SUSTAINABLE BUSINESS Energy economics


THE SEAIHAS INCREASED ITS TAX INCENTIVE SCHEME FOR ENERGY-EFFICIENT EQUIPMENT, ALLOWING BUSINESSES TO SAVEMONEY AS WELL AS THE ENVIRONMENT. SORCHA CORCORANREPORTS


BrianMotherway, SEAI


Threenewcategories of equipment have been recently added to the Sustainable EnergyAuthority of Ireland’s (SEAI)AcceleratedCapi- tal Allowance (ACA) scheme, which means about four fifths of all business energy usage is nowcovered,according toBrianMotherway, chief operations officer at SEAI. First introduced in 2008,ACAis a tax incentive scheme for energy-


efficient equipment which offers businesses investing in such equip- ment the double benefit of recurring energy savings and an up-front tax incentive. Under the scheme,whenmoney is spent on eligible energy-efficient


equipment, the company can deduct the full cost of this equipment fromtheir profits in the year of purchase (rather than over the normal eight years). In other words, the taxable profit in year one is reduced by the full cost of the equipment. The new categories are: refrigeration and cooling systems; electro-


mechanical systems; and catering and hospitality equipment,bringing the total number of categories up to 10.With the addition of 20 new technology groups, the scheme now covers a total of 49 technology groupings.The SEAI is currently taking submissions under the three new categories,which cover 15 new technology groupings. “The idea of the ACA scheme is to give business owners an extra


incentive to buy energy-efficient equipment such as lights,motors or pumps, and to realise that they have a choice,” saysMotherway. “Traditionally, people would buy the cheapest piece of kit without


thinking of the cost of running it over its lifetime.The purchase price of any kind of factory pump ormotor represents 1–2pc of the cost of running it over its lifetime. “We did some work in 2007 as to what policy options were avail-


able and this scheme is similar to ones we looked at in other coun- tries.We realised a barrier existedwhichwas leading to peoplemaking perverse decisions when buying equipment – saving a few quid at the start and then damaging their business competitiveness over time.”


ELIGIBLE EQUIPMENT


The list of eligible equipmentwas recently updated and nowincludes over 5,800 products that represent above-average energy efficiency. “When someone buys something on that list, they know itmeets


our conditions and has passed a test. It is proving very popular now, with suppliers keen tomake sure they’re on the list and then using it in theirmarketingmaterials.Some people are using the list even if they don’t qualify for tax relief, such as in the public sector,” Motherway explains. Rigorous eligibility criteria, based on recognised testing, certifica-


40 OWNER MANAGER VOL 3 ISSUE 3 2010


tion and performance standards, have been devised for each of the technology groupings.All products for listing are required to submit comprehensive information and test data demonstrating aminimum energy-efficient performance according to the specified standard.A fully searchable list of products is available to viewonwww.seai.ie/aca. TheACAscheme is part of a general trend towards greater energy


efficiency andMotherway says businesses are thinking more about energy costs than ever before. “In the past three years we launched a free advice service and we


have sent advisers out to 2,000 businesses that requested it.There is not a single business that has not been able to savemoney as a result – typically they achieve 10pc energy savings within a few months. Every kind of business, small and large, is tuning into this.” As part of this general push,SEAI has just launched a newscheme,


called the Energy Efficiency Retrofit Fund, under which public- and private-sector organisations are invited to submit proposals for ambi- tious projects aimed at demonstrating significant energy savings,new procurement and contractual models and exemplars for replication. Full details can be found at www.seai.ie/Grants/Retrofit.


Howto claimtheACA Unlike grant schemes,where individual projectsmust qualify and demonstrate that the criteria have beenmet, theACArequiresno application forms or burdensome administration. Claiming theACAis very simple as the standard annual company tax return procedure used to claim standard capital allowances is also themethod used to


claimtheACA.All you have to do is: Ensure the product youwant to buy is on theACAlist When buying the product ensure the product


ClaimtheACAon your tax return formin the same section as for standard capital allowances.


details on your purchase records are the same as on theACAlist


If your company doesn’tmake a profit in the year of pur- chase, the capital allowance can be carried forward and offset against profits in the following years.


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