The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment and audit scheme for large UK enterprises. Phase 4 of ESOS opened on 6 December 2023 and the compliance deadline — by which participating organisations must have completed their audit and submitted a notification to the Environment Agency (or Natural Resources Wales for Welsh public sector bodies) — is 5 December 2027. For Welsh businesses that qualify, the audit obligation is live now and the clock is running.
Who must comply with ESOS Phase 4?
ESOS applies to large enterprises — defined by the UK Government as organisations that meet one of the following criteria:
- 250 or more employees, or
- Annual turnover exceeding €50 million AND annual balance sheet total exceeding €43 million
Linked and partner enterprises (group structures, subsidiaries, parent companies) are assessed together. A Welsh company that is a subsidiary of a large UK or international group almost certainly qualifies even if the Welsh entity employs fewer than 250 people.
Organisations must assess whether they qualify as of 31 December 2022 for Phase 4 purposes. If you qualified at that reference date, you must comply with Phase 4.
What ESOS Phase 4 requires
An ESOS audit must cover all the organisation’s energy — buildings, transport and industrial processes. The audit must be:
- Carried out or reviewed by a Lead Assessor holding a recognised qualification (typically an IEMA-registered ESOS Lead Assessor or an energy auditor approved by a competent body such as CIBSE or EIC)
- Comprehensive: covering at least 90% of total energy consumption across all sites
- Action-oriented: producing a list of costed energy saving recommendations with estimated savings
- Compliant with EN 16247 (European energy audit standard)
The notification to the Environment Agency (or NRW for Welsh devolved public bodies) must be submitted through the ESOS portal by 5 December 2027 and must confirm that the audit has been completed and reviewed by the Lead Assessor.
Phase 4 changes from Phase 3
ESOS Phase 4 introduces several changes from the previous compliance cycle:
Net zero alignment: Phase 4 guidance requires the audit to address alignment with net zero commitments and identify measures that support long-term decarbonisation, not only short-term efficiency gains. For Welsh businesses with supply chain sustainability requirements, this means the ESOS audit can serve as the evidence base for scope 3 emissions reduction commitments.
Alternative compliance routes: ISO 50001 energy management system certification remains a recognised alternative compliance route — organisations with a certified ISO 50001 system in place do not need to complete a separate ESOS audit. However, the ISO 50001 system must cover all the organisation’s significant energy uses.
Increased enforcement: The Environment Agency increased penalty notices under Phase 3. Phase 4 penalties for non-compliance are up to £50,000 for failure to notify plus £500 per working day for continued non-compliance after a compliance notice.
How solar and battery storage interact with ESOS
For organisations that have already installed or are considering rooftop solar and battery storage, ESOS Phase 4 creates a direct interaction:
Solar in the audit: An ESOS audit must account for on-site generation from solar. A building with a 200kWp rooftop solar array generating 180,000 kWh per year has significantly different grid import figures than an identical building without solar — the audit must reflect actual energy flows, not just grid import.
Solar as a recommended measure: In most cases where a commercial building has suitable roof space and the organisation does not already have solar, the ESOS audit will recommend solar installation as a costed energy saving measure. The recommendation carries no legal obligation to act, but many organisations use ESOS as the formal trigger to commission a solar feasibility study.
Battery storage and demand shifting: ESOS Phase 4 guidance specifically includes demand-side flexibility measures — battery storage, smart EV charging, load scheduling — as valid energy efficiency recommendations. For Welsh manufacturers and logistics operators with time-of-use electricity tariffs, battery storage optimisation can represent significant annual savings.
Welsh businesses: NRW or Environment Agency?
Most Welsh businesses report to the Environment Agency for ESOS purposes — not Natural Resources Wales. NRW is the lead competent authority only for Welsh devolved public bodies (Welsh Government, Local Authorities, NHS Wales bodies, Natural Resources Wales itself).
Private sector Welsh businesses — manufacturers, hospitality groups, retail chains, professional services firms — notify the Environment Agency regardless of whether all their operations are in Wales.
FLD’s role in ESOS compliance
FLD is not an ESOS Lead Assessor firm — ESOS audits must be carried out by qualified Lead Assessors. However, FLD provides complementary support for Welsh businesses going through ESOS Phase 4:
Pre-audit energy baseline: FLD can prepare a site energy consumption analysis covering electricity, gas and fuel usage across Welsh sites, formatted for use as input data by the Lead Assessor.
Solar feasibility as ESOS evidence: Where the ESOS audit recommends solar as a measure, FLD provides a fully costed feasibility report — system size, generation estimates, capital cost, payback, available grants — that satisfies the audit’s costed recommendation requirement.
Post-audit implementation: FLD installs the solar, battery storage and EV charging measures recommended by the ESOS audit, managing DNO applications, grant submissions and commissioning through to handover.
For organisations whose ESOS audit is scheduled for 2025 or 2026, commissioning a FLD solar feasibility report now ensures that the recommendation can be costed accurately in the audit and that installation is complete before the December 2027 notification deadline.
Call Paul on 01792 680611 to discuss ESOS Phase 4 and how a solar feasibility assessment fits your compliance timeline.