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Energy Savings Opportunity Scheme (ESOS): Compliance Guide for Businesses

The Energy Savings Opportunity Scheme (ESOS) is a mandatory government programme that requires large organisations to measure, audit, and identify opportunities to improve their energy efficiency every four years.

The ESOS rules are detailed and can often be confusing, but compliance doesn’t have to be.

This guide explains what ESOS is and provides a step-by-step process for conducting an ESOS assessment and preparing an ESOS report for qualifying businesses.

Contents

• What is ESOS?
• ESOS qualification criteria
• ESOS requirements for businesses
• How to conduct an ESOS assessment
• ESOS reporting
• Key ESOS dates

What is ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a mandatory UK government programme designed to encourage large organisations to improve business energy efficiency.

ESOS applies to large businesses and some not-for-profit organisations and is regulated by the Environment Agency (in England) and equivalent bodies in Scotland, Wales, and Northern Ireland.

The scheme requires organisations to:

• Understand how and where energy is used across their buildings, industrial processes, and transport activities.
• Identify practical opportunities to reduce energy consumption.

The scheme does not require businesses to implement any identified energy efficiency measures, but participants must carry out energy assessments and report their findings by the set compliance dates every four years.

ESOS qualification criteria

Any business or charity in the UK that meets one or both of the following criteria in a financial reporting year must participate in ESOS:

• Employs 250 or more people.
• Has an annual turnover exceeding £44 million and a balance sheet total of more than £38 million.

The criteria apply to the financial reporting of individual limited companies rather than to consolidated group accounts.

If a corporate group includes at least one entity that meets the ESOS qualifying conditions, all UK operations within that group are required to take part in the scheme.

ESOS qualification date

The ESOS qualification criteria are assessed once every four years.

The next qualification assessment must be carried out based on the financial year ending on, or immediately preceding, 31 December 2026.

ESOS requirements for businesses

This section sets out the required activities, reporting obligations, and deadlines for businesses that meet the ESOS qualifying criteria.

Undertake ESOS assessment

Deadline: 5 December 2027

ESOS regulations require completion of an energy assessment that covers corporate activities accounting for at least 95% of the total energy consumption from UK operations.

For the 2027 ESOS compliance period, the energy assessment must consist of either an energy audit or ISO 50001 certification.

Prepare ESOS report

Deadline: 5 December 2027

Qualifying businesses must prepare an ESOS report that includes details of the ESOS assessment undertaken and the identified energy-savings recommendations.

See our section below on ESOS reporting for the required contents of the ESOS report. The report must be signed and approved by a qualified lead assessor and a board-level director.

Submit a notice of compliance

Deadline: 5 December 2027

Qualifying businesses must prepare and submit an ESOS notification on the Environment Agency’s website (or to the equivalent regulatory body in Scotland, Wales, or Northern Ireland).

This submission is not the full ESOS report but a high-level summary completed through a standardised online form.

💡 The Environment Agency publishes most of the information submitted, so it is important to exclude any commercially sensitive data.

Develop and submit an ESOS action plan

Deadline: 5 December 2028

All ESOS participants must produce and submit an action plan following their ESOS submission.

The action plan sets out the energy efficiency improvements identified in the audit that your business intends to implement over the next four years (before the next ESOS assessment).

💡 There is no regulatory requirement to implement any of the recommendations from the ESOS assessment.

Submit annual progress reports

Deadlines: 5 December 2029 and 5 December 2030

ESOS participants must produce and submit an annual progress update for each of the two years following submission of their ESOS action plan.

Each report summarises the actions your business has taken and the energy savings achieved.

How to conduct an ESOS assessment

Below is a summarised step-by-step process for businesses conducting an ESOS assessment using the energy audit compliance method, which is the approach adopted by most participants.

The assessment and reporting should cover a 12-month period that overlaps with the qualification date of 31 December 2026.

Step 1: Measure total energy consumption

Calculate your total business energy consumption in the UK during the selected 12-month period. Business energy consumption can be measured in either:

• Kilowatt-hours (kWh): Energy consumed, as measured by business electricity meters and business gas meters at each of your sites.
• Energy spend (£): The total business electricity prices and commercial gas rates incurred during the reference period.

This calculation identifies which sites or assets consume the most energy. Types of energy include electricity, gas, fuel for transport, and other combustible fuels.

Your analysis of total energy consumption should break down overall consumption by individual properties and industrial processes.

Step 2: Identify areas of significant energy consumption

The next step is to identify the areas of your energy consumption that need to be audited. These are referred to as “areas of significant energy consumption.”

These areas must collectively account for at least 95% of your total energy consumption.

The remaining 5% of energy consumption may be excluded from the ESOS assessment.

Step 3: Select and calculate energy intensity ratios

The Energy Savings Opportunity Scheme requires participants to choose energy intensity ratios that are appropriate to their business activities to benchmark energy efficiency.

An energy intensity ratio should be selected for each area of significant energy consumption.

The table below provides examples of some of the most common energy intensity ratios used in ESOS:

The energy intensity data submitted in your ESOS report will serve as a baseline for measuring future performance.

Step 4: Conduct ESOS-compliant energy audits

An ESOS-compliant energy audit must be carried out to cover each area of significant energy consumption.

ESOS does not prescribe specific methodologies for conducting your business energy audit, but as a minimum, it must include:

• Collection of energy consumption data.
• Analysis of energy consumption at each site, ideally using half-hourly meter or smart meter data where available.
• Identification and formal recommendation of practical and cost-effective energy-saving measures, including a cost-benefit analysis for each.
• Recommendations for a programme to implement the identified energy-saving opportunities.

Your auditor does not need to visit every site. However, the sites they do visit should be representative of the typical energy use and conditions across your other locations identified as areas of significant energy consumption.

For a detailed breakdown of the audit process, read our comprehensive guide to the business energy audit.

ESOS reporting

The ESOS scheme requires participants to produce a formal ESOS report detailing the assessment carried out. The report must be formally approved and signed by a board-level director.

Participants are not required to submit or publish their ESOS report but must instead provide a summary notice of compliance to the Environment Agency (or to the equivalent regulatory body).

What’s included within ESOS reporting?

The ESOS regulations are not prescriptive about what must be included in the formal ESOS report, but it must contain at least the following:

• Calculation of total energy consumption.
• A breakdown of areas of significant energy consumption, including calculations of energy intensity ratios for each.
• An explanation of the number of sites visited during the audit, along with the visit date for each.
• A justification of why the sites visited were considered representative and how they account for the unvisited sites.
• A summary of the energy-saving measures identified, including quantified estimates of savings and the costs associated with implementation.
• An estimation of energy savings achieved since the previous ESOS assessment (if applicable).
• Details of the approving director, lead assessor, and other employees involved in the assessment.

Key ESOS dates

Below is a summary of the key upcoming dates and deadlines for the Energy Savings Opportunity Scheme:

Compliance period three

• Annual progress update one deadline: 5 December 2025
• Annual progress update two deadline: 5 December 2026

Compliance period four

• Qualification date: 31 December 2026
• Compliance notification deadline: 5 December 2027
• Action plan submission deadline: 5 December 2028
• Annual progress update one deadline: 5 December 2029
• Annual progress update two deadline: 5 December 2030

ESOS regulations

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy efficiency scheme established under UK law. The ESOS regulations set out the legal obligations for large organisations.

In this guide, we’ve explained those obligations and their associated deadlines. Enforcement of these requirements is divided among the UK’s environmental regulators:

• Environment Agency (EA) – England
• Scottish Environment Protection Agency (SEPA) – Scotland
• Natural Resources Wales (NRW) – Wales
• Northern Ireland Environment Agency (NIEA) – Northern Ireland

These regulators are responsible for monitoring submissions and maintaining public registers of compliant organisations.

What are the penalties for non compliance?

Failure to meet ESOS obligations can result in civil penalties, including:

• A fine of up to £50,000 for failing to carry out an ESOS assessment.
• Daily fines of up to £500 per day for continued non-compliance.
• Publication of your organisation’s details on the public enforcement register.

Regulators may also issue enforcement notices requiring organisations to take corrective action within a specified timeframe.

ESOS compliance services

Energy specialists, including business energy suppliers, offer a range of services to help businesses comply with the Energy Savings Opportunity Scheme, including the delivery of required energy audits.

We recommend the following trusted suppliers that we partner with for our business electricity comparison service:

• E.ON business energy: Compliance services, including regular audit assessments conducted by their team of qualified experts.
• SSE business energy: The SSE compliance team includes fully qualified in-house ESOS Lead Assessors.

These suppliers also provide support for the Streamlined Energy and Carbon Reporting (SECR) scheme, which large businesses must comply with alongside ESOS.

Voluntarily undertaking of an ESOS assessment

The ESOS regulations are designed to place audit requirements on large business energy customers. However, small business energy customers who do not meet the mandatory ESOS criteria may choose to voluntarily complete an ESOS assessment.

A voluntary ESOS assessment can be registered with the Environment Agency (or equivalent regulator) and published on the list of ESOS-compliant organisations.

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