In a political world gone mad mounting questions are being asked over some of the outlandish decisions being made by our government, in particular for backed incentive schemes
A prime example of this can be seen in the latest raft of changes to the ETPL (Energy Technology Product List), part of the ECA (Enhanced Capital Allowance) scheme, which were released in October.
Originally introduced to offer upfront tax incentives for businesses to invest in energy efficient equipment, such as Uninterruptible Power Supply (UPS) systems, amendments to the policy seem to be making this an upwards struggle by grossly overlooking the movement towards scalable growth and investment.
The notable shift in procurement has given rise to the uptake of modular UPS systems, which are predicted to grow from being a US$multimillion sector to a US$multibillion market by 2020 with a compound annual growth rate of 12 per cent. So why has the ETPL chosen to take a short-sighted stance by only providing support for the initial UPS module size, with further module additions being excluded?
According to the current ETPL guidelines, a standalone 100kVA with batteries can benefit from the scheme on day one and another 100kVA with batteries purchased to go in parallel on day two can still benefit from the ETPL. However, when it comes to a modular UPS system, a second 100kVA module with batteries cannot take advantage of the tax incentive. Surely this deters from right sizing, one of the main ways of reaching ultimate energy efficiency.
Another area where the ETPL falls short is its omission to take into account realistic values and best practice. The scheme calls for UPS efficiency to be tested at 100 per cent, which is totally impractical as UPS systems are never specified and should never be run at 100 per cent – it would be operationally negligent to do so. Reputable UPS manufacturers tune UPS efficiencies to peak at between 25 per cent – 75 per cent loadings.
The ETPL criteria asks for 95.5 per cent overall efficiency from the UPS, however the first measurement point is at 25 per cent load (requiring 94 per cent overall efficiency). It is not uncommon to see UPS solutions operating below 25 per cent, particularly early in the facility life and when configured in parallel redundant operation. Rather than requiring figures and test points at 100 per cent load, where impractical, perhaps a measuring point at 10-15 per cent loading may be more applicable in the real world.
Thankfully, the ETPL has included for modular solutions to incorporate controls to balance the load between them to maximise efficiency, in order to be listed. Some modular UPS, such as those manufactured by Huawei Technologies, come with intelligent technology to idly shutdown unused modules to exceed the 25 per cent load efficiency figure even at lower load levels. Sadly though, none of this helps the end user with capex on day one.
The ETPL really needs to take into account its audience and those that are most likely to be able to benefit from the scheme – the user. Those with start-ups and needing scalable options should be incentivised to introduce best practice and efficient operating practices. After all, isn’t this a core objective of the ETPL?
We can only hope that the next wave of amendments to the scheme carefully consider the real operational values and technology practices that are visibly evident to everyone else. In the meantime it will be interesting to see how successful the ETPL fairs as an efficiency scheme and how many benefit from its tax ‘assistance’.
The ETPL is part of the Enhanced Capital Allowance (ECA) tax scheme for energy efficient technologies such as plant and machinery. For a product to be on the ETL, it must meet specific energy saving or energy efficient criteria as set out in the policy. These criteria are reviewed annually by the Department for Business, Energy and Industrial Strategy (BEIS) and is managed by the Carbon Trust.
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