Business energy audit: what it includes, who needs one and how to run one

A business energy audit (sometimes called an energy survey or assessment) is a methodical look at how your premises use gas and electricity. It ends with a list of savings opportunities, ranked by cost and payback. For most small firms it is voluntary and can be done yourself for free or by a professional; for large companies it is a legal requirement under a government scheme.

What an audit includes

Whoever does it, a good audit follows the same shape:

1. Collect data. Twelve months of bills for each meter, the unit rates, standing charges, meter numbers (see MPAN and MPRN), floor area, opening hours and an equipment list.
2. Break down the use. Estimate how much goes on heating, cooling, lighting, refrigeration, cooking, IT and other kit.
3. Inspect the site. Look at the heating and hot water, controls, insulation, glazing, lighting types, ventilation and what runs out of hours.
4. Measure. Spot checks with a plug-in meter, or half-hourly data from a smart meter where you have one.
5. Identify measures. No-cost, low-cost and capital projects.
6. Cost and rank them. Estimated saving in kWh and pounds, cost to do it and simple payback.
7. Report and act. A written action plan with owners and dates.

Types of audit

• Walk-through (basic). A visual survey and bill review, usually a few hours. Good for a shop, salon or small office.
• Detailed audit. Metering, calculations and engineering analysis of systems. Suited to larger or complex sites.
• Compliance audit. Required for qualifying large undertakings under ESOS (below).

These labels are common industry usage rather than legal categories, so ask any provider exactly what is included before you pay.

Who must have one: ESOS

The Energy Savings Opportunity Scheme (ESOS) applies to large UK undertakings: those with 250 or more employees, or turnover over £44 million and a balance sheet total over £38 million. For the current phase (phase 4), qualification is assessed at 31 December 2026, the notification of compliance is due by 5 December 2027, and an action plan by 5 December 2028, according to the government's guidance. A lead assessor is normally required, and a director must review the findings. Public bodies are excluded. If your business is smaller than this, ESOS does not apply, though you may be part of a group that qualifies.

Commercial buildings also have separate rules about energy performance certificates, which are not the same as an audit; see commercial EPCs and MEES.

Choosing an auditor

Ask who will carry out the visit and what qualifications they hold, whether they sell equipment themselves (which can bias recommendations), and whether the report is yours to keep. Ask for two or three references from businesses like yours. Get the scope and price in writing, including whether any follow-up support is included. If the provider is paid commission by a supplier or installer for referrals, they should tell you. A clear, independent report that you can take to several installers for quotes is better than one tied to a single product.

Free and low-cost help

NetRegs lists the main sources of advice and funding, including the Carbon Trust and the Energy Saving Trust. What each offers free of charge, and who qualifies, has changed several times over the years, so check its current offer before relying on a free survey. In Scotland, Business Energy Scotland runs training for small and medium firms; Invest NI covers Northern Ireland. The government's campaign page and its SME guide to energy efficiency also set out practical steps. Availability changes over time, so check each organisation's current offer.

Be cautious of unsolicited calls offering a "free energy audit" that turns out to be a sales pitch for a contract, a letter of authority or a product. See is it safe to sign a letter of authority and why you get cold calls.

A do-it-yourself audit in an afternoon

1. Know your numbers

Write down annual kWh and cost for electricity and gas, then your cost per kWh. The cost calculator helps.

2. Do an out-of-hours walk-round

Go round after closing and list everything still on. Note wattage from labels, and how many hours it really runs.

3. Calculate each item

Annual kWh = watts / 1,000 x hours per year. For example, a 150W display light left on 24 hours: 0.15 kW x 8,760 = 1,314 kWh. At 27.2p/kWh that is £357.41 a year. Switching it off for 14 hours a day saves 0.15 x 14 x 365 = 766.5 kWh, or £208.49.

4. Rank by payback

Simple payback = cost / annual saving. If an LED retrofit costs £900 and saves £600 a year, payback is 1.5 years. Do the quickest first. Re-run the audit every year or two, because equipment ages, opening hours change and energy prices move.

Reading the results

Treat payback figures as estimates, not guarantees. Savings depend on how you use the premises, energy prices (a higher price shortens the payback), and whether the work is done well. Ask providers to show the assumptions behind each saving. The government's own guidance suggests getting an audit or financial advice before major investments and checking the risks and payback period.

Ask for the audit report in a form you can keep: a ranked list with cost, saving and payback, plus a note of any figures the provider assumed.

What an audit won't do

An audit will not change the price per unit you pay. For that you need to compare contracts, and it is worth doing both. If you are on out-of-contract rates, switching may save more than any equipment change; see out-of-contract energy cost calculator. For the wider picture of cutting costs, read saving energy in a small business. For what a professional visit typically involves, see what does a business energy audit involve.

Next steps

1. Decide whether your business is in scope for ESOS (250+ employees, or very large turnover and balance sheet).
2. If not, start with the DIY audit above and check NetRegs for current sources of free help.
3. Rank measures by payback and do the no-cost ones now.
4. Check grants and loans before paying for capital work.