The 12L tax incentive could benefit compressed air users if they achieve efficient parameters such as lowering the energy use of compressors and associated systems, reports measurement and verification (M&V) company Veritek.
Veritek is one of the first South African National Accreditation System (SANAS) M&V inspection bodies accredited to provide M&V services and issue certificates to claim a tax deduction for energy efficiency savings under the 12L Regulation that was released in November last year.
The Income Tax Act of 1962 Section 12L is an energy efficiency tax incentive, which was promulgated by the Department of Treasury to assist tax paying entities to receive a deduction on taxable income, owing to the savings achieved through energy efficiency projects.
M&V provides impartial, transparent and accurate quantification of energy savings projects and impacts. Most stakeholders in energy savings projects want to know and be certain how much energy is being saved, whether these savings are being sustained and if reported figures can be trusted.
By using an accredited M&V inspection body, assurance is paramount, as SANAS accreditation is subject to meeting strict guidelines with regular review. These guidelines include a requirement of impartiality, which means that M&V teams must remain separate from the implementation team. Services should also be delivered in accordance with SANS 50010:2011, and comply with SANS/ISO/IEC 17020:2012. Additional compliance with the ISO 9001 quality management system standard is most beneficial.
Typical services delivered by M&V specialists include the measurement of project parameters, developing baselines, and calculating the savings in accordance with SANS 50010:2011 that was derived from the nonprofit organisation Efficiency Valuation Organisation’s International Performance Measurement and Verification Protocol, which is international best practice.
A key responsibility of M&V services is to facilitate agreement between the stakeholders on the M&V evaluation outcomes through accurate reporting of results.
Veritek’s experience ranges from demand side management projects, of which over 400 have been completed successfully, to 12i tax incentive projects, 12L tax incentive projects and numerous client-funded energy efficiency demand side management projects.
Veritek personnel has M&V experience in various industries including hot water load control; space heater load control; lighting retrofits; mine pumping systems; thermal ice storage systems; irrigation pumping systems; furnace energy efficiency upgrades; solar water heating; compressed air systems; gas compressors; diesel usage; heating, ventilation and air-conditioning systems; fuel source changes; milling systems and building enhancement.
The first step for an organisation wanting to pursue the 12L energy efficiency tax incentive is the appointment of an M&V entity accredited by SANAS, such as Veritek.