ESOS Compliance for Care Homes: What You Need to Know — Greystones Energy Ltd

ESOS Compliance for Care Homes: What You Need to Know

The Energy Savings Opportunity Scheme (ESOS) is one of the most significant energy compliance obligations facing large UK care home operators — and one of the most frequently misunderstood.

Phase 3 of the scheme required qualifying organisations to complete energy audits and notify the Environment Agency by 5 June 2024. If your group hasn't done this, you're already in breach. The Environment Agency has made clear it will pursue non-compliant organisations, with civil penalties of up to £50,000 plus daily fines for continued non-compliance.

This guide explains what ESOS requires, who it applies to, and what care home operators should do now.

ESOS is a mandatory energy assessment scheme for large UK organisations, introduced under the EU Energy Efficiency Directive and retained in UK law post-Brexit. It requires qualifying organisations to:

1. Conduct energy audits covering at least 90% of their total energy consumption
2. Identify energy-saving opportunities
3. Notify the Environment Agency that they have complied

Crucially, ESOS does not require you to implement the measures identified. It requires you to identify them and report that you have done so. The scheme is about creating a structured evidence base for energy decisions — not mandating specific investments.

Your care home group qualifies for ESOS if, on the qualification date (31 December 2022 for Phase 3), it met at least one of the following criteria:

• 250 or more employees (full-time equivalent across the whole organisation)
• Annual turnover exceeding £44 million and an annual balance sheet total exceeding £38 million

These thresholds apply to the whole corporate group, not individual care homes. A group operating 15 homes with 20 staff each — 300 employees in total — is in scope even if no single home employs 250 people.

Subsidiaries and associated enterprises are counted together. If your care home business is part of a larger group, the parent company's size determines qualification.

If you're unsure whether you qualify, the Environment Agency's ESOS guidance includes a qualification tool, or you can take advice from a registered Lead Energy Assessor.

An ESOS audit must cover all significant energy uses across your organisation — buildings, transport, and industrial processes. For most care home groups, buildings dominate, but company vehicles and staff travel must also be assessed.

The audit must be conducted or overseen by a Lead Energy Assessor (LEA) — an individual registered with an approved professional body such as the Energy Institute or CIBSE. The LEA is responsible for signing off the audit and submitting the notification to the Environment Agency.

For a care home group, the audit typically covers:

• Energy consumption data for all sites (electricity, gas, oil, LPG)
• Building fabric and insulation
• Heating and hot water systems
• Lighting
• Catering and laundry equipment
• Ventilation and air conditioning
• Transport fleet and business travel

The output is a report identifying energy-saving opportunities, ranked by estimated cost and savings. The report must demonstrate that at least 90% of total energy consumption has been assessed.

Sampling is permitted. For groups with multiple similar sites, you don't need a full audit of every care home. A representative sample — typically 10–25% of sites, selected to reflect the range of building types, ages, and sizes in your portfolio — can be used to extrapolate findings across the group. This significantly reduces the cost and time involved.

The Environment Agency has enforcement powers under the ESOS Regulations 2014. Penalties for non-compliance include:

• Civil penalties up to £50,000 for failing to comply with the scheme
• Daily penalties for continued non-compliance after a compliance notice is issued
• Publication of enforcement action — the Environment Agency publishes details of enforcement cases, which can affect reputation and relationships with commissioners

The EA has been actively contacting organisations it believes are in scope but have not notified compliance. If you've received a letter from the EA, you should treat it as urgent.

Late compliance is better than no compliance. The EA has discretion in how it applies penalties, and organisations that engage proactively and complete their audits promptly are treated more favourably than those that ignore correspondence.

There is an alternative compliance route for organisations that hold a current ISO 50001 certification covering their significant energy uses. ISO 50001 is an energy management system standard that, if properly implemented, satisfies the ESOS audit requirement.

For care home groups that are already investing in energy management infrastructure, pursuing ISO 50001 can make sense — it provides ongoing compliance for future ESOS phases and demonstrates a systematic approach to energy management that is increasingly valued by commissioners and investors.

However, ISO 50001 certification is a significant undertaking. For most care home operators, completing an ESOS audit is the faster and more proportionate route to compliance.

If your group is in scope and hasn't completed Phase 3 compliance, the priority is to act quickly.

Step 1: Confirm your qualification status. Check whether your organisation met the size thresholds on 31 December 2022. If you're part of a larger group, this needs to be assessed at the group level.

Step 2: Appoint a Lead Energy Assessor. The LEA must be registered with an approved professional body. Check the Energy Institute or CIBSE registers. Your LEA will guide the audit process and is responsible for the compliance notification.

Step 3: Gather energy data. Collect 12 months of energy consumption data (ideally the 2022 calendar year, which is the reference period for Phase 3) for all sites. Utility bills, half-hourly meter data, and fuel delivery records are all acceptable sources.

Step 4: Conduct the audit. Working with your LEA, complete the energy assessments. For a multi-site group, agree the sampling approach upfront to ensure it meets the 90% coverage requirement.

Step 5: Notify the Environment Agency. Once the audit is complete and signed off by your LEA, submit the compliance notification through the ESOS notification system. Keep all audit documentation — the EA can request evidence for up to five years.

Phase 4 of ESOS will require compliance by December 2027 (the exact date is subject to confirmation). If you're completing Phase 3 late, it's worth structuring your audit to provide a solid foundation for Phase 4 — rather than treating it as a one-off exercise.

Installing half-hourly smart metering across your portfolio now means you'll have two years of granular consumption data available when Phase 4 audits begin. It also means you can track the impact of any energy-saving measures you implement in the interim.

ESOS compliance is a legal obligation, but the audit it requires is also genuinely useful. A well-conducted ESOS audit gives you a prioritised list of energy-saving opportunities with indicative costs and payback periods — a roadmap for reducing your operating costs over the next four years.

Care home groups that treat ESOS as a compliance exercise to be completed as cheaply as possible typically get a report that sits in a drawer. Groups that treat it as a strategic planning tool use it to drive real reductions in energy spend — which, at £80,000–£140,000 per home per year, represents a significant opportunity.

If you need help with ESOS compliance or want to understand what an audit would involve for your group, we work with registered Lead Energy Assessors and can coordinate the process from data collection through to EA notification.