Are you ESOS Phase 3 Compliant?

As professional Lead Assessors and experts on Environmental Legislations we have done the heavy lifting and summarised the changes for you. We’ve scrutinised the new Statutory Instrument (SI) which came into force on 29 November 2023, and reviewed all the available government guidance. Check below to see if you are fully ready for disclosure.

Key updates include:

1.    Extending the deadline for notification of compliance to 5 June 2024 (from the previous deadline of 5 December 2023).

2.    Reducing the de-minimis to 5% of the undertaking’s Total Energy Consumption (TEC), meaning that at least 95% of the undertaking’s energy consuming assets must be audited.

3.    Requiring all ESOS participants to produce an ESOS report, including those that used only alternative compliance routes for ESOS compliance.

4.    The calculation and reporting of energy intensity metrics for buildings, transport, industrial processes, and any other relevant energy uses.

5.    Including an estimate of energy savings achieved by the participant since the previous ESOS compliance period (for ESOS Phase 3, this is energy savings achieved between 06 December 2019 and 05 December 2023).

6.    Energy Saving Opportunities must be classified by organisational purpose and energy saving category. 

7.    Energy Audits must include a suggested programme for implementing energy saving measures.

8.    A list of available funding for implementing energy saving opportunities must be included.

9.    If estimations are necessary, the reasons and methodology must be kept in the evidence pack.

10. For those reporting as the highest UK parent company, the disclosure of relevant information from the ESOS report to all members of the corporate group (e.g., identified energy saving opportunities and implementation plans that are relevant to a subsidiary).

11. Undertakings that consume less than 40,000 kWh over the annual reference period can now be exempt from appointing a lead assessor provided two board-level directors sign off on the compliance notification (for all other reports only one board-level director signature is needed).

12. For participants with an ISO 50001 energy management system certified by an accredited certification body and covering all energy supplies as included under ESOS, the total energy consumption must now be calculated in order to calculate energy intensity ratios.

13. Assets held in trust must be included in ESOS if the organisation that is party to the agreement for the supply of energy to the assets qualifies for ESOS.

14. Previously, the Environment Agency published a list of which undertakings complied with ESOS. In addition to this, the EA will publish energy consumption data, energy intensity ratios, estimates of energy savings achieved, action plans, and progress updates received from participants for Phase 3.

15. Following submission of the compliance notification:

a.    Completing an ESOS Action Plan, setting out any commitments to implement energy efficiency measures. This action plan must be submitted by 05 December 2024, to cover the period of 06 December 2023 to 05 December 2027.

b.   Completing two annual progress updates against the participant’s action plan. The deadline for the first progress update is 05 December 2025, and for the second progress update is 05 December 2026.

c.    Note: Action plans and progress reports must be submitted, even if no action is to be taken. If action plans or progress reports are not submitted, the EA will publish that you do not intend to carry out any energy saving action.

A new online notification system will replace the ‘SmartSurvey’ system used in ESOS Phase 2. In the new online system, the Responsible Undertaking will be required to create a user account and can then add their Lead Assessor as an editor able to upload information. The Responsible Undertaking, not the Lead Assessor, will be responsible for submitting the notification.

The new online notification system is currently undergoing beta testing and will undergo a digital service assessment in February 2024. The EA have advised they will make the system available for submissions once all testing is completed.

Responsible Undertakings may receive a “pre-onboarding exercise” email from the Environment Agency, asking for basic company and contact information to be entered into an online form.

Please note that the qualification thresholds and dates have not changed; ESOS Phase 3 applies to all organisations that met either of the below qualification criteria on 31 December 2022:

1.    Employed 250 or more people, or



2.    Had an annual turnover in excess of £44 million, and an annual balance sheet total in excess of £38 million.

The 12 months of consecutive energy data for analysis must still include 31 December 2022.

Need help? Contact PASCHALi for expert advice and support.

info@paschali.co.uk; Tel: 0113 400 1101

Ref:

1.   Statutory Instrument (SI) which came into force on 29 November 2023

2.   Webinar hosted by the Environment Agency (EA) and Department for Energy Security and Net Zero (DESNZ) on 25 January 2024.

3.   Latest government guidance as published 29 November 2023.