficiency and implementing identified opportunities across all subsidiaries, it will be a requirement to share ESOS reports with them.
- Setting targets and including an action plan
Following the phase 3 compliance deadline, participants will be required to set targets or develop action plans. Progress against these goals will be reported annually through SECR reports or the ESOS web portal.
ESOS phase 4: what’s on the horizon?
The indication is that for ESOS phase 4 energy efficiency implementations will have increasing importance. There will be more pressure for end users to take action or explain why they haven’t in their future ESOS reports.
In ESOS phase 4 every organisation will be required to conduct a net-zero assessment, examining potential pathways to achieve net-zero status and assessing the cost-effectiveness of each option. Additionally, there will be an anticipation for organisations to act based on the recommendations outlined in their ESOS report. If any recommendations are not implemented, organisations will be expected to provide a rationale for their decision.
In addition, simpler energy audits including Display Energy Certificates (DECs) and Green Deal Assessments are being phased out as routes to ESOS compliance, which means they will not be valid for phase 4.
So, whilst the focus is currently on ensuring compliance with ESOS phase 3, it’s crucial for businesses to stay updated with regulatory changes, as ESOS requirements may evolve in the future.
ESOS phase 3 presents both challenges and opportunities for businesses seeking to improve their energy efficiency. With the extended deadline, there’s still time to gather data and conduct assessments if you haven’t already. Understanding the changes from ESOS phase 2 and preparing for potential future developments in phase 4 will help businesses stay compliant and environmentally responsible.