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Argus
20-04-2006, 09:49 AM
Here?s a question for UK companies installing Heat Pumps, though I'd be interested to hear of similar schemes to promote Heat Pumps in other countries.

Enhanced Capital Allowances (ECAs) apply to certain models of Heat Pumps that attain a higher level of energy efficiency.

http://www.eca.gov.uk/etl/homepage.asp

To companies that buy them, it can work out as a considerable up-front tax break (but it?s NOT free money).

Most of Daikin and Mitsubishi?s HP line-up, plus some other manufacturers, attracts ECAs, including some VRF systems.

My questions are:


Do your customers know about it?
As a sales advantage, do customers insist on ECA qualifying equipment?

________
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frank
20-04-2006, 04:01 PM
My questions are:


Do your customers know about it?
As a sales advantage, do customers insist on ECA qualifying equipment?


Hi Argus

If I am quoting equipment that qualifies for ECA I always state this in my quotation to the customer. This does not apply to some of my customers though as they are non-profit organisations.

It can be a handy tool to increase the sales value by pointing out that they [the customer] won't get any tax allowance for cooling only equipment but will if they buy the more expensive heat pump or even heat recovery equipment.

Argus
20-04-2006, 04:15 PM
Thank you Frank ? glad you responded. Taxation glazes most people?s eyes!

Obviously it does not apply to charitable bodies, but I understand ECA eligibility is now a requirement of UK local government procurement, whether they are eligible to claim or not in order to demonstrate that they are selecting the most energy efficient machines.

I am conscious that this is a flawed system in the detail of its operation, because if you identify the equipment on your invoice as being ECA eligible, it still needs the customer and his accountant to be aware and tick the right boxes. In other words it needs a chain of people right through to the taxman to do all the right things in sequence.

Considering that ECAs offer the delayed benefit of a tax break in the first year (equivalent in broad terms, I think, to about 30% the capital cost), how much an incentive is it when in all probability they are buying a premium price product?

What's the awareness amongst end users?
Does it influence their buying decisions?

.
________
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frank
20-04-2006, 05:05 PM
Funny you should bring this subject up because, not more than one hour before you posted, I was fielding a telephone call from one of my contractors -

" What's all this ECA stuff in your quotation for the Crewe job? what does it mean?"

" Well, it is a Government sponsored incentive to encourage end users to purchase energy efficient equipment"

"I don't understand"

"It works like this - your customer buys inverter driven heat pump equipment from us that is ECA qualified and at the end of the installation, we issue a certificate that he can use to offset the WHOLE COST of the installation against his taxable profits"

"Oh, well, what do we get?"

:( Bang my head against the wall time :(

Seems like the word isn't reaching very far :rolleyes:

Argus
20-04-2006, 05:20 PM
"Oh, well, what do we get?"





Absolutely. You hit the nail on the head.
Many small company end users don?t know about it. Some don?t care. A lot of small installers simply select on price and by-pass the whole initiative.

VSDs and ECAs are a very grey area.
Apparently, VSDs only qualify if they are an off-the-shelf ?black box? wired into a separate motor ? i.e. not a small split system. Secondly, it?s AC inverters only. DC motors don?t qualify.

The entry level for Heat Pumps is going up in August this year from energy Class C to a minimum of B in both modes.
This effectively puts all R 407C kit out of the running.

Any more observations out there?

.
________
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Daddy Cool
20-04-2006, 09:05 PM
The ECA scheme in my experience is much shouted about by the manufacturers in sales pitch, but in reality i have yet to meet any customer who has bothered to use it. When it first came about, some people were being mis-led (by a supplier who shall remain nameless) into thinking they could claim the entire cost back from the government, then it was 30% being banded around, in the end, it looked like everyone knew something about it, but not the full story and i think end-users began to doubt the worth of it. It is possible to claim 100% of the installation and any enabling works (crane etc) against the first tax years corporation tax with 30% being the max i think. In the grand scheme of things, every company wants to pay as little tax as possible, so try to keep the corporation tax down. By the time they have paid the accountant to look into it, the relatively small cost has been swollowed up. I always mention it. Sometimes get questions, and generally direct them to the ECA website to draw their own conclusions. mainly can't be bothered with it.:D

Andy
20-04-2006, 09:33 PM
Hi:)

The ECA is enhanced capital allowance, ie it inhances the rate at which the capital spend can be written off at, ie reduce it to one year.

100% right off is applicable, but only with products on the energy technology list.

Danfoss or similar controls are a good example, they have very high right off values, which in most cases meet or exceed the instal value.

ECA is at first complex, but worth the effort, I would usualy sit down with the company accountant and assist the filling in of the claim, if you do it right it will benifit the customer. Value to the customer is 25 or 30% of the cost of install approximatley, not to be confused with the 100% right off value.

Kind Regards. Andy:)

Peter_1
20-04-2006, 09:58 PM
Belgium system:
HP must serve as the main heating system of a house
COP >3.5
You receive 210 Euro/kVA compressor power (max1680 Euro)
Not for air/air or Air/water