The deadline for qualifying organisations to complete and submit their UK Energy Savings Opportunity Scheme ("ESOS") reports for Phase 3 of the scheme has been extended by 6 months - from 5 December 2023 to 5 June 2024. The government's rationale for the extension is to allow sufficient time for participants to meet the new requirements of Phase 3 and for assessors to carry out assessments. An open letter from DESNZ confirming the extension can be viewed here.
Whilst the compliance date has been pushed back, the qualification thresholds and dates remain the same. This means that ESOS still applies to all organisations (and their corporate groups) that were classed as large undertakings on 31 December 2022.
ESOS is a mandatory energy assessment scheme which requires larger companies and non-public sector organisations in the UK to carry out assessments to identify energy efficiency savings and enhance good energy management. The scheme has been in force in the UK since 17 July 2014 pursuant to the Energy Savings Opportunity Scheme Regulations 2014 (SI 2014/1643) (as amended).
Does your organisation qualify?
ESOS applies to organisations counted as a "large undertaking" on 31 December 2022. A "large undertaking" is any UK corporate body, partnership, or an unincorporated association carrying on a trade or business, with or without a view to profit, that meets one of the following tests:
- It employs 250 people or more; and/or
- It has an annual turnover in excess of £44 million and an annual balance sheet in excess of £38 million.
Whole corporate groups also qualify if at least one UK group company meets this criteria. Where a corporate group takes part in ESOS, unless otherwise agreed, the highest UK parent will act as the "responsible undertaking" and is responsible for ensuring the group, as a whole, complies.
Complying with Phase 3
Under ESOS, qualifying organisations must carry out assessments in four-year compliance phases. Organisations must (i) determine qualification status for the scheme by 31 December 2022 and (ii) complete assessments and notify the Environment Agency of compliance by 5 June 2024. ESOS assessments comprise organisations measuring and auditing the energy consumption of their buildings, industrial processes and transport to identify cost-effective recommendations to improve energy efficiency.
Participants should be mindful that notifications cannot be submitted until the Phase 3 requirements have been finalised in legislation and the updated IT system, which is currently being developed, has been appropriately tested. The government has advised that the system will be made available in time to enable participants to meet notification requirements ahead of this extended compliance date.
Organisations should therefore consider beginning their ESOS assessment as soon as possible in order to stay on the front foot and also identify, and benefit from, energy efficiencies and cost savings.
We regularly advise clients on qualification and ongoing compliance with the ESOS scheme. If you need any support with this scheme please get in touch with Michael Barlow, Sarah Sackville Hamilton or any other member of the environment team.
This post was co-authored by Simon Cox, a solicitor in our environment team.