Fluid drives and Eff1 motors will qualify for tax breaks

The Government has released details of the high-efficiency motors and speed controllers that will qualify for 100% tax write-offs under a new scheme designed to encourage the installation of energy-saving equipment.

The scheme, known as Enhanced Capital Allowances (ECAs), will allow purchasers of qualifying equipment to write off its entire cost in the year it is bought. The scheme, which comes into effect later this year, is designed to offset, to some extent, the cost of the Climate Change Levy which will add about 12% to almost all non-domestic energy bills from next April.

Details of the eligible equipment have just been published by the DETR (the Department for the Environment, Transport and the Regions). Motors will have to comply with one of two efficiency rating schemes (depending on their size and type), while the variable speed drives will have to be used in fluid movement applications, such as pumps, fans and compressors.

For motors, the ECAs will apply to cage induction, fixed-speed machines operating at 200-750V, 50Hz, subject to the following conditions:

• All two- and four-pole motors between 1.1-90kW will have to meet the Eff 1 rating of the efficiency scheme agreed last year between the European Commission and CEMEP, the body representing Europe`s motor manufacturers; and

• All two- and four-pole motors between 90-400kW, and all six- and eight-pole machines between 5.5-315kW, will have to meet the Water Industry Motor Efficiency Standards (WIMES) criteria for six-pole motors.

ECAs will also be available for all multi-speed motors used in applications involving the movement of liquids or gases.

Motor manufacturers will have to provide an adjudicating body known as the Carbon Trust with evidence that their motors comply with the above criteria. They will have to submit results of tests performed in accordance with procedures laid down in the IEC 34-2 standard. The tests may be performed either by the manufacturers themselves or by independent test houses. The Carbon Trust will carry out random audits on manufacturers.

A list of eligible motors - known as the UK Energy Technology List - is due to be published in November. Applications for inclusion in the list must submitted by 15 October. If a product is rejected, the DETR will provide reasons and the manufacturer will be allowed to resubmit the product, supplying further evidence if necessary.

Users will be allowed to claim the Allowances not only on the purchase price of a motor, but also on the capital costs of installing the motor (providing they produce receipts).

When a qualifying motor is part of a larger piece of equipment, users will be allowed to claim a fixed amount, depending on the rating of the motor. The Government has drawn up a list of allowable amounts designed to reflect the cost of the motor, its ancillary components and its installation. These amounts - which apply to standard, non-sparking and increased safety motors - range from £407 for a standard 1.1kW motor, to £70,318 for a 400kW flameproof machine.

There will be no limitation on how the motors that qualify for ECAs are used, but variable speed drives (VSDs) will be eligible only if they are used in applications that control the movement of liquids or gases via pumps, fans or compressors. Three qualifying types of equipment are variable frequency controllers (inverters), integrated motor-drive packages, and controllers for switched reluctance drives.

The DETR has drawn up a definition of eligible controllers stating that they should "act directly on the electrical energy input into the windings of a motor" so that the rotor speed is either "substantially different" from a directly connected motor, or varies the rotor speed over a "substantial" range. The controller should also allow the motor to be used for the its intended purpose without detracting from its performance.

The definition excludes controllers that cannot sustain a motor`s rotor speed at 70% of its rated value for at least one hour without causing overheating, and those that alter the speed of a shaft connected to the load independently of the rotor shaft. The DETR criteria also specifically exclude soft-starters and "energy optimisers" designed to cut excitation losses on single-speed motors.

Controller manufacturers applying for inclusion in the Energy Technology List will have to submit specifications or literature establishing that their equipment complies with the DETR definition.

For users applying for ECAs on controllers, the conditions are similar to those applying to motors. Users will be able to claim the allowances on purchase and installation costs of standalone controllers, or on a fixed amount for controllers incorporated in a larger item of equipment. This amount takes into account some associated items such as enclosures and EMC measures, but excludes others, such as programmable controllers and transformers.

For controllers used on single-phase motors, the amount will range from £202 for a 0.37kW machine to £429 for a 2.2kW motor. For three-phase motors below 0.75kW, the claimable amount will be £474. At the other end of the scale, if the equipment is controlling a 5MW machine operating above 690V, you will be eligible for an allowance of £261,700.

Users will be allowed to claim ECAs on investments in eligible equipment made after the Energy Technology List is published in November, but they will only be able to submit formal claims for the Allowances after April 2001. The Inland Revenue expects the ECA scheme to cost around £100m in its first year.

Full details of the ECA scheme and the allowable amounts are available on a new Web site (www.eca.gov.uk).