ESOS · Phase 4
ESOS compliance: what Phase 4 requires
ESOS compliance is a four-yearly duty on large UK undertakings to assess their energy use, find cost-effective savings and notify the result, under the Energy Savings Opportunity Scheme Regulations 2014.
Phase 4 is under way: whether you qualify is fixed by your position on 31 December 2026, and the compliance date is 5 December 2027.
The rules changed on 22 July 2026, so a Phase 3 checklist is not a safe guide.
The scheme
ESOS in one page, and who runs it
ESOS has run since 17 July 2014 in four-year compliance periods, and Phase 4 runs from 6 December 2023 to 5 December 2027.
A participant measures its total energy consumption across four organisational purposes: transport, industrial processes, buildings, and any other purpose.
It then audits the areas that make up at least 95% of that consumption, identifies cost-effective energy-saving measures, and notifies compliance.
Since Phase 3 it must also publish an action plan of the measures it intends to take, and report progress against it.
ESOS is an assessment duty, not a duty to implement the savings found.
It is separate from the annual disclosure duty in Streamlined Energy and Carbon Reporting, which uses a different size test.
Guidance is the Environment Agency’s, not DESNZ’s: the Phase 4 compliance guidance was published on 30 July 2026, and the GOV.UK ESOS page was rewritten for Phase 4 on 2 September 2026.
Who does what
| Body | Role |
|---|---|
| DESNZ | ESOS policy and the amending regulations |
| Environment Agency | UK scheme administrator: guidance, helpdesk, MESOS, and regulator for England |
| Natural Resources Wales | Regulator in Wales |
| SEPA | Regulator in Scotland |
| Northern Ireland Environment Agency | Regulator in Northern Ireland |
| Secretary of State (DESNZ) | Regulator for wholly or mainly offshore activities |
Source: Environment Agency Phase 4 guidance, “About this guidance”
Qualification
Who qualifies for Phase 4
Schedule 1 defines a large undertaking as one that employs at least 250 people, or has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million.
The structure is employees, or both money limbs together — not two of three, which is the SECR shape.
The drafting is uneven on purpose: 250 employees qualifies, but £44 million of turnover exactly does not.
A UK undertaking that is part of a group containing a large undertaking is caught too, and the group participates together.
Qualification is judged on 31 December 2026, the Phase 4 qualification date; a change of size after that day does not take you out of Phase 4.
Schedule 1 ¶11 adds a retention rule: an undertaking that was large keeps that status until it has been small or medium-sized for two consecutive accounting periods.
The 2026 regulations widened the insolvency exclusion to undertakings in insolvency proceedings at any point between the qualification date and the compliance date.
The qualification thresholds themselves were not changed by the 2026 amendments.
The large undertaking test
| Limb | Test | Note |
|---|---|---|
| Employees | At least 250 | Exactly 250 qualifies |
| or: turnover | In excess of £44m | Exactly £44m does not |
| and: balance sheet | In excess of £38m | Both money limbs must be exceeded |
The assessment
What an ESOS assessment involves
Total energy consumption
Twelve consecutive months of verifiable data that include 31 December 2026 and end on or before the compliance date.
The GOV.UK page adds that the period must begin no earlier than 6 December 2022, and no earlier than 24 months before the audit starts.
Significant energy consumption
The areas making up at least 95% of the total, measured by energy units or by energy spend.
Up to 5% may be left out of the audit.
Four organisational purposes
Transport, industrial processes, buildings, and any other purpose.
Regulation 25C requires an energy intensity ratio for each purpose that applies.
Two routes, and only two
An ESOS energy audit, or ISO 50001 certification covering total or significant energy consumption.
Display Energy Certificates and Green Deal Assessments were removed as routes by SI 2026/701.
ISO 50001 does not exempt you from ESOS.
Certification covering total or significant consumption discharges the duties to appoint a lead assessor, audit and produce an ESOS report, but the assessment duty and the notification remain.
The GOV.UK page says the certificate must have been issued after 5 December 2023 and be valid on 5 December 2027.
Data from a DEC or GDA can still feed the assessment, for example an intensity ratio, but it cannot replace the audit.
Climate Change Agreement and UK ETS data can feed the assessment too, but the Environment Agency’s Appendix C is clear that membership of those schemes does not by itself count as ESOS compliance.
Lead assessor and sign-off
Who reviews it, and who signs it
A lead assessor on one of the seven approved registers must review the assessment, unless an exemption applies.
Regulation 21(3) removes the requirement where total energy consumption is less than 40,000 kWh, and the ISO 50001 route and zero consumption remove it too.
The competence standard the registers apply is PAS 51215:2014; the 2025 parts of PAS 51215 are voluntary additions for net zero considerations, and MESOS cannot accept a voluntary decarbonisation assessment.
Since 22 July 2026 the lead assessor must notify their approval body within seven days of completing your assessment.
Sign-off is by responsible officers: directors, or people exercising management control.
Under regulation 30(3), one is enough where the lead assessor is independent of the participant, and two are needed in any other case.
Independence has a statutory test: the assessor must not, in the last 12 months, have been your employee, director, partner, person with management control or shareholder, or the spouse or civil partner of one.
A consultant who holds shares in your business is outside that test, so you need two signatures, not one.
How to choose and brief a provider is covered in our guide to carbon compliance services.
The seven approved registers
- Association of Energy Engineers
- CIBSE (Low Carbon Consultant register)
- Elmhurst Energy Systems
- Energy Institute
- Energy Managers Association
- Institute of Sustainability and Environmental Professionals
- Quidos
ESOS drops the lead assessor where total consumption is less than 40,000 kWh.
SECR’s relief is 40,000 kWh or less — so a business at exactly 40,000 kWh needs a lead assessor for ESOS but may use the SECR relief.
Phase 4 dates
The Phase 4 timeline, to 2031
Every Phase 4 date follows from regulation 4: a period that ends on 5 December four years after it began, and a qualification date on the 31 December before the compliance date.
Phase 4 adds three things to the notification.
First, the energy savings actually achieved in the period, measure by measure; only the combined figure is published.
Second, a review of the previous action plan, naming measures not implemented and why; that narrative is notified but not published.
Third, a final progress update in the fourth year of the action plan, making three updates rather than two.
The Environment Agency’s guidance contradicts itself on the number of updates in places; the amended regulation 34B settles it at three.
Phase 5 is already scheduled in the guidance: qualification date 31 December 2030 and compliance date 5 December 2031.
DESNZ has said, in the Modernising corporate reporting consultation, that it intends to consult on SECR and ESOS later in 2026.
- 6 Dec 2023Phase 4 begins
- 22 Jul 2026SI 2026/701 in force
The Phase 4 changes take effect.
- 5 Dec 2026Phase 3 progress update
The second update on Phase 3 action plans.
- 31 Dec 2026Qualification date
Your size today decides whether you are in.
- 5 Dec 2027Compliance date
Assessment complete and notified through MESOS.
- 5 Dec 2028Action plan due
Covering 6 Dec 2027 to 5 Dec 2031.
- 5 Dec 2029–31Three progress updates
The third, final update is new in Phase 4.
Sources: SI 2014/1643 reg 4 · Environment Agency Phase 4 milestone table
Enforcement
ESOS penalties, exactly
The penalties are statutory, in Part 8 of the regulations, and every one is published.
| Regulation | Failure | Fixed maximum | Daily penalty |
|---|---|---|---|
| 43 | Failure to notify compliance | £5,000 | £500 per working day, up to 80 working days |
| 44 | Failure to keep records | £5,000 plus the regulator’s audit costs | None |
| 45 | Failure to undertake an ESOS assessment | £50,000 | £500 per working day, up to 80 working days |
| 46 | Failure to comply with a compliance, enforcement or penalty notice | £5,000 | £500 per working day, up to 80 working days |
| 47 | False or misleading statement | £50,000 | None |
Publication names the undertaking, the requirement breached and the amount, for at least a year.
There is no penalty in Part 8 for failing to submit an action plan or progress update; the Environment Agency says it will publish the failure instead.
An enforcement notice requiring an action plan would still be enforceable under regulation 46, so the gap is not immunity.
For a new entrant in its first compliance period, the Environment Agency’s enforcement policy says it will normally impose a lower initial penalty of up to £5,000 for failing to undertake an energy audit.
Getting ready
An ESOS compliance plan for the next fifteen months
Confirm your group structure and which undertaking is responsible, and test the qualification limbs against your position on 31 December 2026.
Choose a 12-month reference period that includes that date, and start collecting verifiable data for buildings, transport, processes and anything else.
Decide early between the audit and ISO 50001, because certification has to be in place and valid on the compliance date.
If you need a lead assessor, check their register listing yourself and ask about independence before you appoint.
Collect the evidence for savings achieved against your Phase 3 action plan, because Phase 4 asks for it.
Keep the evidence pack: record-keeping is itself a penalised duty.
If ESOS is part of a wider reporting picture, our where-to-start guide maps the regimes, and you can book a free 15-minute call to talk your position through.
ESOS savings and targets often feed a wider plan; see science based targets for how target-setting works.
Frequently asked
Questions people ask
Is ESOS mandatory?
Yes, for a large undertaking and any UK group containing one. An undertaking qualifies for Phase 4 if on 31 December 2026 it employs at least 250 people, or has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million. Group members are assessed together.
When is the ESOS Phase 4 deadline?
The compliance date is 5 December 2027. By then a participant must have carried out its ESOS assessment and notified compliance to the Environment Agency through MESOS. The action plan follows by 5 December 2028, with progress updates due by 5 December 2029, 2030 and 2031.
What changed for ESOS Phase 4?
The ESOS (Amendment) Regulations 2026, in force on 22 July 2026, removed Display Energy Certificates and Green Deal Assessments as compliance routes, let ISO 50001 covering significant energy consumption discharge the audit, required participants to report the energy savings they actually achieved, added a review of the previous action plan and a third progress update, and gave lead assessors a duty to notify their approval body.
Is a lead assessor needed for ESOS?
Usually. A lead assessor on one of the seven approved registers must review the assessment unless ISO 50001 covers your total or significant energy consumption, your total energy consumption is less than 40,000 kWh, or your total consumption is zero.
Who signs off ESOS compliance?
Responsible officers — directors, or people exercising management control. One is enough where the lead assessor is independent of the participant; two are needed in any other case, including where no lead assessor was required because consumption was below 40,000 kWh. Independence has a statutory test: no employment, directorship, partnership or shareholding in the last 12 months.
What is the penalty for not complying with ESOS?
Failure to undertake an ESOS assessment carries a penalty of up to £50,000 plus up to £500 for each working day, capped at 80 working days. Failure to notify carries up to £5,000 plus the same daily amount. The regulator also publishes the name of the undertaking penalised. There is no penalty for failing to submit an action plan or progress update, though the failure is published.
Does ISO 50001 mean we are exempt from ESOS?
No. ISO 50001 certification covering your total or significant energy consumption discharges the duties to appoint a lead assessor, carry out an ESOS energy audit and produce an ESOS report, but you must still carry out the ESOS assessment and notify compliance. The certificate must have been issued after 5 December 2023 and be valid on 5 December 2027.
Does SECR or UK ETS participation count as ESOS compliance?
No. The Environment Agency’s Phase 4 guidance says participation in UK ETS, Climate Change Agreements, SECR or other schemes does not automatically count as ESOS compliance. The data can feed the ESOS assessment, but additional work is usually needed.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- legislation.gov.ukThe Energy Savings Opportunity Scheme Regulations 2014 (SI 2014/1643)
The principal instrument.
- legislation.gov.ukSI 2014/1643, Schedule 1 ¶¶1, 1A and 11 — the large undertaking test
At least 250 employees, or turnover over £44m and balance sheet over £38m; the two-period retention rule.
- legislation.gov.ukSI 2014/1643, regulation 4 — compliance periods and dates
Generates the Phase 4 dates: 6 Dec 2023 to 5 Dec 2027, qualification date 31 Dec 2026.
- legislation.gov.ukSI 2014/1643, regulation 21 — the lead assessor
Regulation 21(3): no lead assessor below 40,000 kWh.
- legislation.gov.ukSI 2014/1643, regulation 25 — significant energy consumption
At least 95% of total consumption, by units or by spend.
- legislation.gov.ukSI 2014/1643, regulation 25C — energy intensity ratios
A ratio for each organisational purpose.
- legislation.gov.ukSI 2014/1643, regulation 30 — responsible officers and independence
One officer where the lead assessor is independent; two otherwise.
- legislation.gov.ukSI 2014/1643, Part 8 — civil penalties, regulations 39–47
The five penalties and their maxima.
- legislation.gov.ukThe ESOS (Amendment) Regulations 2023 (SI 2023/1182)
The 95% threshold, the 40,000 kWh lead-assessor exemption and action plans.
- legislation.gov.ukThe ESOS (Amendment) Regulations 2026 (SI 2026/701)
In force 22 July 2026: the Phase 4 changes.
- Environment AgencyHow to comply with the Energy Savings Opportunity Scheme (ESOS) phase 4
Published 30 July 2026; the milestone table and §4.5 on other schemes.
- Environment AgencyESOS phase 4, Appendix C — advice for complying with ESOS
How CCA and UK ETS data can feed an ESOS assessment.
- GOV.UK / Environment AgencyEnergy savings opportunity scheme (ESOS): find out if you qualify and how to comply
Rewritten for Phase 4 on 2 September 2026; the seven approved registers and the audit data window.
- Environment AgencyEnforcement and sanctions policy, Annex 2: climate change schemes
§D2.3: a lower initial penalty for new entrants.
- Department for Business, Innovation, Science and TradeModernising corporate reporting (consultation, 7 September – 30 November 2026)
¶150: DESNZ intends to consult on SECR and ESOS later in 2026.
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