Energy compliance is not optional for large UK businesses.
If your organisation qualifies under the Energy Savings Opportunity Scheme, you have legal obligations to meet, and the deadlines are real. Miss them, and you face financial penalties, public enforcement action, and reputational damage.
ESOS Phase 3 introduced new compliance requirements for large UK businesses. Understanding these changes and the necessary steps to ensure compliance is crucial.
This guide covers everything you need to know about ESOS Phase 3, what it is, who it applies to, what the key requirements are, and what the ongoing deadlines look like in 2026. We also explain how BizGrow Holdings helps UK organisations navigate ESOS compliance without unnecessary stress.
What Is ESOS?
The Energy Savings Opportunity Scheme is a compulsory energy compliance programme specifically intended for large businesses in the UK. Its primary goal is to help organisations reduce their energy costs and carbon footprint by identifying energy-saving opportunities through a comprehensive energy audit.
ESOS makes energy audits mandatory for large organisations. It requires participants to carry out an assessment of their energy use across their buildings, transport, and industrial operations, and identify opportunities for energy efficiency, such as insulation, lighting upgrades, and sub-metering.
The scheme runs in four-year phases. Organisations that qualify for ESOS must carry out ESOS assessments every four years.
What Is ESOS Phase 3?
The Energy Savings Opportunity Scheme runs in four-year phases. We are currently in Phase 4, which began on 6 December 2023. Some businesses have yet to complete their obligations under Phase 3.
The compliance deadline for Phase 3 was 5 June 2024, extended to 6 August 2024 due to IT problems with the online compliance portal.
Phase 3 introduced several important new requirements that were not present in earlier phases:
- ESOS Phase 3 mandated large UK businesses to undergo comprehensive energy audits, increasing audit coverage from 90% to 95% of total energy consumption.
- A new Action Plan requirement organisations have to produce a written plan outlining their energy-saving commitments for the next four years.
- A key new requirement for Phase 3 compliance was calculating the energy intensity ratio, which quantifies energy consumption in relation to specific outputs such as energy use per unit area for buildings or per unit output for industry.
- The changes in Phase 3 placed a big emphasis on public disclosure of information. The Environment Agency publishes most of the information provided in your compliance notification, including total and significant energy consumption, potential reductions, and energy savings achieved.
If your organisation was in scope for Phase 3 and has not yet completed its obligations, act now. In July 2025, the Environment Agency said over 80% of organisations are now compliant with Phase 3, with more being brought into compliance. If you have missed deadlines that have passed, you may be at risk of enforcement action and should contact the Environment Agency.
Who Must Comply With ESOS Phase 3?
The scheme applies to UK undertakings which qualify as large for the scheme.
An organisation qualifies if it employs 250 or more persons, or has an annual turnover of more than £44 million and an annual balance sheet of more than £38 million.
If a corporate group contains just one large UK undertaking, that group’s entire UK operations will be subject to the scheme. For example, a UK investment company or LLP which does not have any turnover and employs fewer than 250 employees will still fall within scope if at least one member of its group meets one of the above criteria.
Examples of organisations that can qualify include:
- UK limited companies
- LLPs and partnerships
- Joint ventures and trusts
- Corporate groups containing at least one qualifying UK undertaking
Public bodies and companies in insolvency are excluded from the scheme. Overseas undertakings are not required to participate; however, a group which contains an overseas undertaking can still qualify where there is a UK undertaking which qualifies as large within the group.
ESOS Phase 3 Key Requirements
Energy Audits
An auditor must review your organisation’s energy data using 12 months of data and survey your sites using energy consumption profiling to understand where energy is used and wasted.
The audit must cover at least 95% of your total energy consumption, covering buildings, transport, and industrial processes. This is a stricter threshold than the 90% required in Phase 2.
Lead Assessor Requirements
All ESOS audits must be carried out or overseen by a qualified ESOS Lead Assessor. An accredited assessor can be helpful in guiding your compliance process and ensuring your energy efficiency rating is properly calculated.
Lead Assessors must be registered with a recognised professional body such as CIBSE, EI, or IEMA. Their role is to review your energy data, conduct site surveys, and sign off on your compliance notification.
Notification to the Environment Agency
The scheme administrator is the Environment Agency. The extended deadline for Phase 3 compliance passed on 6 August 2024. The Environment Agency is pursuing non-compliant organisations.
Notification is submitted through the Manage your ESOS (MESOS) online portal. This submission must include your total energy consumption, significant energy consumption, and confirmation that the required audit has been completed.
Action Plans | New for Phase 3
Phase 3 of ESOS introduced a new requirement for organisations to produce an Action Plan outlining what they intend to do to reduce their organisation’s energy consumption over the next four years, and how they estimate those energy savings.
The Action Plan must be signed off by a board-level director or equivalent and submitted via the compliance notification system.
If you decide your organisation will take no action at all, it is perfectly lawful to submit an official notification confirming this, but this will be made public, so your organisation needs to consider the reputational risk of being seen to do nothing.
ESOS Phase 3 Deadline | What You Need to Know
Here is the full ESOS Phase 3 timeline with current deadlines:
- Qualification date: 31 December 2022
- Notification of compliance deadline: 6 August 2024 (passed)
- Action Plan submission deadline: 5 March 2025 (passed)
- First Action Plan Progress Update: 5 December 2025
- Second Action Plan Progress Update: 5 December 2026
Each progress update covers the 12 months preceding the deadline and must be signed off by a board-level director or equivalent, then submitted through the notification system.
If you are still working through Phase 3 obligations, the second progress update deadline of 5 December 2026 is now your most immediate priority.
Looking ahead: The qualification date for Phase 4 is 31 December 2026. If your organisation meets the size criteria on that date, you will be in scope for ESOS Phase 4. The compliance deadline for ESOS Phase 4 is currently 5 December 2027.
Penalties for Non-Compliance
Ignoring ESOS obligations is a serious risk. The maximum financial civil penalties for failing to comply with ESOS include: failure to carry out an energy audit £90,000; failure to notify the Environment Agency of compliance £45,000; failure to comply with a notice issued by the Environment Agency £45,000; making a false or misleading statement £50,000; failure to maintain records £5,000.
Beyond financial penalties, organisations may face ongoing daily fines until compliance is achieved.
Failure to submit an ESOS Action Plan or Progress Updates will not attract enforcement action or financial penalties directly, but the Environment Agency will publish that the organisation has failed to submit. The reputational damage of being publicly listed as non-compliant is a significant risk in itself, particularly for businesses that work with public sector clients or want to demonstrate environmental responsibility.
How to Achieve ESOS Phase 3 Compliance | Step by Step
Step 1 | Determine whether you are in scope. Check whether your organisation met the Phase 3 qualification criteria on 31 December 2022, 250 or more employees, or turnover above £44 million and balance sheet above £38 million.
Step 2 | Appoint a qualified Lead Assessor. Engage a registered ESOS Lead Assessor to oversee your energy audit. They must be accredited by a recognised professional body.
Step 3 | Gather 12 months of energy data. Collect energy consumption data across all buildings, transport, and industrial operations. Your reference period must cover 12 consecutive months.
Step 4 | Conduct your energy audit. Your Lead Assessor reviews your energy data, surveys your sites, and identifies energy-saving opportunities. The audit must cover at least 95% of your total energy consumption.
Step 5 | Submit your compliance notification. Submit through the MESOS portal. Include your total energy consumption, significant energy consumption, and audit confirmation.
Step 6 | Complete and submit your Action Plan. If you have not already submitted your Phase 3 Action Plan, do so immediately. The Plan must be board-level signed and made public.
Step 7 | Submit Progress Updates. Submit progress reports on 5 December 2025 and 5 December 2026, covering the energy-saving actions implemented during each 12 months.
How BizGrow Holdings Helps You Meet ESOS Phase 3
ESOS compliance involves significant data collection, expert assessment, regulatory submission, and ongoing reporting. Many organisations find the process complex and time-consuming, especially when managing it alongside day-to-day business operations.
At BizGrow Holdings, we support UK organisations in meeting their ESOS Phase 3 and Phase 4 obligations. Our compliance team helps you:
- Determine whether your organisation is in scope for ESOS Phase 3 or Phase 4
- Identify and appoint a qualified ESOS Lead Assessor
- Collect and organise 12 months of energy consumption data across buildings, transport, and operations
- Manage the energy audit process from start to finish
- Prepare and submit your compliance notification through the MESOS portal
- Develop your Action Plan board-signed and publicly compliant
- Prepare and submit both annual Progress Updates, 5 December 2025 and 5 December 2026
- Begin Phase 4 preparation ahead of the 31 December 2026 qualification date
- Keep all records and documentation for the Environment Agency scrutiny
We take the complexity out of ESOS compliance so you can focus on running your business with confidence that your regulatory obligations are being met.
Visit bizgrow-holdings.com to speak with our compliance team today.
Conclusion
ESOS Phase 3 has significant ongoing obligations in 2026, particularly the second Progress Update due on 5 December 2026. And with Phase 4 qualification approaching on 31 December 2026, the compliance window is tightening further.
The Environment Agency is expected to continue strengthening enforcement actions and issuing penalties for non-compliance. Organisations must stay up to date with the latest guidance and regulations to ensure compliance and maximise the benefits of ESOS.
FAQs About ESOS Phase 3 in the UK
1. What is the ESOS Phase 3 deadline in the UK?
The Phase 3 compliance notification deadline passed on 6 August 2024. The second Action Plan Progress Update is due on 5 December 2026. Phase 4 compliance is due by 5 December 2027.
2. Who qualifies as a large undertaking for ESOS?
Any UK organisation with 250 or more employees, or with an annual turnover above £44 million and a balance sheet above £38 million. Corporate groups containing one qualifying UK undertaking are also in scope.
3. What happens if you miss the ESOS Phase 3 deadline?
You face financial penalties up to £90,000 for audit failures and £45,000 for notification failures, plus ongoing daily fines. Non-compliance is also published publicly by the Environment Agency, causing reputational damage.
4. Do SMEs need to comply with ESOS Phase 3?
No. ESOS only applies to large undertakings meeting the size thresholds. SMEs below the employee and turnover thresholds are not in scope and are not required to comply.
5. What is an ESOS Lead Assessor?
An ESOS Lead Assessor is a qualified professional registered with a recognised body such as CIBSE, EI, or IEMA who is authorised to oversee ESOS energy audits and sign off compliance notifications on behalf of your organisation.