While attention has been paid to the Climate Change Levy and the tax allowances for fitting energy saving equipment such as variable speed drives, there is a strong case for looking at power factor correction first when looking to cut electricity consumption ...
Energy consumption was brought into focus for industry when the Climate Change Levy (CCL) was introduced. Essentially, the CCL is an additional tax on energy usage by industry and commerce, but the UK Government tried to soften the blow by introducing Enhanced Capital Allowances for capital investment in certain energy saving technologies. What this means is that the full value of the installation can be offset against income tax in the first year. Although this does provide a small amount of relief for such investments, the allowable equipment only extends to the likes of efficient boiler systems and to variable speed drives used to control electric motors. In practicality, the CCL has not impacted as greatly as first imagined and neither has the ECA had anything like the take up expected. Why power factor correction equipment was not considered in the tax allowances introduced along with the Climate Change Levy is a mystery, since its primary function is to reduce energy losses!
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