Are your compressed air products energy efficient?

Compressed air systems are used throughout industry, with at least 80 per cent of industrial applications using compressed air in one or more of their processes.

They are large consumers of energy consuming around 10 per cent of all industrial electrical consumption, or 8.8 TWh each year, resulting in CO2 emissions of approximately 3,100 kt per year. Various issues can affect the efficiency of compressed air systems, such as air leaks, over pressurisation and inappropriate use of products.

Businesses who purchase energy efficient technologies can not only create cost and energy savings through operational efficiencies, but may also be eligible for accelerated tax relief on their taxable profits through the Enhanced Capital Allowance (ECA) scheme. In order to qualify for the ECA, businesses must purchase products on the Energy Technology List, a government-backed list of over 15,000 energy efficient products. The products are typically amongst the top 25% of energy efficient products in the marketplace. The ETL features compressed air dryers and controllers, though air compressors are not listed.

The ECA can serve as a cash boost to sway businesses who might be initially reluctant to invest in high-performing products due to higher prices. Businesses can then avoid the false economy of cheaper products that consume greater levels of energy and incur long-term energy costs.

In the majority of compressed air systems efficiency improvements can be made by installing improved controls, such as master controllers, which are featured on the ETL. Further energy savings can be achieved by replacing low efficiency dryers with more efficient dryers (refrigerated and desiccant types) which incorporate energy saving controls.

On average, master controllers can deliver energy savings of approximately 15-30 per cent depending on system size, which can result in considerable energy and cost savings. The ECA can then provide an additional cash boost. For example, the potential annual savings of installing an ETL-listed master controller on a compressor with a 90kW capacity, delivering 14.25m3 per minute, for a total of 8,000 hours per year, at full load, roughly comes to £12,000, 108 MWh of electricity and 38 tonnes of CO2. With a typical capital cost of £6,000 and lifetime energy and ECA benefits of around £121,800 at today’s prices. Thus the financial benefit of choosing an ETL listed product could be over 20 times the upfront cost. Furthermore with a potential ECA of £1,140 in year one, plus energy savings, the capital cost can be recovered within the first year of purchase.

Investing in energy efficient compressed air products can therefore be financially beneficial for businesses as well as the environment. The total energy savings from investments in ETL-listed technologies has 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.

The ECA will run until April 2020 and although the scheme is coming to a close, the ETL will continue beyond April 2020, and can be paired with other forms of accelerated tax relief, such as the Annual Investment Allowance (AIA). The AIA limit has been 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.

With increasing consumer awareness of environmental issues and governmental pressure, organisations are being forced to critically assess their footprints and realising the reputation and economic value in reducing their impact.  With just over a year remaining on the availability of ECA tax relief, businesses should make the most of this window and benefit by upgrading to energy efficient equipment.

For more information on Compressed Air equipment and the Energy Technology List, read the online information leaflet: https://bit.ly/2GxLgpS