The powers behind the ESOS regulations
ESOS is secondary legislation, so it only exists because an Act says it may. Since 2023 that Act is the Energy Act 2023, whose Part 11 carries standing powers to make and amend an energy savings opportunity scheme — which is why the scheme can be reformed, as it was in July 2026, without a line of new primary legislation.
Where ESOS gets its authority
ESOS is secondary legislation. It exists only because an Act permits it — and the Act that permits it today is not the one that permitted it in 2014.
ESOS is a UK statutory scheme established by 1 the Energy Savings Opportunity Scheme Regulations 2014 (SI 2014/1643) and materially reformed by 2 the Energy Savings Opportunity Scheme (Amendment) Regulations 2023 (SI 2023/1182).
The 2014 Regulations were made under section 2(2) of the European Communities Act 1972 and transposed Article 8(4) to 8(6) of 3 the EU Energy Efficiency Directive (2012/27/EU).
That original power was repealed on EU exit. The instrument itself was not: ESOS remained in force as standalone retained UK law, and later instruments repaired its references rather than replacing it.
The scheme was then given a domestic statutory home. Part 11 of the Energy Act 2023 — sections 254 to 265, headed Energy Savings Opportunity Schemes — carries standing powers to make and amend a scheme of exactly this kind.
Both amending instruments since, the 2023 Regulations and the 2026 Regulations, were made under sections 254 to 260 and 263 of that Act. That is the whole reason ESOS could be materially reformed in July 2026 without a line of new primary legislation, and the reason a further reform will not need one either.
The powers, section by section
Part 11 is not a single enabling section but a set of them, each authorising a different limb of the scheme. Reading them in order is the quickest way to see the shape the regulations are obliged to take.
Section 254 — Energy savings opportunity schemes
The core power.
It permits the Secretary of State to make regulations establishing a scheme requiring undertakings to assess their energy consumption and identify savings.
Everything else in Part 11 qualifies this section.
Section 255 — Application of energy savings opportunity schemes
The power to say who is caught.
The qualification test in Schedule 1 of SI 2014/1643 — the 250-employee limb, and the conjunctive turnover-and-balance-sheet limb — is made under this section.
Section 256 — Requirement for assessment of energy consumption
The power behind the assessment duty itself, including the coverage rule that SI 2023/1182 raised from 90% to 95% of total energy consumption.
Section 257 — Assessors
The power behind the lead assessor regime: who may sign off an ESOS assessment, and the approved-register machinery that stands behind it.
Section 258 — ESOS action plans
Added for the plans and progress updates.
Part 6A of the 2014 Regulations, inserted in 2023 and extended in 2026, rests on this section.
Section 259 — Action to achieve energy savings or emissions reductions
The power to go beyond auditing and require action.
It is the statutory room the 2026 achieved-savings reporting duty was made in.
Section 260 — Scheme administration
The power to appoint and empower scheme administrators — in practice the Environment Agency UK-wide, with SEPA, Natural Resources Wales and the NIEA in the devolved jurisdictions.
Section 263 — ESOS regulations: procedure etc
Not a power to do anything to participants, but the rule for how the other powers are exercised: consultation and the parliamentary procedure the regulations must clear.
It is cited in the preamble of both amending instruments.
Energy Act 2023, sections 254 to 265
The standing statutory basis for ESOS.
Sections 254 to 260 authorise the scheme itself — its application, the assessment requirement, assessors, action plans, savings action and administration — and section 263 governs the procedure for making the regulations.
Enforcement and appeals sit at sections 261 and 262.
SI 2014/1643 — the instrument itself
The scheme in one statutory instrument, made under a power that no longer exists.
1 The Energy Savings Opportunity Scheme Regulations 2014 came into force in July 2014 under section 2(2) of the European Communities Act 1972, and set up the four-year compliance cycle that has run without a break since — Phase 1 to 5 December 2015, Phase 2 to 5 December 2019, Phase 3 to 5 June 2024, and Phase 4 to 5 December 2027.
Everything that has happened to ESOS since has happened to this instrument: there is no second set of ESOS regulations, only amendments to these, which is why the enabling powers matter more here than the amendment history does.
SI 2023/1182 — the first amendment under the new powers
In force 29 November 2023, and the first ESOS instrument not made under European Communities Act powers.
2 The Energy Savings Opportunity Scheme (Amendment) Regulations 2023 came into force on 29 November 2023, raising the significant-energy-consumption coverage from 90% to 95% and introducing mandatory action plans and progress updates.
Its constitutional significance is separate from its content: it was made under sections 254 to 260 and 263 of the Energy Act 2023, and so was the first demonstration that ESOS could be reformed by regulations alone.
SI 2026/701 — the same powers, used again
Made 23 June 2026, in force 22 July 2026, under sections 254 to 260 and 263 of the Energy Act 2023.
The Energy Savings Opportunity Scheme (Amendment) Regulations 2026 were made on 23 June 2026, laid before Parliament on 1 July 2026 and came into force on 22 July 2026; the Environment Agency published its Phase 4 participant guidance on 30 July 2026 7.
It removed Display Energy Certificates and Green Deal Assessments as compliance routes, added a third progress update, and introduced achieved-savings reporting — none of which required a new Act, because Part 11 of the Energy Act 2023 already authorised all of it. It left the qualification thresholds alone: it touches neither regulation 15 nor Schedule 1, so the 250-employee and £44m/£38m limbs are unchanged. The proposed change to those thresholds to align them with SECR will not go ahead for Phase 4, and no Phase 5 commitment to it has been published — the postponement to Phase 5 that GOV.UK does record attaches only to the introduction of net zero requirements.
European underpinning
ESOS originated as UK implementation of Article 8 of the Energy Efficiency Directive 2012/27/EU.
ESOS originated as the UK's implementation of 3 Article 8 of the Energy Efficiency Directive 2012/27/EU.
Article 8 required Member States to ensure that all enterprises that are not SMEs undergo an energy audit carried out in an independent and cost-effective manner by qualified or accredited experts, at least every four years.
The UK transposed this through SI 2014/1643 under the European Communities Act 1972.
A formal transposition note was published alongside the regulations on legislation.gov.uk.
The Directive was substantially recast in 2023 by 4 Directive (EU) 2023/1791, which entered into force on 10 October 2023.
The recast moves to a consumption-based trigger for mandatory audits and energy management systems, introduces a 1.9% annual reduction target for the public sector, and establishes "energy efficiency first" as a binding principle.
Post-EU-exit status
EU-exit instruments amended SI 2014/1643 to address deficiencies arising from withdrawal — the Energy Savings Opportunity Scheme (Amendment) (EU Exit) Regulations 2018 (SI 2018/1095) provided for UKAS accreditation of ISO 50001 certifiers, and the money limbs of the qualification test were converted from euro to sterling by SI 2018/1342: paragraph 1A of Schedule 1 now reads £44 million and £38 million for qualification dates on or after IP completion day, against €50 million and €43 million before it. Those figures have been static since 31 December 2020.
ESOS continues to operate under retained UK law, independent of the EU regime.
Enforcement powers
Five statutory offences, to a maximum of £50,000 per breach, with daily penalties counted in working days and capped at 80 of them, plus publication.
5 The Environment Agency's enforcement and sanctions policy (Annex 2, Section D) sets out how civil penalties are applied to ESOS breaches under Parts 7 and 8 of SI 2014/1643.
ESOS sanctions are civil — not criminal — but the publication element creates a public record that regulation 41(2) requires to run for at least a year.
The Environment Agency can issue:
Failure to undertake an energy audit (Reg. 45)
Initial penalty of £50,000, or such lesser amount as the compliance body may determine, plus £500 for each working day after service of the compliance notice until the breach is remedied, capped at 80 working days, plus the publication penalty.
Failure to notify compliance (Reg. 43)
Initial penalty up to £5,000, plus £500 for each working day after service of the penalty notice until notification is completed, capped at 80 working days, plus publication.
Applied where a qualifying undertaking misses the notification deadline.
Failure to maintain records (Reg. 44)
Initial penalty up to £5,000 plus the compliance body's cost of auditing the activity, plus publication.
The penalty notice may also specify remedial steps.
Failure to comply with a compliance, enforcement or penalty notice (Reg. 46)
Initial penalty up to £5,000, plus £500 for each working day in breach, capped at 80 working days, plus publication.
False or misleading statement (Reg. 47)
Penalty of £50,000, or such lesser amount as the compliance body may determine, plus publication, where false or misleading information is provided to the Environment Agency or any compliance body.
There is no daily penalty on this limb.
Publication penalty
The compliance body publishes details of the breach on a public register, naming the responsible undertaking and, where different, the participant.
Regulation 41(2) requires the entry to stay up for at least a year.
Reputational exposure is often the most material consequence.
Compliance and enforcement notice mechanics
Under Part 7 of SI 2014/1643, the Environment Agency may serve compliance notices (Reg. 35) requiring a participant to remedy a breach, and enforcement notices (Reg. 38) imposing specific steps.
Inspection powers under Reg. 36 allow the regulator to require documents and information.
A failure to comply with either notice opens the participant to the full Reg. 45 penalty regime — initial penalty plus daily penalties for up to 80 working days plus publication.
For new entrants to ESOS in their first compliance period, the Environment Agency's published policy is to apply a reduced initial penalty (up to £5,000 rather than £50,000) for failure to undertake an audit.
In subsequent phases, the statutory maximum is normally applied.
The publication penalty
Under Reg. 41 the compliance body publishes the breach, the requirement breached and the amount, naming the responsible undertaking and, where different, the participant — for a minimum of one year. The amounts themselves are statutory: they are in Part 8 of the ESOS Regulations 2014, not in enforcement policy 8.
There is no penalty for failing to submit an action plan or a progress update, and the reason is stronger than regulator forbearance: regulations 34A and 34B are named nowhere in Part 8, and SI 2026/701 added no offence, so the gap is in the statute itself. The Environment Agency's Phase 4 guidance separately states that regulators will not take enforcement action over non-submission, and the Scheme Administrator publishes the failure instead. One qualification: if a regulator served an enforcement notice under regulation 38 requiring an action plan, ignoring that notice would be penalisable under regulation 46.
What is the primary ESOS legislation?
The Energy Savings Opportunity Scheme Regulations 2014 (SI 2014/1643), as amended by the Energy Savings Opportunity Scheme (Amendment) Regulations 2023 (SI 2023/1182) and, for Phase 4, by the Energy Savings Opportunity Scheme (Amendment) Regulations 2026 (SI 2026/701), in force 22 July 2026.
All three have to be read together: the consolidated text of the 2014 Regulations on legislation.gov.uk does not yet carry any of the 2026 amendments.
Why was ESOS introduced in 2014?
ESOS was introduced to transpose Article 8(4) to 8(6) of the EU Energy Efficiency Directive (2012/27/EU), which required Member States to ensure large enterprises undergo periodic energy audits.
The regulations were made under section 2(2) of the European Communities Act 1972.
Does the EU's 2023 recast Energy Efficiency Directive apply to the UK?
No.
The recast Energy Efficiency Directive (EU) 2023/1791 entered into force on 10 October 2023 but applies only to EU Member States.
The UK left the EU in 2020, so ESOS now stands as standalone UK law.
The 2023 ESOS amendments were domestic UK reform, not transposition.
What changed under the 2023 Amendment Regulations?
Key changes effective 29 November 2023: significant energy consumption coverage — the areas comprising at least 95% of total energy consumption — increased from 90% to 95%, new ESOS action plans and progress updates are mandatory, regulation 21(3) was inserted to disapply the duty to appoint a lead assessor where total energy consumption is less than 40,000 kWh of energy, and energy intensity ratios are required.
Display Energy Certificates and Green Deal Assessments were not removed by SI 2023/1182; that was done later by regulation 26 of SI 2026/701.
What did the 2026 Amendment Regulations (SI 2026/701) change?
SI 2026/701 was made on 23 June 2026, laid before Parliament on 1 July 2026 and came into force on 22 July 2026.
Regulation 26 removes Display Energy Certificates and Green Deal Assessments as compliance routes by omitting regulation 34 of the 2014 Regulations.
Regulation 28 adds a third and final progress update, due 5 December 2031.
The instrument also requires participants to report the energy savings actually achieved, to review which measures from the previous action plan were not implemented and why, and it inserts regulation 33A for undertakings with zero energy consumption.
It did not change the qualification thresholds.
Who enforces ESOS legislation?
The Environment Agency is the lead regulator for ESOS across the UK, with devolved counterparts (SEPA, Natural Resources Wales, NIEA) operating in their respective jurisdictions.
The Environment Agency can issue compliance notices, enforcement notices and civil penalties to a statutory maximum of £50,000 per breach — the instrument sets the figure and lets the compliance body go below it — plus publication.
How does ESOS legislation interact with SECR and the Companies Act?
ESOS sits in standalone regulations (SI 2014/1643) enforced by the Environment Agency.
SECR is embedded in the Companies Act 2006 (via the 2018 Regulations) and enforced through annual reports filed at Companies House.
The two regimes use overlapping energy data but have separate scopes, deadlines and enforcement bodies.
Related guides & references
ESOS: Energy Savings Opportunity Scheme Guide
Complete introduction to the ESOS framework, qualification and compliance routes
ESOS Requirements: The 7 Compliance Steps
How the statutory framework translates into operational compliance obligations
ESOS Phase 4: Deadline and Requirements
How SI 2023/1182 changes apply to the current Phase 4 compliance cycle
SECR Compliance Guide
Companies Act energy and carbon reporting that overlaps with ESOS data
UK SRS Legislation and Legal Status
How voluntary UK SRS standards relate to statutory regimes like ESOS
SECR legislation — the Companies Act power behind it
The mirror of this page for the other regime: SECR has no Act of its own
ESOS vs SECR — two regimes, two statutory bases
How the ESOS Regulations differ from SECR’s Companies Act footing
ESOS penalties and fines
Part 8 in practice — amounts, methodology, appeals and the register
Authority Sources
- Energy Savings Opportunity Scheme Regulations 2014
- Energy Savings Opportunity Scheme (Amendment) Regulations 2023
- Energy Efficiency Directive 2012/27/EU
- Directive (EU) 2023/1791 (recast EED)
- Environment Agency Enforcement and Sanctions Policy, Annex 2
- Energy Savings Opportunity Scheme (Amendment) Regulations 2026
- Comply with the Energy Savings Opportunity Scheme (ESOS) phase 4
- Energy Savings Opportunity Scheme (ESOS) — Guidance
- Environment Agency