ESOS Phase 4: who qualifies, the 2027 deadline and what to do with your audit

ESOS Phase 4: key facts

What is ESOS? The Energy Savings Opportunity Scheme in plain English

ESOS is the UK's mandatory energy assessment scheme for large organisations. It runs in four-year phases. In each phase, every organisation in scope has to measure its total energy use (buildings, industrial processes and transport), have the significant part of it audited, identify cost-effective ways to save energy, and tell the regulator it has done so.

ESOS doesn't force you to install anything. What it does force is a board-level look at where your energy goes and what it would cost to cut it, with the results reported to the regulator. Since Phase 3 you also have to submit an action plan and annual progress updates, and from Phase 4 the Environment Agency will publish each participant's total energy consumption.

Notifications, action plans and progress updates all go through the Environment Agency's online reporting system, MESOS.

Who qualifies for ESOS Phase 4?

You're in scope if, on the qualification date of 31 December 2026, your organisation is a large undertaking. GOV.UK says that means it meets either or both of these tests:

Groups, overseas companies and the public sector

• Corporate groups: if at least one undertaking in a UK group qualifies, the entire UK operation takes part. By default the highest UK parent acts as the responsible undertaking.
• Overseas companies: GOV.UK says UK registered establishments of an overseas company take part, regardless of their size, if any other part of the global group's UK activities qualifies.
• Public sector: public sector organisations don't usually need to comply.
• Close to the line? The Phase 4 guidance has a section on organisations that are very close to the thresholds or have recently grown or shrunk. Check it before you decide you're out.

Your size on 31 December 2026 is what counts for Phase 4. If you're growing towards the thresholds, plan the audit now rather than leaving it to the last months before 5 December 2027.

ESOS Phase 4 deadlines: every date from 2026 to 2030

What an ESOS Phase 4 assessment must cover

An ESOS assessment has three parts: measure total energy, audit the significant part of it, and report what could be saved.

• Total energy consumption across buildings, industrial processes and transport, over a reference period of 12 consecutive months, based on verifiable data where reasonably practicable.
• Significant energy consumption: the audits must cover at least 95% of the total. Up to 5% can be left out as de minimis.
• Energy savings opportunities: the audit must identify them, and cost-effective ones where practicable.
• Money and payback: for each opportunity the report gives an estimate, in pounds, of the costs and benefits, the payback period, and the annual reduction in energy spend and in kWh. Where practicable, costs should use life cycle cost analysis.
• Energy intensity ratios for each organisational purpose, plus total energy consumption in kWh.
• Lead assessor sign-off: you must appoint a lead assessor from an approved register, unless your total consumption is under 40,000kWh or ISO 50001 certification covers your energy use. If the lead assessor is your own employee, two directors must provide the confirmations.

What changed for Phase 4

• No more DEC or Green Deal shortcuts. Display Energy Certificates and Green Deal assessments can no longer be used as alternative compliance routes, so buildings need a proper audit.
• Your energy use goes public. From Phase 4 the Environment Agency will publish each participant's total energy consumption.
• Net zero is optional. You can choose to include net zero considerations using the BSI PAS 51215 standards.

ESOS penalties: fines of up to £50,000

The Phase 4 guidance sets out the civil penalties regulators can impose. They are maximums: regulators can waive or reduce them.

Publication means the regulator names the organisation, the requirement it broke and the size of the fine. On action plans the guidance is specific: regulators won't fine you for not submitting an action plan or progress update, but the failure is still published by the scheme administrator. For a listed company or a business bidding for public contracts, that's a reputational cost in itself.

Your ESOS action plan: from audit to installed measures

An ESOS report on its own saves nothing. The action plan is where that's meant to change. For each measure, you say when you intend to implement it, whether an energy audit recommended it, and the savings you expect, with how you estimated them. You can say you won't implement anything, but that goes on the public record too.

The weak point is the numbers. Audit costs are estimates. A firm installer quote turns an estimate into a price your finance director can sign off. These are the measures an installer can survey and quote for, and where to read up on each:

Can't fund the capital? A power purchase agreement puts solar on your roof with no upfront cost: see commercial solar PPAs.

Paying for ESOS measures: tax allowances and rates

There is no single national grant that pays for business solar, batteries or efficiency upgrades in England. The money comes from tax allowances, the business rates exemption, export payments, the Boiler Upgrade Scheme, the Workplace Charging Scheme and local or sector funds. For a large business, the tax position usually matters most:

• Solar panels are special-rate plant. Solar panels are special-rate plant for tax. The Annual Investment Allowance (£1 million a year) can write off the cost in year one. Above that, companies can claim the 50% first-year allowance. Full expensing does not apply to solar. See solar capital allowances.
• Lighting and heating systems are integral features under HMRC's manual (CA22320), which makes them special-rate expenditure too. The Annual Investment Allowance can be used against them.
• Business rates: In England, on-site solar, and battery storage that mainly stores renewable power, are left out of your rateable value until 1 April 2035, so adding panels doesn't push up your business rates. Wales and Scotland have similar exemptions to 2035.
• EV chargepoints: The Workplace Charging Scheme pays up to £500 per socket (it went up from £350 on 1 April 2026), capped at 75% of costs, for up to 40 sockets across all your sites. That's up to £20,000. Funding runs until 31 March 2027, its final year.
• Rented-out buildings: Since 1 April 2023 you can't keep letting a commercial property in England or Wales rated below EPC E unless you register an exemption. In June 2026 the government dropped the planned EPC C by 2027 step. It now proposes EPC B from 2031 for buildings over 1,000 square metres, where cost-effective. See MEES and commercial EPCs.

Every figure here is general. Your accountant should confirm how the allowances apply to your group.

How we help after your ESOS audit (we're not lead assessors)

To be clear about our role: we don't carry out ESOS assessments and we aren't lead assessors. You need a lead assessor from an approved register for the audit and sign-off. What we do is the next step. Once you know which measures you want to price, we pass your enquiry to one suitable installer that does commercial work, for a site survey and a quote.

What to send the installer

• The recommendations section of your ESOS report, or the measures you're shortlisting.
• Twelve months of electricity data, ideally half-hourly, for each site in scope.
• Site addresses, roof plans and who owns or leases each building.
• Your action plan timetable and any board or budget deadlines.

Next steps

1. Send us the basics using the form. It takes two minutes.
2. One installer contacts you to arrange a survey. You won't be passed round a list.
3. Survey and quote, with costs and expected savings you can put straight into your ESOS action plan.
4. Install, then report the progress in your annual ESOS update.