How to Comply with ESOS Phase 4

What is ESOS Phase 4?

The Energy Savings Opportunity Scheme (ESOS) is a mandatory UK energy assessment scheme for large undertakings, administered by the Environment Agency. It runs in four-year compliance phases. Phase 4 has a qualification date of 31 December 2026 and a notification of compliance deadline of 5 December 2027.

Under ESOS you must measure your total energy consumption, audit the areas of significant energy consumption that account for at least 95% of it (the 2023 amendment raised this from 90%), identify cost-effective energy savings, have the assessment reviewed and signed off by an approved ESOS Lead Assessor, and notify the Environment Agency through the MESOS reporting system. Phase 4 also continues the action-plan and progress-update requirements introduced in Phase 3, so compliance is now an ongoing cycle rather than a one-off audit.

Step 1: Confirm Whether You Qualify

Your ESOS status is assessed on the qualification date of 31 December 2026. You qualify if, on that date, your UK undertaking either:

• Employs 250 or more people, OR • Has an annual turnover exceeding £44 million AND a balance sheet exceeding £38 million.

If the highest UK parent of a corporate group qualifies, all UK group entities are normally treated as in scope and can comply together as a group. Overseas entities are excluded, but UK operations of an overseas group can still qualify in their own right. Record the headcount and financial figures you used and the date they relate to, as this is the first item of evidence the Environment Agency may ask for.

Step 2: Calculate Your Total Energy Consumption

Measure the total energy your organisation consumed over a 12-month reference period that includes the 31 December 2026 qualification date. This covers three energy types:

• Buildings: electricity, gas and other heating fuels • Transport: fuel used by vehicles you operate, including grey fleet business mileage • Industrial processes: energy used directly in manufacturing or operations.

Express everything in a common unit (kWh). This total becomes the denominator for the 95% audit requirement, so it must be reasonably complete. Where you have to estimate, document the method and keep the supporting data.

Step 3: Choose Your Compliance Route

ESOS lets you cover your energy use through one or more routes:

• ESOS energy audits: the default route, covering buildings, transport and processes • ISO 50001: a certified energy management system can cover all or part of your energy.

Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) were valid routes in earlier phases but have been removed for Phase 4, so most organisations now cover their energy through ESOS audits, ISO 50001, or a combination of the two. Together your chosen routes must cover at least 95% of your total energy. Decide your routes early, because it determines how much auditing you need to commission.

Step 4: Audit at Least 95% of Your Energy

Identify your areas of significant energy consumption (AoSEC): the sites, fleets and processes that together make up at least 95% of your total energy. The remaining de minimis, up to 5%, can be excluded from auditing.

For each area, carry out an energy audit that reviews consumption patterns, identifies cost-effective energy-saving opportunities, and quantifies the likely savings and paybacks. Site audits should be evidenced (meter data, half-hourly profiles, photographs, and an assessor's observations). The output is a set of recommendations that will later feed your action plan.

Step 5: Appoint a Lead Assessor and Get Sign-Off

Your ESOS assessment must be reviewed and approved by an ESOS Lead Assessor, an individual on an approved professional register. The Lead Assessor checks that your energy data, audits, and opportunities meet the scheme's requirements.

In addition, a board-level director must review and confirm the assessment internally. Both sign-offs must be in place before you can notify compliance. Keep the written confirmations: they are core evidence-pack items.

Step 6: Notify Compliance via MESOS

Submit your notification of compliance to the Environment Agency through MESOS, the online ESOS reporting system, by 5 December 2027. The notification captures your qualification details, group structure, energy data, compliance routes, total identified savings, and the Lead Assessor and director confirmations.

Since Phase 3, MESOS collects more detail than a simple declaration, so have your figures and supporting documents ready before you start. Save the submission confirmation as evidence.

Step 7: Publish Your Action Plan and Progress Updates

Notification is no longer the end of ESOS. After notifying, you must produce an action plan setting out the energy-saving measures you intend to implement, signed off by a board-level director and submitted via MESOS. You then report delivery through two annual progress updates in the years that follow.

Following Phase 3, the action plan is due in the year after compliance, with progress updates in each of the next two years. DESNZ will confirm the exact Phase 4 deadlines in its updated guidance, expected in early 2027. Either way, tracking the measures you committed to, and being able to explain any that slip, is now part of being compliant, so keep your action plan live rather than filing it away.