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Government Scheme Allows Manufactures to Look Past System Cost

All comments attributed to Guy Fitzpatrick, General Manager – ICA at Xylem

When businesses are investing in new equipment, it can often be tempting to opt for equipment with the lowest purchase price as a way of saving costs. However, not considering the future operating cost of the equipment before investing, can mean that such immediate cost savings can prove to be a false economy.

One of the challenges faced by industry is that although businesses are aware of the potential savings new equipment could make, they may not have the necessary funds or the justification to implement the change.

To help alleviate this problem, The UK Government introduced a number of initiatives, one of them being the Enhanced Capital Allowance (ECA) scheme for energy-saving technologies. The ECA scheme was introduced by the Government in April 2001, in parallel with the Climate Change Levy (CCL). The CCL imposes a levy on energy tariffs for businesses (excluding very small businesses), while the ECA scheme enables businesses to reclaim the tax if they invest in energy efficient equipment.

The ECA scheme allows businesses to write off the whole cost of new equipment against taxable profits in the year of purchase. This provides not only an incentive to invest in energy-saving equipment, which normally comes at a higher cost when compared to less efficient alternatives, but also a cash flow boost as businesses are able to claim 100% tax relief on qualifying capital expenditure in the first year.

For businesses wanting to benefit from the ECA scheme, they must utilise energy-saving technologies specified on the Energy Technology List, which is managed by The Carbon Trust. The Energy Technology List is regularly reviewed, with random testing carried out on the equipment listed to ensure compliance with the energy efficiency criteria. Additional technology categories are introduced on a regular basis, ensuring that older equipment that no longer qualifies will be removed from the list and newer, more energy efficient equipment will be added.

For example, Xylem’s Flygt SmartRun and PumpSmart have recently been added to the ETL list thanks to their energy efficient properties. Flygt SmartRun is a pump control unit that provides the full benefits of variable speed pumping and is designed to achieve energy savings within wastewater pumping stations using managing the pump system. The Flygt PumpSmart is an enhanced variable frequency drive offering all the advantages of speed regulation, as well as enhanced algorithms to provide many unique features including pump efficiency; through smart controls and flow stability.

With energy reduction and environmental considerations becoming more and more prominent within the water industry, it has never been more prevalent to focus on system performance rather than system cost. The ECA and the ETL support this as criteria for entry is being updated to reflect whole system performance – not just individual pieces of kit. With a host of initiatives like the ECA scheme available for companies to take advantage of, business can utilise the latest energy efficient technologies available at no upfront cost, helping them to take a practical approach to the issue of sustainability.

For more information visit www.xyleminc.com  or call 0115 940 0111.

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