energy efficient equipment on the etl · the energy technology list (etl) & enhanced capital...
TRANSCRIPT
Energy Efficient Equipment on the ETLA manufacturer´s and supplier´s introduction to the Energy Technology List (ETL) & Enhanced Capital Allowance (ECA) Scheme
March 2018
This presentation aims to communicate the benefits of using the Energy Technology List (ETL) and Enhanced Capital Allowance (ECA) scheme, both for yourselves and your customers.
The presentation is divided into the following sections:
1
What will you get from this presentation?
1
2
3
4
5
What is the ETL and ECA scheme?
Ideas for Communicating Energy Efficiency to customers
More on the ETL
How do I make an application to have a technology listed on the ETL?
What are the benefits of the ECA?
6
7
Case Studies
For More Information
1What is the ETL and ECA scheme?
2
Currently, approximately 17,000 products are listed on the ETL.
Using the ETL can help organisations navigate product selection and have confidence about energy efficiency claims: Despite the benefits of energy efficiency, organisations may find it difficult to know if the equipment they have selected actually performs better than other options. The ETL rigorously evaluates listed products so that businesses can have confidence in their energy performance.
The ETL can be used to streamline purchasing decision, ensuring that efficient options are selected to decrease energy bills and increase green credentials.
Technologies listed on the ETL qualify for accelerated tax relief in the form of Enhanced Capital Allowances (ECAs). Other products also qualify as part of the ETL’s "unlisted" technology categories, e.g. lighting
3
What is the Energy Technology List (ETL)?
The ETL is a government approved list of energy efficient equipment across a wide range of technology categories.
Energy efficient equipment frequently carries a price premium when compared with less efficient alternatives. The ECA scheme financially incentivises the use of higher energy efficient equipment in order to help the UK transition to a low-carbon economy. It provides the customer with a cash flow boost.
The ECA scheme for energy-saving technologies provides accelerated tax relief for businesses that invest in plant and machinery that meet high energy efficiency performance standards.
The scheme allows purchasing business to write off 100% of the qualifying costs on eligible Plant and Machinery against the taxable profits from the year the investment is made. There is no cap on how much can be claimed for profit making businesses.
The ECA scheme was borne out of the Climate Change Levy Package and addresses businesses’ request for a fiscal incentive to redistribute CCL payments. The scheme has been available since 2001.
4
What are Enhanced Capital Allowances (ECAs)?
What kinds of equipment are listed?
How does equipment qualify for the list?
2More on The ETL
5
The ETL seeks to incentivise the use of energy efficient products. In so doing, the ETL aspires to encourage manufacturers to design more products that qualify as high energy efficiency performance equipment.
In contrast, Minimum Energy Performance Standards, such as building design regulations and EcoDesign, are used to remove the poorest performing equipment from the market.
6
What does it mean to qualify for the ETL?
The energy-saving criteria are set to ensure eligible products represent a significant improvement in energy efficiency performance over current standard products.
As the market evolves and equipment energy performance generally improves for a technology, the list requirements will change to make sure that only the most energy efficient equipment is represented.
Top 25%
Bottom 25%
Minimum Energy
Efficiency Performance
Average Energy Efficiency
Performance
High Energy Efficiency
Performance
ETL Products
Listed Technologies: Many of the technologies that are eligible for the ECA are “listed” on the ETL. Products that fall into one of the ‘listed’ technology categories will have been reviewed by the ETL team as meeting energy efficiency performance requirements. Consumers can consult the list to see which products have demonstrated high energy efficiency performance and therefore would qualify for an ECA.
Unlisted Technologies: Some technologies are not listed on the ETL but products in those categories may still be eligible for an ECA. Products that fall into an “unlisted” category must still demonstrate high energy efficiency performance to qualify for an ECA. Manufacturers will need to confirm that their product meets established criteria. More details about this process are available on slide 23.
Combined Heat and Power (CHP): CHP may be eligible for ECAs but follows a unique process: the equipment and design must be assessed by the CHPQA and must receive a certificate of energy efficiency. 7
What is the difference between a listed and an “unlisted” technology?
The technologies that participate in the ETL and ECA can be categorized in three ways depending on whether it is a listed or “unlisted” technology on the ETL and the requirements for claiming an ECA.
8
What technologies are listed on the ETL?
Equipment that is eligible to be claimed under the ECA will be either:
Air-to-air energy recoveryBoiler equipmentCompressed air equipmentHeat pumpsHeating, ventilation and air conditioning (HVAC) equipmentHigh speed hand air dryersMotors and drivesPortable energy monitoring equipmentRadiant and warm air heatersRefrigeration equipmentSolar thermal systemsUninterruptible power suppliesWaste heat to electricity conversion equipment
Automatic Monitoring and Targeting Systems
Lighting equipmentPipework insulation
Air source split and multi- split heat pumps (incl. VRF)
Equ
ipm
ent
liste
d o
n t
he
ETL
Unlisted ETL categories: speak with your supplier or installer to understand if the following
technologies are energy-saving and are eligible for the ECA
To verify if Combined Heat and Power (CHP) is eligible for the ECA, the equipment
and design must be assessed by the CHPQA and must
receive a certificate of energy efficiency
For more information please visit the CHPQA webpage.
1) Listed on the ETL2) Complies with ETL criteria and the manufacturer has provided a statement of
compliance (ETL “unlisted” categories)3) Assessed CHP equipment that has received a certificate of energy efficiency
Boiler Equipment Refrigeration Motors & DrivesHeat Pumps HVAC Uninterruptible Power SuppliesRadiant & Warm Air Heaters High speed hand air dryers Automatical Monitoring & Targeting SystemsSolar Thermal Compressed Air Air to Air Energy Recovery
9
How many products are Listed on the ETL? What is the breakdown by technology category?
0%
6%0%
1%1%
60%
1%
27%
1%
0%1% 2%
1009
58
118
127
10276
221
4624
71
32
203
258
29
0% 20% 40% 60% 80% 100%
Technologies listed on the ETL by category as of May 2017
3How do I make an application to have a product listed on the ETL?
10
• The ETL independent technical team review the products against the criteria to demonstrate that the products meet the appropriate criteria requirements
• Different Performance requirements are set for each technology
• For most categories manufacturers or suppliers need to test their equipment performance to BS EN standards
• All products must be tested in accordance with the relevant procedures and test conditions
• To see specific requirements for the technology categories, please visit The ETL Criteria List
• Where products are assessed as meeting the criteria, they are added to the ETL. If products do not meet the criteria (which may be due to a lack of supporting information in the application) then they are not added to the ETL.
11
How are products on the ETL assessed?
The ETL has robust, high energy efficiency criteria for each “listed” and “unlisted” technology against which products are assessed
What is the application process?
Applicants complete
online application
Application Completeness
checks are undertaken before
technical evaluation
Application assessed by
Technical specialist
Product decision communicated: the list of newly
accepted products is sent
out via email
If accepted, the product will
appear on the list
Products added to ETL on 1st of every month or the 15th of the
month
Non-listed technologies (lighting, pipework insulation, AM&T systems, CHP) do not
have any type of listing on the ETL website and so no ETL assessments are required.
30 day limit
BEIS informed
If a product doesn't pass the first time, you can re-apply
E-mail requesting additional
information
If rejected, the product
will not appear on the
list and you will be able to login to your account for
further information
13
Useful sources of information for making an application
Please Click on the following hyperlinks for additional information for making an application:
Guidance note on making a product application.
Criteria for listed and unlisted ETL technologies
Application Checklists for each Technology
Registration and Login
14
Is there a way to show that a product is listed on the ETL?
Use of the ETL LogoProducts listed on the ETL can have the ETL Logo associated with them in product market materials. This logo is an easy way to communicate the energy efficient performance of your product.
To request the logo, please contact:[email protected] ETL logo should only be positioned alongside ETL eligible products. The unique licence number can be used with the ETL logo.
For more information on how to promote ETL listed products please visit the Manufacturer´s Toolkit.
4What are the benefits of the ECA?
15
• Qualifying costs include the cost of buying the equipment as well as other direct costs involved, such as the installation and transportation costs of the purchased equipment (see ETL technology criteria for further details)
• A purchasing business can choose whether to claim an accelerated capital allowance as an ECA on energy efficient plant and machinery or as an Annual Investment Allowance. For example, if the AIA maximum has already been met, the purchaser may wish to take advantage of tax relief for ETL eligible plant and machinery via the ECA.
• Loss-making businesses* can also realise the tax benefits from the ECA. Please visit the claim capital allowances web page for further information.
*The Government announced at Autumn Budget 2017 a plan to extend the lifespan of the relief for loss making businesses and reduce the rate claimable to two-thirds of the CT rate. However this is still subject to the parliamentary process. Please look out for updates on the HMRC website.
16
Additional information on ECA tax benefits
17
How does the ECA compare with other allowances?
Businesses can write off 100% of the qualifying costs
on eligible Plant and Machinery against the
taxable profits in the first year after the investment is made. There is no cap on
the amount that profit making businesses can
claim. There is a cap on the amount that can be claimed by loss making businesses*.
• Businesses can write off 18% (or 8% for some
technologies, “Special Pool Rate”) of the
qualifying costs against the taxable profits per
year on a reducing balance basis.
• Relief is spread over several years.
• Businesses can write off 100% of the qualifying costs on eligible Plant and Machinery against
the taxable profits in the first year after the
investment is made.• From 1 January 2016 the
AIA was capped at £200,000
Enhanced Capital Allowance (ECA)
Capital Allowance (CA)Annual Investment
Allowance (AIA)
ECAs and AIA deliver a first year cash flow timing benefit when compared with Standard and Special Rate Pool capital allowances.
*The Government announced at Autumn Budget 2017 a plan to extend the lifespan of the relief for loss making businesses and reduce the rate claimable to two-thirds of the CT rate. However this is still subject to the parliamentary process. Please look out for updates on the HMRC website.
The ECA value in the year of purchase is
nearly 6 times the
value of the standard CA, 12.5 times
the value of the special
rate pool CA, and is the
same as the AIA
18
Visual comparison between tax relief options
Tax relief for £25,000 of spending on qualifying purchases
0
5000
10000
15000
20000
25000
30000
ECA (100%) Standard CA(18%)
Special RatePool CA (8%)
AnnualInvestmentAllowance
(100%)
Exp
en
dit
ure
(£
)
Tax relief in year of purchase
Total expenditure
The Standard CA and the Special Rate Pool CA can be claimed in future years.
• Immediate tax bill reduction > increases cash flow
• Reduced payback period on purchases
• Reduced running costs
• Against a backdrop of increasing energy prices, the savings from buying
efficient equipment are even more beneficial
• Reduces carbon footprint
• Supports businesses’ green credentials
19
What are the wider benefits of the ECA?
20
An example* of the benefits of the ECA and energy savings
Total cost of ownership additional benefit of ETL product over a standard product
Cost of ETL compliant Packaged Chiller:
£52,000
ETL product
Cost of a packaged chiller that does not qualify for the ETL
Standard product
£43,000
Premium for high energy efficiency performance
£9000
£4,889.50
Additional ETL Product Annual Energy Saving
Capital Allowances in the year of purchase
ETL Product: ECA
Standard Product: CA
£9880 £1470.60
£8409.40
Additional tax relief in the year of purchase
How long will it take to recover the premium for high energy efficiency?
£9,000.00
£4,889.50
£4,298.90
8 Months
Premium
Energy Savings
Additional cash flow in year of purchase from
ETL product
Payback Period on premium for ETL
product / higher energy efficiency
Additional tax relief in the year of purchase£8,409.40
This results in a:
*A different process
applies to CHP
21
It’s important to talk to your business’s accountant
at an early stage
How does a purchaser claim an ECA?
For more information
about claiming allowances,
please visit the HMRC website.
Consult the ETL for listed technologies or ETL criteria for unlisted technologies
Make a qualifying Capital purchase
Keep supporting documentation (invoice, etc.)
Claim allowance
2 431
For “unlisted” ETL Technologies Manufacturers will need to
review products against the ETL criteria. If a product complies
with the criteria, it is eligible for an ECA claim. The Manufacturer will need to provide compliance information and a declaration
letter stating that the product(s) being purchased are ETL compliant and eligible for
an ECA claim. This must be supported by other technical
information to substantiate the claim.
For Listed ETL Technologies,
purchasers should make sure to print a
screenshot demonstrating that the technology was listed on the ETL at
the date of purchase
Example declarationstatement
The lighting checklist (https://www.gov.uk/government/publications/)provides an example of
the information that should be included in
the declaration
1A
5Ideas for Communicating Energy Efficiency to customers
22
Tried & Tested strategies for communicating energy efficiency benefits to customers:
• Energy Savings – when discussing product options with customers, it’s important to make sure that customers are aware of the additional energy bill savings from energy efficient equipment. It is likely that there is a strong business case to support additional investment in a higher energy efficiency performance option.
• Environmental Benefits – the greenhouse gas emissions reductions associated with less energy consumption can be a selling point for some customers. It may be worth asking customers if their purchase can support their business’s CSR efforts.
Other strategies for communication energy efficiency benefits to customers:
• Connect to other equipment benefits – Speaking with customers about the additional benefits of energy efficient equipment can help make the case for energy saving options. For example LED lighting may provide better lighting, increasing productivity, whilst also reducing energy bills.
23
Strategies for making the case for energy efficient equipment
Organisations frequently focus on the upfront costs of new equipment without really considering the energy and running costs even though running costs can quickly outpace the purchase price.
• ETL: Listing on the ETL demonstrates independent endorsement and compliance with rigorous standards. A Carbon Trust survey of energy managers showed that only 5% of participants are very confident in the energy savings claims made by manufacturers, whilst 24% of participants do not trust these claims. ETL listing gives credibility to equipment energy saving credentials.
• ECA: Accelerated tax relief through the ECA can improve the chances of business case success. The five-fold (or more) tax relief on ETL purchases can significantly improve the net cost of more expensive, but much more energy efficient products.
• In our recent survey of energy managers 56% of participants indicated that making a business case for energy efficient equipment was a barrier to purchasing energy efficient equipment whilst 30% of participants were not aware of the ECA. These statistics highlight the advantages of discussing the cash flow boost of the ECA.
• Both the ETL and the ECA improve the total cost of ownership of product purchases.
• Sustainability: The UK government’s ETL is recognised as a qualification yardstick for various sustainability assessment processes including BREEAM and SKA rating. Additionally, the Carbon Trust’s Low Carbon Workplace certification considers the use of ETL compliant products as part of the qualitative assessment. 24
How the ETL and ECA can support discussion with customers about energy efficiency
Case studies
6Who uses the ETL, how do they use it, and why do they use it?
25
Technologies: the University has used the Energy Technology List across a range of different technologies, from boilers to refrigeration units to high-efficiency hand dryers.
How the university used the ETL: The University of Reading has used the Energy Technology List to select projects and deliver energy efficiency savings across the University. For example, the University recently installed 72 high-efficiency hand dryers, selected directly from products listed on the Energy Technology List.
Financial savings: These products have delivered attractive financial paybacks in terms of the energy saved. It is estimated that the 72 dryers are delivering total energy savings of £8,022 annually – calculated using Salix Finance’s hand dryer calculation tool.
Use of the ECA: As a public body, the University of Reading does not benefit from the tax benefits of the Enhanced Capital Allowance scheme.
26
University of Reading
27
London Underground
Technologies: Examples of ECA qualifying technologies installed across the Tube network in the past two years include lighting and VRF systems at a number of stations, and variable speed drives within cooling systems and escalators. Upgrades at stations such as Victoria, Liverpool Street and Moorgate include many ETL-listed assets.
London Underground’s Procurement Process: LU has included project management processes to ensure delivery teams are using the ETL and are capturing the necessary information to enable ECA claims to be submitted to HMRC in a standard format. The energy efficiency requirements in LU’s engineering standards for electrical and mechanical equipment have been aligned to the performance criteria of the ETL and LU is encouraging its suppliers to make sure their products are listed.
Use of the ECA Scheme: LU has been able to benefit from the Enhanced Capital Allowances scheme since 2013, and is increasingly using the ETL when purchasing new equipment. This includes upcoming projects such as replacement LED lighting on the Bakerloo Line rolling stock.
28
In their own words
“The Energy Technology List is an invaluable source of information for a number of reasons. It provides independent assurance of products’ energy performance, enabling direct comparisons between different manufacturers’ products on a like for like basis. This has enabled us to have confidence in procurement decisions for more energy efficient equipment, helping to make the case for large-scale investment… The periodic review of Energy Technology List criteria means we can be confident we are purchasing products at the top end of efficient products currently on the market, and we are working to formally adopt these criteria as the standard across the University. ” - Energy Manager, University of Reading
“Educating both the installation sector and end customers is a vital part of making the ETL and the Enhanced Capital Allowance work effectively and we actively look at engaging our customers through CPD guides or presentations, and in our regular communications either digitally or in person…. We do see our installation partners using ETL as a benchmark of energy efficiency, particularly with split air conditioning.”Product Manager of City Multi VRF
“The Energy Technology List provides a clear benchmark for energy efficient performance across the range of technologies we use across the Tube network. Combined with the Enhanced Capital Allowance scheme, the ETL supports decision-making within projects and provides a visible indication of our efforts to reduce our carbon emissions.” - Energy & Carbon Strategy Manager, London Underground Ltd
“Specifying products from the Energy Technology List ensures that our lighting will meet our customers’ requirements not only in quality, but in saving energy as well. As a Carbon Trust Accredited Supplier we are pleased to be able to deliver solutions that can deliver the win-win of saving money and reducing carbon emissions at the same time.” Carbonlights
“The feedback from the new lighting has been very positive. People in other terminals are now asking us to hurry up and upgrade their lighting.”-Facilities Manager, Manchester Airport
29
In their own words: Why do manufacturers list products?
We´ve spoken with manufacturers that have applied to have products listed on the ETL. Below we present the reasons that they choose to apply to have their products listed
Manufacturers were driven by requests from consumers and specifiers to list their products on the ETL
Consumers informed manufacturers that they wanted to take advantage of ECA tax relief and asked that products be listed on the ETL
Manufacturers see the ETL as a badge of respectability that demonstrates the quality of their product
Manufacturers list their products because they take pride in the efficiency of their products and in supporting the drive for increasingly efficient products
Manufacturers want to market the energy efficiency of their products
7For more Information
30
For more information on the ECA scheme:
For information about the ETL please visit the following webpages:
The ETL Home and ETL: Information for Manufacturers Or contact the ETL Help Line on 0300 330 0657
or email [email protected].
To search for a product on the ETL please visit:
The Find ETL Products webpage
For tax questions please visit the HM Revenue & Customs website
Or contact Tunde Ojetola, [email protected]
31
Where can I find more information?
© Crown copyright 2018You may re-use this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected].