On a previous blog we set out the changes to Phase 3 of the Energy Savings Opportunity Scheme (“ESOS”) - see Key changes to Energy Savings Opportunity Scheme, Michael Barlow .

One of the changes From Phase 3 onwards is that organisations that qualify are required to produce and submit Action Plans and annual progress updates. 

These documents will demonstrate how participants plan to implement measures to improve energy efficiency and the progress they have made. Below is a summary of the essential requirements organisations need to know, based on the ESOS Regulations 2014 (as amended by the ESOS Amendment Regulations 2023), UK government guidance and the Environment Agency’s recent ESOS newsletters.

1. Who should submit an Action Plan 

It should be noted all ESOS participations must submit an Action Plan and annual progress updates, including participants relying wholly or partly on an alternative compliance route. Only those whose compliance notification reported zero total energy consumption during the reference period are exempt from the requirement. 

2. Action Plan Deadline

For organisations qualifying for Phase 3 of ESOS, the deadline for submitting your ESOS Action Plan is the 5 December 2024.

Organisations are encouraged to meet the 5 December 2024 deadline, though submissions will be accepted until 5 March 2025.

3. Action Plan Requirements

The Action Plan should outline energy efficiency measures your organisation intends to implement during the four year compliance period. The Phase 3 compliance period runs from 6 December 2023 to 5 December 2027.

Key elements of the Action Plan include:

  • Measures to be implemented (organisations must specify whether the measure was identified as a result of an energy savings opportunity report in the energy audit; whether it relates to any other schemes; or whether it is another voluntary measure).
  • Implementation dates for each measure (month and year).
  • Expected energy savings over the compliance period (in energy measurement units).
  • Breakdown of expected total energy savings by purpose (buildings, transport, industrial processes).
  • How energy savings were calculated, specifying whether it was based on an ESOS audit, an alternative compliance route, or another reasonable method.

In the EA’s ESOS Newsletter Issue 29, a data requirements template has been provided which outlines these key elements for recording energy efficiency measures in an ESOS Action Plan. 

While you do not need to justify your choice of measures in the Action Plan, it is important to remember that both the Action Plan and the subsequent progress updates will be made public by the Environment Agency. You will also be required to detail subsequentlywhich measures were implemented.  You will also be required to produce and submit two annual progress updates, explaining any measures which were not completed by the deadlines set out in the Action Plan. Organisations should carefully select appropriate measures that not only demonstrate a strong commitment to energy efficiency but are also realistic to implement. 

4. Identifying Measures

The energy efficiency measures included in an Action Plan can include:

  • energy savings opportunities recommended through the ESOS audit or an alternative compliance route; 
  • measures identified through other schemes such as the Climate Change Agreements (CCA), Streamlined Energy and Carbon Reporting (SECR), UK Emissions Trading Scheme (ETS), or voluntary schemes like the UN Race to Zero or Science-Based Targets Initiative (SBTi); and/or
  • any other measures that the participant may decide to carry out.  

Only future measures (from December 2023 onwards) should be included. Organisations are encouraged to include measures relating to other schemes in the Action Plan, so it is a single source of all measures you are taking and energy savings expected by the end of the relevant compliance period. Organisations should also ensure any measures are not reported more than once to avoid double-counting savings across schemes.

If no measures are proposed, you can submit an Action Plan stating no implementation will occur, but you must still provide annual progress updates.

Any measures that are included in the Action Plan are for the benefit of the organisation to make public its commitment to save energy and you must be prepared to provide annual progress updates against them. 

5. Energy Savings Estimates

For each measure, you need to provide energy savings estimates in relevant units (kWh, MWh, etc.), covering the period from implementation to the end of the compliance period (5 December 2027 for Phase 3). Participants must clearly state whether the estimates come from:

  • the ESOS audit;
  • an alternative compliance route; or
  • another reasonable estimation method, such as survey data or feasibility studies. 

Where you have used a reasonable estimation method that is not based on data from an energy audit or alternative compliance route, you must record a brief description of the estimation method in the Action Plan and record in the evidence pack the reason for using this method.

6. Director Sign-Off

The final Action Plan must be approved and signed off by one director if an external lead assessor is used. However, if an internal lead assessor is appointed, or if energy consumption is below 40,000 kWh and no lead assessor is required, two directors must sign off. The sign-off confirms that the directors have reviewed the plan and are satisfied that it complies with the ESOS requirements. This mirrors the sign-off process for the initial ESOS compliance notification.

Action plans must be submitted via the online notification system (MESOS). 

7. Annual Progress Updates

To increase accountability, participants must submit two progress updates within the compliance period:

  • First update by 5 December 2025.
  • Second update by 5 December 2026.

Each progress update relates to the 12-month period preceding its deadline and must set out the progress made against the Action Plan, including: 

  • Any measures implemented (organisations should specify whether or not the measure was implemented by the date specified in the Action Plan). The progress update should also include measures not yet actioned by the target dates. 
  • An estimate of the energy consumption reduction, either achieved or anticipated, during the relevant reporting period as a result of the actions outlined in the ESOS progress update, expressed in energy measurement units.
  • The method used to produce the estimate. 

These updates will be published by the Environment Agency to ensure transparency.

8. Evidence Packs 

The evidence pack must contain a copy of the action plan and each annual progress update, and written confirmation from the directors to evidence that they reviewed the action plan and progress updates.

In addition, as mentioned above, participants should keep detailed records of how estimates included in action plans and progress updates were calculated.

Final Thoughts

For organisations participating in ESOS, the new Phase 3 requirements introduce enhanced accountability and structure to implementing energy-saving measures. The key deadlines and submission protocols must be met to ensure compliance, but there is flexibility in terms of the measures chosen and how progress is reported. This shift encourages organisations to take a proactive approach in addressing energy efficiency and contributing to broader sustainability goals.

By following these guidelines, businesses can avoid penalties while maximising energy savings and improving overall environmental performance.

If you require further advice on ESOS and how to comply with the scheme, please contact Michael Barlow and Annalise Slocock.