ESOS Phase 4: Everything you need to know

An introduction to ESOS

ESOS (Energy Savings Opportunities Scheme) was first introduced in 2014 and is administered by the Environment Agency.

The mandatory scheme requires all large businesses within the UK to report on their energy consumption and recognise any energy saving opportunities. Each ESOS phase has a duration of 4 years.

It’s important to note that there are a number of potential penalties for businesses that fail to submit a compliance notice by the set deadline. Should you find yourself in this position, you may be at risk of enforcement action, including the possibility of civil penalties.

What’s new for ESOS Phase 4?

Net zero assessment

One of the known changes proposed within Phase 4 was for companies to complete a net zero assessment. This has been an optional element to ESOS Phase 3 and was intended to become compulsory for Phase 4. However, the UK Government has announced that this requirement is now postponed until Phase 5 in 2027 due to the delays with the introduction of Phase 3 legislation and guidance.

Audit standards

Your ESOS report must be based on a current and recognised audit standard (e.g., ISO 50002 or EN 16247), but UK Government guidance now also highlights that the existing PAS competency standard (PAS 51215:2014) will continue to be required, with new PAS 51215-1 and PAS 51215-2 as voluntary options.

Removal of DECs and GDAs

Both DECs (Display Energy Certificates) and GDAs (Green Deal Assessments) are not accepted as routes to compliance for Phase 4.

Action plans & annual progress updates (updated)

Starting with Phase 4, companies will be required to explain why an energy-saving goal has not been achieved following a recommendation.

The Phase 3 Action Plan deadline was officially 5 March 2025 (extended from 5 December 2024).

Participants must submit two annual progress updates:

• Progress Update #1 — 5 December 2025
• Progress Update #2 — 5 December 2026

These are already required and published by the Environment Agency.

This has been clarified in official guidance and reflects current requirements that even companies that did not commit to actions must still submit updates.

Qualification thresholds

The qualifying criteria for ESOS Phase 4 will be:

• Over 250 employees.
• An annual turnover in excess of £44m and an annual balance sheet total of more than £38m.
• UK registered organisation (or part of a qualifying group).

Key dates for Phase 4

If you would like further guidance on ESOS, please get in touch via the form below.