Managing energy use in a business is a balancing act. It requires targeting areas where energy waste is occurring, but without compromising business operations. While behaviour change can deliver significant savings, often it is necessary to invest in equipment upgrades, using more efficient technologies to deliver reductions. However, it can be a tricky case to make the business case for investment, especially if the impetus to reduce energy use has been driven by cost concerns.
There is also an opportunity cost from failing to invest in energy efficient technologies sooner rather than later. Securing these cost savings can cut overheads and ultimately improve cash flow, as well as avoiding higher overall energy costs over an extended time period.
Whilst there are a number of different tools and financing options to help companies make upgrades, businesses should always consider using the Energy Technology List (ETL), which is a UK government-managed list of about 15,000 of the most energy efficient products across 56 technology categories.
The ETL is free-to-use and provides organisations with the confidence that they are buying equipment that demonstrates an objectively high standard of energy efficiency performance. This is maintained through regular, independent evaluations of the market across the relevant technology categories, providing a benchmark for what currently represents top performance.
The ETL is comprised of two separate sub-lists: the Energy Technology Product List (ETPL), which is a list of qualified energy saving products. Technologies categories featured on the ETL include: automatic monitoring and targeting (aM&T) equipment; boiler equipment; combined heat and power (CHP); heat pumps; heating, ventilation and air-conditioning (HVAC) equipment; lighting; motors and drives; refrigeration equipment; and waste heat to electricity conversion equipment.
Due to the rigorous standards and testing processes, manufacturers featured on the ETL can credibly claim that their products typically fall in the top quartile of energy efficient products available in the market. By using the list, customers can similarly be confident that they are gaining operational savings compared to less efficient alternatives. This is an important factor, as when it comes to buying new equipment, as businesses are increasingly looking beyond up-front capital costs to consider total cost of ownership.
As a result, the ETL has become an integral part of the procurement process for many large businesses and public sector organisations. For example, businesses seeking to achieve a high rating against SKA or BREEAM criteria when designing or refitting buildings, can do so by selecting equipment from the ETL. This is because both schemes include ETL-listed energy efficient equipment in their criteria.
The second sub-list is the Energy Technology Criteria List, which is a list specifying the energy-saving performance requirements products must meet or exceed to be supported by the Enhanced Capital Allowance scheme. Although most purchasing businesses will only have to concern themselves with the ETPL.
The Enhanced Capital Allowance (ECA) scheme, enables businesses who purchase technologies listed on the ETL to claim accelerated tax relief on their taxable profits. This incentive can help strengthen the business case for investment, making it more appealing for companies that might otherwise be reluctant to spend the large upfront costs on new equipment.
The ECA scheme is closing in April 2020. But although the scheme is ending, it is important to note that the government has no plans to stop supporting the ETL beyond this point. The ETL can also be paired with other forms of accelerated tax relief, such as the Annual Investment Allowance (AIA). The AIA limit is being raised to £1 million for two years from January 2019, enabling businesses investing in new plant and machinery to be able to claim through their AIA instead.
The ETL also complements other government energy efficiency policies, such as the Energy Savings Opportunity Scheme (ESOS) requiring large businesses to report on cost-effective energy saving recommendations. Although ESOS does not require companies to actually implement identified measures, it is intended to encourage greater levels of procurement for energy efficient technologies, making the ETL a more widely useful resource.
Energy savings resulting from purchases of ETL-qualifying equipment have resulted in the sizeable abatement of carbon emissions in the UK – equivalent to approximately 88 million tonnes of CO2 since 2001. In addition, it is estimated that the ECA scheme has been used by UK businesses to capture around £100 million a year in accelerated tax relief.
With increasing awareness and concern around climate change issues, organisations are needing to put greater levels of attention on their carbon footprint, securing the reputational and economic benefits from reducing their environmental impact. With just over a year remaining on the availability of ECA tax relief, energy managers should make the most of this time-limited window and benefit by upgrading to energy efficient equipment, and beyond April 2020, continue to use the ETL as a trusted, independent source of high performing products to make informed purchasing decisions and manage their energy costs.