ESOS PHASE 3: A WARNING TO BUSINESSES

by | Oct 20, 2023 | All News, Latest News | 0 comments

In the world of energy management and sustainability, the Energy Savings Opportunity Scheme (ESOS) is a well-known and often-discussed topic. ESOS Phase 3 has been making headlines recently due to an extension in the deadline, but I urge businesses not to leave their compliance efforts until the last moment in 2024. Here’s why.

The most significant change in ESOS Phase 3 is the reduction of the de minimis threshold to 5%. This change is likely to bring a significant number of additional sites into the scope of ESOS audits. Traditionally, transport has been the category that filled the de minimis allowance for many companies. With this reduction, we can expect more transport-related activities to be scrutinised under ESOS.

One key takeaway from this change is that meaningful transport audits will require more than just recording mileage. Companies will face greater scrutiny to provide more comprehensive and accurate data to support their recommendations. While some may view this as a challenge, it’s an opportunity for organisations to gain a deeper understanding of their energy consumption and identify areas for improvement.

Another notable change is the introduction of a roadmap or action plan for ESOS recommendations. While companies are not currently required to implement these recommendations, it’s essential to understand that in ESOS Phase 4 (scheduled for 2027), actions are expected to become mandatory. The Environment Agency (EA) will likely provide some leeway in Phase 4, but the emphasis will be on demonstrating reductions in energy consumption compared to previous phases.

However, the biggest bombshell for ESOS is that the proposed Phase 4 will see the expansion of its scope to include medium-sized businesses. There are approximately 36,000 medium-sized businesses in the UK, and they will be directly affected by this new update from the EA. This expansion means that medium-sized businesses will need to comply with ESOS and integrate the changes brought about in Phase 3.

This expansion to medium-sized businesses will undoubtedly have a significant impact. These businesses will face the dual challenge of complying with ESOS requirements and adapting to the updates from Phase 3. While the specifics of Phase 4 are not yet known, it’s evident that ESOS is becoming more stringent and comprehensive with each phase.

In conclusion, ESOS Phase 3 is ushering in a new era of energy management and compliance. The reduction of the de minimis threshold, the emphasis on meaningful transport audits, and the introduction of action plans are all significant changes that businesses should not underestimate. Moreover, the looming Phase 4 in 2027, with its extension to medium-sized businesses, should serve as a wake-up call.

To avoid compliance headaches and seize the opportunity to improve energy efficiency, companies should start their ESOS Phase 3 preparations now. Waiting until the last moment in 2024 might prove costly and challenging. By taking proactive steps, businesses can not only meet regulatory requirements but also reap the benefits of reduced energy consumption and a more sustainable future. Click here to find out more about our ESOS services.