ESOS Phase 4: What Businesses Need to Know
8 September 2025
ESOS Phase 4: What Businesses Need to Know
The Energy Savings Opportunity Scheme (ESOS) Phase 4 is underway, starting on 6 December 2023, with a compliance deadline of 5 December 2027. UK businesses must understand ESOS Phase 4 eligibility, key changes, and deadlines to ensure compliance and avoid penalties. This guide covers everything you need to know about ESOS Phase 4 for UK businesses.
Who needs to comply with ESOS Phase 4?
The ESOS Phase 4 eligibility criteria remain consistent with Phase 3. Your organisation qualifies as a “large undertaking” if, on the qualification date of 31 December 2026, it meets all of these requirements:
- Based and registered in the UK
- Employs 250 or more people
- Has an annual turnover above £44 million
- Has an annual balance sheet total over £38 million
To confirm your ESOS Phase 4 eligibility, visit our site and answer the questions to see if your business should be participating.
Even if you don’t currently meet these criteria, crossing the threshold by the qualification date means you must submit a compliance notification by the ESOS Phase 4 deadline of 5 December 2027.
If your business qualified for Phase 3 but no longer meets the criteria, you must submit a “Do Not Qualify” (DNQ) notification via the Environment Agency’s MESOS portal.
Key requirements for Phase 4
Phase 3 introduced the requirement for organisations to create an Action Plan that set out how you intend to cut energy use and when. That same principle continues in Phase 4, along with mandatory progress reporting in the years that follow.
However, there are some updates to note:
- Action plan progress must now be included within your ESOS assessment. If commitments aren’t met, your business will need to explain why.
- Display Energy Certificates (DECs) and Green Deal Assessments (GDAs) are no longer valid routes to compliance.
- While net zero reporting will not yet be mandatory, you can choose to adopt the new PAS 51215 standards for voluntary energy and decarbonisation reporting. This could give your organisation a head start before net zero requirements arrive in Phase 5.
These
ESOS Phase 4 key changes ensure businesses focus on actionable energy efficiency measures and transparent reporting.
Why prepare early for ESOS stage 4?
With the ESOS Phase 4 deadline set for 5 December 2027, early preparation is crucial for smooth compliance. Benefits include:
- Accurate Data Collection: Start measuring energy use across sites and processes to ensure reliable data.
- Energy Efficiency Opportunities: Identify improvements like upgrading to LED lighting or optimising heating systems.
- Board-Level Support: Engage senior leadership early, as your Action Plan requires board approval.
Non-compliance can lead to significant penalties, including fines of up to £50,000 plus £800 per day. Preparing now reduces the risk of missing the ESOS Phase 4 deadline.
Key dates for your diary for ESOS Stage 4:
- 5 December 2025 – Phase 3 Progress Report 1 deadline
- 5 December 2026 – Phase 3 Progress Report 2 deadline
- 31 December 2026 – Phase 4 qualification date
- 5 December 2027 – Phase 4 compliance notification deadline
ESOS Phase 4 is a vital step in the UK’s net zero journey, encouraging businesses to implement energy-saving measures. While the framework is familiar, the updated requirements, such as mandatory Action Plan progress reporting and the removal of DECs and GDAs, require careful attention.
For expert guidance on ESOS Phase 4 eligibility, compliance, or reporting, contact our expert team at SeeMore Energy for a free consultation that can give you peace of mind, knowing that all of your ESOS phase 4 reporting meets the requirements.
Contact Us
Why UK Energy Prices Keep On Rising… And what it means to manufacturing and engineering companies over the next few years Over the past decade, UK energy prices have changed dramatically. Not only in terms of overall cost but also in how those costs are made up. Ten years ago, the largest part of a business electricity bill came from the commodity element: the wholesale price of electricity. Non-commodity charges -- often used to support the infrastructure of the electricity grid or government energy policies -- were relatively modest. In 2013, the typical breakdown of electricity costs for a business user was around 60–65% commodity and 35–40% non-commodity. Today, that picture has flipped. For many manufacturers, non-commodity charges now make up over 60% of the total bill, with the non-commodity percentage of the bill increasing each year. This shift explains why energy bills have remained stubbornly high, even during periods when wholesale prices fell. Grid reinforcement, renewable subsidies, and balancing costs have grown year on year, with these costs baked into every unit of power consumed, regardless of wholesale prices.
In the last decade, over 50 UK energy suppliers have gone out of business. With Tomato Energy being issued with a provisional order this week, it seems as though their name will be the latest to be added to the list of defunct suppliers including Bulb, Avro, and Spark Energy. For customers of a supplier that is on the brink of going out of business, this can be a scary time, but there is a process in place to ensure they are not at risk of losing their supply. Who is responsible? OFGEM (The Office of Gas and Electricity Markets) are a non-ministerial government department tasked with regulating the energy markets and networks. In cases where a supplier goes out of business, OFGEM provide a safety net to ensure that customers supply won’t be disrupted. What is the process? OFGEM may elect to appoint an administrator. If this is the path they choose, then no action is necessary from the supplier’s customers. At some point, the administrator may choose to shut down the supplier, at which point, all existing customers will be moved to a new supplier of the administrator’s choosing.
Market-Wide Half-Hourly Settlement (MHHS) What is MHHS? MHHS stands for Market-Wide Half-Hourly Settlement. Currently, most electricity is billed based on estimates or meter reads that can be provided monthly, quarterly, or sporadically. With MHHS electricity consumption will be accounted for and billed in 30-minute blocks. The idea is that with more precise, time-based data, suppliers and networks can match supply and demand more accurately. This helps reduce waste and allow more flexibility in how electricity is used across the system. Who does it apply to? Previously, only large industrial and commercial users needed to have half-hourly meters, but MHHS is intended to apply across the whole electricity market in Great Britain. This includes domestic consumers, small businesses, large industrial users, and everything in between. That means most electricity users will be indirectly affected, even if they don’t see anything change in how their meter looks, the rules behind billing and settlement will shift behind the scenes.
September Review By Adam Novakovic We have reached the time of year where the summer months have started to fade and we begin to think about the colder seasons. This month saw the UK government recognise Palestine as a country, although they still seem unable to recognise the harm their energy policies are causing UK businesses. With further charges set to be added to UK energy bills and rising non-commodity costs, it was a relief that wholesale energy prices remained fairly flat throughout September. A recent report from independent analysts Cornwall Insights revealed that large energy users who aren’t covered by Government schemes could find that they are paying a further £450,000/year in non-commodity costs by 2030. With non-commodity costs such as DUOS and TUOS charges –which are used to fund the infrastructure responsible for the transmission of electricity – now accounting for over 2/3rds of total electricity costs for some businesses, it is of growing concern that these charges are set to continue rising. With the TUOS charges for 26/27 expected to increase significantly , the non-commodity charges are starting to have a negative impact on UK businesses ability to compete against foreign businesses with fewer governmental charges on their energy bills. This growing concern is yet to be addressed but could have a huge impact on many industries in the next year.
Following on from our previous article about rising TNuOS costs , we look at the reasons behind energy price rises, and which other items on your bill are likely to increase in the near future. What is RIIO – ET3? RIIO: “Revenue = Incentives + Innovation + Outputs” is Ofgem’s regulatory framework for setting how much network operators can recover from users while delivering value, efficiency and innovation. The current RIIO-2 period ends 31 March 2026, and RIIO-ET3 (also called RIIO-3) will run from 1 April 2026 through 31 March 2031.
How TNUoS costs are set to rise As the UK pushes towards a low-carbon energy system, there has been a sharp rise in costs for businesses connected to the grid. The National Energy System Operator (NESO) has released its latest five-year outlook on Transmission Network Use of System (TNUoS) charges, and -- from April 2026 – energy costs will rise significantly to fund the country’s energy transition. What Are TNUoS Charges? NESO uses the funds from TNUoS charges to build, operate, and maintain the high-voltage transmission network across Britain. The forecasts for 2026/27 have indicated that NESO will be looking to almost double the revenue generated in the previous year. While suppliers pass these charges on to both households and businesses, the scale of the increases ahead will be most acutely felt by large energy users.
August Review By Adam Novakovic August was a month that saw the return of domestic football and the return of one of the most prolific energy narratives of the last 5 years, as the conflict between Russia and Ukraine once again dominated the headlines.
Nuclear Regulated Asset Base Levy: What It Means for Your Electricity Bills From this autumn, UK businesses will see a new charge appear on their electricity invoices: the Nuclear Regulated Asset Base (RAB) Levy. This charge will help finance new nuclear power stations such as Sizewell C, but it also means yet another non-commodity cost will be added to bills. What is the RAB model? The Regulated Asset Base (RAB) model is not new and has been used for decades to fund water networks, energy grids, and other large-scale infrastructure. Instead of waiting until projects are completed, it allows investors to receive steady returns during construction. The aim is to lower the overall cost of borrowing by sharing risk between developers, government, and consumers. In 2022, the Nuclear Energy Financing Act cleared the way for this model to be applied to nuclear energy. The logic is that by reducing financial risk, investors will be more willing to commit to long-term projects. For the government, it helps accelerate the nuclear build-out that is essential to the UK’s 2030 clean power targets. For consumers, however, it means paying towards new power plants years before they produce a single kilowatt-hour and before they can help lower unit rates.
Why electricity prices keep going up By Adam Novakovic Electricity has always been more than just a utility it is an essential component in every part of UK business. Yet in recent years, costs have been climbing steadily, and today’s bills are weighed down by more than just wholesale market prices. There can be long periods of time where wholesale prices remain stable or decrease, yet the amount businesses are paying for their electricity continues to rise. A large part of the increase comes from policy decisions. Most notably the way the UK has chosen to fund decarbonisation, its reliance on renewables, and its failure to make a serious commitment to nuclear energy.
Back Billing: Understanding OFGEM Rules and Avoiding Unexpected Energy Costs in the UK Recently we have been seeing an increase in suppliers issuing invoices for charges that are more than 12 months old. Back billing can catch UK businesses and households by surprise, leading to unexpected energy costs. This guide explains what is back billing , the OFGEM back billing rule , and practical steps to avoid energy back bills. What Is a Back Bill? Back billing occurs when an energy supplier issues an invoice for energy used but not previously billed accurately. This could result from missed meter readings, estimated charges, or issues with consumption data. These bills can cover usage from weeks, months, or even over a year, leading to significant unexpected costs for UK energy users. The 12-Month Back-Billing Rule The OFGEM back billing rule protects domestic energy users and microbusinesses in the UK. Under OFGEM regulations, suppliers cannot charge for energy used more than 12 months ago if: You never received an accurate bill for that period, even after requesting one. You were not informed of charges through a statement of account. Your Direct Debit was set too low to cover actual usage, and the supplier failed to adjust it. This OFGEM back billing rule ensures suppliers cannot unfairly burden customers with old charges due to their own errors. Exceptions to the OFGEM Back Billing Rule You may be liable for charges older than 12 months if the billing issue is your fault. For instance, if you deliberately prevented meter access or ignored billing requests, suppliers can back-bill for up to six years. Understanding these exceptions can be key to managing back billing on UK energy invoices.