Insight 2026-09-14
14.09. 2026
ESOS Phase 4: how to turn energy opportunities into investable projects
By Mehmet Olgun, Head of Net Zero Compliance, Carbon Shift, Equans UK & Ireland
For many organisations, the challenge is no longer identifying ways to save energy. It is turning those opportunities into credible projects that can secure investment, gain internal approval and get delivered.
ESOS Phase 4 presents an opportunity to change that. During our recent webinar, Making Confident and Investable Energy Decisions, we explored how organisations can turn energy opportunities into investable projects that deliver real value.
The wider context is important. Organisations are pursuing their energy and decarbonisation ambitions against a backdrop of tighter capital, energy cost pressures, ageing assets, regulatory change and competing business priorities. At the same time, many of the easier energy-efficiency opportunities have already been identified or implemented.
We are entering what might be described as an age of competition - competition for capital, people’s time, internal investment and the resources needed to deliver change.
In that environment, a technically sound energy opportunity is not enough. It needs to stand up as a credible business investment.
From identifying opportunities to acting on them
For years, ESOS has helped large organisations identify opportunities to improve energy efficiency. Yet there is a familiar problem. Too often those opportunities remain recommendations rather than becoming delivered projects.
The issue is not necessarily a lack of ambition or opportunity. Many organisations already have energy audits, decarbonisation roadmaps and lists of potential projects. Some have had them for years.
The bigger challenge is what happens next.
Projects can stall because the data is not robust enough, technical feasibility has not been developed far enough, savings assumptions are difficult to stand behind, or the wider business benefits have not been clearly quantified. Funding and delivery routes may also be considered too late.
And even where the case is technically strong, energy projects are competing against other strategic organisational priorities such as investment in technology, production, property and people.
That is why ESOS Phase 4 should prompt a different question.
Not simply: how do we comply? But: how can we use ESOS to develop projects the business is prepared to invest in?
ESOS is moving towards greater accountability
The changes introduced for ESOS Phase 4 make that question particularly relevant.
Organisations that qualify will be assessed against their position on 31 December 2026, with the Phase 4 compliance notification due by 5 December 2027.
But the important change is not simply the deadline.
Phase 4 places much greater emphasis on accountability, robust evidence and measurable progress. Organisations will need to provide more detail on the energy savings they have achieved and review previous action plan commitments, including explaining why proposed measures have not been implemented.
This begins to close the gap between identifying an opportunity and doing something with it.
Historically, it has been possible to think about ESOS primarily as an exercise completed every four years. Phase 4 makes that increasingly difficult. Better data, clearer ownership and greater visibility of progress will all become more important.
For organisations willing to embrace that shift, there is an opportunity to get significantly more value from the process.
What makes an energy project investable?
Our experience is that organisations making stronger progress are moving beyond lists of potential measures and putting greater focus on developing projects that are technically robust, commercially viable and deliverable.
That starts with credible data. If an organisation cannot establish a trusted baseline, it becomes much harder to give decision-makers confidence in projected savings, costs or returns.
Next comes technical feasibility. An opportunity identified through an audit needs enough engineering development behind it to demonstrate that it can work within the realities of the organisation's buildings, infrastructure and operations.
There also needs to be a clear commercial case. Carbon reduction matters, but it is rarely the only consideration when projects reach finance leaders, boards or investment committees.
The strongest business cases show how an investment could also reduce operating costs, improve asset reliability, extend asset life, strengthen resilience or support operational performance.
Finally, funding and delivery need to be considered early. The right solution is not simply the one with the strongest technical specification. It needs a viable route to investment, procurement and implementation.
Put those elements together and the conversation changes. It moves from "here is an energy-saving recommendation" to "here is a business investment we can confidently make".
That distinction matters when energy projects are competing against every other demand on organisational capital.
Start driving decisions before the deadline
Although the 5 December 2027 compliance deadline may seem some time away, the most useful preparation can start now.
First, organisations should understand whether their current corporate structure places them within scope. Organisations change between ESOS phases through acquisitions, disposals, restructuring and growth, so it is important to establish your position against the Phase 4 qualification criteria rather than assuming it will be the same as Phase 3.
Second, look at the data. Energy consumption across buildings, processes and transport is fundamental to ESOS, but it is equally important to good investment decisions. Identifying gaps now gives organisations time to strengthen the evidence that future projects and business cases will rely on.
Third, revisit what previous assessments have already told you. Which recommendations from Phase 3 were implemented? Which were not? And, importantly, why?
The barrier may not be technical. It could be a lack of capital, uncertainty over payback, operational constraints, competing priorities or a lack of internal ownership. Understanding those barriers now can help avoid repeating them.
Finally, bring the right people into the conversation early.
ESOS should not sit solely with sustainability, energy or facilities teams. Finance, estates, operations, procurement and senior leadership all have a role in determining whether an opportunity becomes an investment.
That does not mean involving everyone in every technical decision. It means understanding early what different stakeholders need to see before they can support a project.
What evidence will finance require? What are the operational constraints? How does the investment compete against other capital requests? Who will own delivery? And how will success be measured afterwards?
Those questions are just as important as identifying the energy-saving opportunity itself.
From compliance to business value
ESOS Phase 4 is an opportunity to strengthen the data, evidence and business case behind energy projects.
By understanding previous barriers, demonstrating wider business value and considering funding and delivery early, organisations can turn energy opportunities into credible investments that get delivered.
Preparing for ESOS Phase 4?
At Equans, our Carbon Shift team supports organisations from ESOS compliance and energy strategy through to development and delivery of investable energy projects. If you are preparing for ESOS Phase 4 and want to explore how to get greater value from the process get in touch.
