ESOS Phase 3 vs Phase 4 — what changed

Phase 3 vs Phase 4 — the regulatory basis for changes

ESOS Phase 4 changes were introduced primarily through the Energy Savings Opportunity Scheme (Amendment) Regulations 2023 (SI 2023/1182). These regulations amended the original ESOS Regulations 2014 (SI 2014/1643) to reflect government consultation findings on improving the scheme's effectiveness.

The 2023 amendments applied in two stages.

Some changes took effect for Phase 3 compliance (primarily the action plan requirement, standardised notification template, and Phase 3 progress reporting).

The more significant changes — removal of DEC and GDA routes, increased coverage threshold, and enhanced lead assessor requirements — apply from Phase 4 onwards under SI 2014/1643 as amended.

The DESNZ Phase 4 guidance, updated in February 2026, provides the current operational framework for Phase 4 compliance.

Organisations should use this guidance alongside SI 2023/1182 rather than relying on Phase 3 guidance which predates the 2023 amendments.

Timeline and deadline changes

Phase 3 ran from 6 December 2019 to 5 December 2023, but the compliance deadline was extended to 5 June 2024 due to delays in the scheme from the 2023 consultation process. The Phase 3 action plan was separately due by 5 March 2025 (extended from 5 December 2024).

Phase 4 runs from 6 December 2023 to 5 December 2027.

The qualification date for determining Phase 4 scope is 31 December 2026 — a single point-in-time test.

Organisations that qualified for Phase 3 should not assume they automatically qualify for Phase 4; the qualification test must be re-run using 31 December 2026 figures.

Coverage threshold: 90% to 95%

One of the most operationally significant Phase 4 changes is the reduction of the de minimis threshold from 10% to 5%.

Under Phase 3, organisations only needed to audit 90% of their total UK energy consumption.

Under Phase 4, the requirement is 95% minimum coverage — meaning no more than 5% of total energy consumption may be excluded from audit or alternative compliance route coverage.

For most organisations, this change will require expanding the scope of their energy audits.

Sites or activities that were previously excluded under the 10% de minimis may now fall within the required audit scope under DESNZ Phase 4 guidance.

Organisations should re-examine their Phase 3 energy audit scope to identify what was excluded and determine whether those elements must now be included in Phase 4 coverage.

The practical impact varies by organisation type.

Organisations with a small number of high-energy sites (manufacturing, data centres) typically found 90% coverage straightforward to achieve.

Organisations with large distributed property portfolios or complex transport fleets may find the additional 5% requirement under SI 2023/1182 involves auditing additional smaller sites that were previously excluded.

DEC and GDA compliance routes removed

Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) were removed as standalone ESOS compliance routes by SI 2023/1182.

This affects organisations that used these routes in Phases 1, 2, or 3 to cover part or all of their energy consumption.

DECs were commonly used by organisations with large portfolios of public-sector or commercial buildings where DECs were already required under building energy performance regulations.

GDAs were used by organisations that had undergone Green Deal assessments for their properties.

Both routes are now invalid for Phase 4.

• Existing DECs cannot be used as ESOS Phase 4 compliance evidence, even if they remain within their validity period
• GDA evidence from Phase 3 cannot satisfy Phase 4 audit requirements as standalone compliance
• DEC and GDA data may be used as supporting information in a Phase 4 ESOS energy audit — but cannot replace it
• Organisations that relied exclusively on DECs or GDAs for Phase 3 must now commission a full ESOS audit or obtain ISO 50001 certification

Action plans — from introduced to mandatory

Action plans were introduced as a new ESOS requirement in Phase 3 by SI 2023/1182.

The Phase 3 action plan (covering what energy efficiency measures the organisation committed to implementing) was due by 5 March 2025 — after the Phase 3 compliance notification deadline.

In Phase 4, action plans are a mandatory element of the compliance assessment itself — not a separate post-deadline requirement.

The Phase 4 guidance requires that the action plan must exist and have board-level approval before the compliance notification is submitted.

The Phase 4 action plan deadline is 5 December 2028 for the formal action plan document, but board-approved action plan commitments must be reflected in the Phase 4 compliance notification.

Annual progress updates against action plan commitments are required from Phase 4.

This creates an ongoing reporting obligation between compliance phases — organisations must report on action plan implementation progress annually, not just at the four-yearly compliance cycle.

Phase 3 progress reporting requirement

A new Phase 4 requirement (SI 2023/1182) is the documentation of progress against Phase 3 action plan recommendations.

The Phase 4 energy audit assessment must include a review of what the organisation committed to in its Phase 3 action plan, what was implemented, what was not implemented, and reasons for any non-implementation.

This creates accountability continuity between phases.

Organisations cannot complete each four-yearly audit in isolation — the ESOS Regulations now explicitly connect Phase 4 assessments to Phase 3 commitments.

The DESNZ guidance recommends starting this Phase 3 progress review early while information is still accessible, rather than attempting to reconstruct records close to the 2027 deadline.

Organisations that did not create clear Phase 3 action plans (or where the plans were not well documented) will face challenges in meeting the Phase 3 progress reporting requirement.

The retrospective nature of this requirement underlines the importance of maintaining good records of ESOS compliance activity across phases.

Mandatory report sharing with subsidiaries

Under SI 2023/1182, the responsible undertaking for group ESOS compliance must share relevant information from the ESOS report with all subsidiary members of the qualifying corporate group.

The Phase 4 compliance notification must confirm that this sharing has occurred.

This is an administrative addition to the group compliance framework.

It does not require subsidiaries to produce separate ESOS reports or submit their own notifications.

However, the parent must formally distribute the group ESOS assessment to all UK subsidiaries — a step that was not mandatory in Phase 3.

For complex groups with many subsidiaries, the distribution process should be planned as part of the overall Phase 4 compliance programme to ensure it does not delay notification submission.

ISO 50001 route — what changed

ISO 50001 certification remains a valid ESOS compliance route in Phase 4, but the coverage requirement has changed.

In Phase 3, ISO 50001 certification covering at least 95% of energy consumption (primarily building energy in most cases) could be used as an alternative compliance route.

In Phase 4, ISO 50001 must cover 100% of the organisation's UK energy consumption — including buildings, transport, and industrial processes — to serve as a standalone compliance route.

Partial ISO 50001 coverage (less than 100%) can still be combined with a standard ESOS energy audit covering the remaining energy consumption to reach the 95% total threshold.

Organisations with ISO 50001 certification that covers buildings only (a common configuration) will need to either extend their ISO 50001 boundary to include transport and processes, or commission a complementary ESOS energy audit for those energy streams.

See the ISO 50001 ESOS compliance guide for detailed guidance on the Phase 4 requirements.

Net zero assessment — deferred to Phase 5

The government had proposed including a mandatory net zero assessment element in Phase 4 ESOS audits.

This would have required organisations to assess their long-term decarbonisation pathway alongside the standard energy efficiency audit.

Following the government consultation, the net zero requirement was deferred to Phase 5.

Net zero assessment is therefore voluntary for Phase 4.

Organisations can choose to include net zero assessment in their Phase 4 ESOS audit as a voluntary element, and the government developed PAS 51215 as a supporting standard for net zero assessment in ESOS contexts.

However, inclusion is not required for Phase 4 compliance.

Given the direction of travel — net zero is mandatory in Phase 5 — organisations that invest in voluntary net zero assessment in Phase 4 will be better prepared for the additional obligations in the next compliance cycle.

For organisations already developing transition plans under UK SRS S2, integrating ESOS net zero assessment with the UK SRS transition planning process creates efficiency.

Lead assessor requirement changes

Phase 4 introduced enhanced continuing professional development (CPD) obligations for ESOS lead assessors under the updated DESNZ guidance.

Lead assessors must meet the revised competency framework for Phase 4 — having completed ESOS assessments in earlier phases does not guarantee that an individual meets Phase 4 accreditation requirements.

Approved lead assessor registers are maintained by the Chartered Institution of Building Services Engineers (CIBSE) and the Energy Institute (EI).

Organisations should verify that their chosen lead assessor's accreditation is current on the relevant register before commissioning Phase 4 work.

An audit signed off by a non-accredited or lapsed-accreditation assessor will not satisfy ESOS compliance requirements.

Full comparison table: Phase 3 vs Phase 4

Frequently asked questions