ESOS Phase 4: requirements, dates and what changed

The Energy Savings Opportunity Scheme has run in four-year compliance periods since 2014.

Each phase asks a large undertaking to measure its total energy consumption, find cost-effective ways to save energy through audits, and notify compliance to the Environment Agency.

The Environment Agency is the UK scheme administrator under regulation 5; the Department for Energy Security and Net Zero owns ESOS policy.

Phase 4 runs from 6 December 2023 to 5 December 2027, a date generated by regulation 4 rather than set by guidance.

Organisations that meet the test on 31 December 2026 are in scope even if they were not before, and must notify by 5 December 2027; the full walkthrough is in the ESOS Phase 4 compliance guide.

ESOS applies to large undertakings, defined in Schedule 1 to the Regulations.

An undertaking qualifies if it employs at least 250 persons, or if it has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.

Both money limbs must be exceeded; exactly £44 million does not qualify, while exactly 250 employees does.

If any UK undertaking in a corporate group qualifies, the whole UK group is in scope.

An undertaking that was large stays large until it has been small or medium for two consecutive accounting periods.

Status on 31 December 2026 governs even if the organisation changes size afterwards.

SI 2026/701 did not change the thresholds, and a change to align them with SECR did not go ahead for Phase 4.

A quick way to run the test is the qualification check on our ESOS consultants guide.

Phase 4 has two routes: the ESOS energy audit, and certified ISO 50001.

Where ISO 50001 certification covers all of the participant’s total or significant energy consumption, the participant is deemed to have complied with the duties to appoint a lead assessor, carry out an ESOS audit and produce an ESOS report.

Partial certification exempts only the certified portion; the rest must still be audited.

The certificate must have been issued on or after 6 December 2023 and remain valid on 5 December 2027.

ISO 50001 never discharges the duty to notify, and it never discharges the duty to carry out an ESOS assessment itself.

A participant whose total energy consumption is zero kWh is deemed to have complied with the assessment duties, but still notifies.

Participation in a Climate Change Agreement, UK ETS or SECR does not automatically count as ESOS compliance, although their energy data can be reused.

Part 8 of the Regulations sets five civil penalty offences, each of which can also be published.

Failing to notify (regulation 43): up to £5,000, plus £500 for each working day the failure continues, capped at 80 working days.

Failing to keep records (regulation 44): up to £5,000 plus the compliance body’s audit costs, with no daily penalty.

Failing to undertake an ESOS assessment (regulation 45): £50,000 or such lesser amount as the regulator determines, plus the same daily penalty.

Failing to comply with a compliance, enforcement or penalty notice (regulation 46): up to £5,000 plus the daily penalty.

A false or misleading statement (regulation 47): £50,000 or such lesser amount as determined.

There is no penalty in Part 8 for missing an action plan or progress update; the failure is published instead, and a regulator can still serve an enforcement notice.

The Environment Agency explains how it sets a penalty in Annex 2 of its enforcement policy; for a new entrant in its first compliance period it normally imposes a lower initial penalty of up to £5,000 for failing to undertake an audit.

Enforcement follows the registered office: the Environment Agency in England, SEPA in Scotland, Natural Resources Wales, the Northern Ireland Environment Agency, and the Secretary of State for DESNZ offshore.