What is the ECA scheme?
The Enhanced Capital Allowance (ECA) scheme is a key part of the Government’s programme to manage climate change, and is designed to encourage businesses to invest in energy-saving equipment.
Why was it introduced?
The Government introduced the ECA scheme in 2001 to encourage businesses to invest in low carbon, energy-saving equipment. As part of the Climate Change Levy Programme, it’s designed to help the UK reach its Kyoto target of reducing carbon emissions by 20%.
There are three ECA schemes which provide enhanced tax relief for spending on equipment which has environmental benefits: energy-saving equipment, water-efficient equipment and low carbon dioxide emission cars. Here we will only deal with the energy saving equipment.
Which technologies and products qualify for ECAs?
An up-to-date list of the technologies that qualify for the allowance can be found on the Energy Technology Product List (ETPL). The groups currently on it are:
- Air-to-air energy recovery
- Automatic monitoring and targeting (AMT)
- Boiler equipment
- Combined heat and power (CHP)
- Compressed air equipment
- Heat pumps for space heating
- Heating ventilation and air conditioning equipment
- Motors and drives
- Pipework insulation
- Radiant and Warm Air Heaters
- Refrigeration equipment
- Solar thermal systems
- Uninterruptible Power Supplies (UPS)
The Energy Technology List (ETL) is solely for the purposes of identifying those energy efficient products which are eligible for an enhanced capital allowance.
Why are Solar Photovoltaics (PV) not included on the ETL?
These are energy generating technologies rather than energy saving and are therefore outside the remit of the ECA Scheme.
For more details:
ECA Frequently asked questions