The chill factor

Stephen James has never seen a food refrigeration plant that works. That's a bit of an exaggeration. Nevertheless, as director of the newly...

Stephen James has never seen a food refrigeration plant that works. That's a bit of an exaggeration. Nevertheless, as director of the newly re-established Food Refrigeration and Processing Engineering Research Centre, James says that over the past four or five years he has seen 200 or 300 food refrigeration plants. "But I have never been called in to a plant that actually works. We only ever get called in when they have gone wrong. We see all the problems."

Those problems make scary reading. But not as scary as the reason behind them. In a survey by the Food and Drink Federation (FDF), over 70% of food manufacturers admitted that they did not know how to specify a refrigeration system. Just as scary is an apparent lack of financial acumen among food companies about the taxman's enhanced capital allowances for refrigeration kit. This ignorance means that a company's cooling and chilling plant may fail to qualify for what is, in effect, a whopping 28% discount on the cost.

The Food Refrigeration and Processing Engineering Research Centre (FRPERC) is now based at the Grimsby Institute of Further & Higher Education after it lost its home at Bristol University last July. But despite the new move, it is the same old problem that James and his team face. Ignorance.

"I am doing more legal work than I ever did. Most of it comes down to the fact that there wasn't a real specification agreed at the start," says James. "Many refrigeration systems are going to take in many different types of food, at different rates, and at different times and temperatures. And that information is something that only the food manufacturer knows. The refrigeration contractor can only interpret what it has been told."

Judith Evans, former colleague of James at FRPERC, agrees. Having spoken to a number of food companies over the past 18 months, she says she was struck by the level of ignorance of refrigeration. "I found that neither the technical people nor the people involved in producing the food knew much about refrigeration and weren't particularly concerned, either. Most said they left everything to their refrigeration contractor."

Evans has now set up Refrigeration Developments and Testing (RD&T) at the London South Bank University and runs a website dedicated to bringing academia and industry together in the search for Sustainable Innovations in Refrigeration and Air Conditioning SIRAC (www.sirac.org.uk).

We can work it out

So if you don't get the process specification right in the first place then you end up having to ring James or Evans to find out why it doesn't work. "You have to sit down and work out exactly what you are trying to do with the system," says James. "What products are you going to put through it? What is the size range? How are they going to be packed? What are they made of?"

Then you need to decide how you present the food to the refrigeration system, says James. "Are you really expecting to put a one -tonne pallet load in hot and expect it to cool in two hours? What about quality? There's a critical rate of cooling for meat and for fish.

"What does initial temperature really mean? Are you talking about the average temperature or the maximum temperature? And final temperature? Are you talking about the average final temperature, or are you meeting a legislative requirement that the maximum temperature has to be below 30°C?"

Then you have to specify what cooling time you want for the system in order for it to fit in with in your process, says James. And what is throughput? The average throughput doesn't mean anything, he says. A food company may well want to put through three times the average on one day. And what is the maximum footprint you have room for?

"Refrigeration contractors are not mind readers. The problem is that food companies know what they want to do with their food but cannot translate that into an unambiguous specification for the contractor."

But help is at hand. The FDF has produced a series of guides to help food manufacturers get the best from their refrigeration plant. They offer practical advice on purchasing refrigeration plant, appointing a contractor, improving operational efficiency, and reducing the heat load and power consumption. The FDF has also just updated its guide to the F Gases regulations covering refrigerant gases and the phase-out of ozone-busting R22 refrigerant gas.

The guides were produced with a grant from the Carbon Trust following a survey of FDF members showing widespread ignorance of refrigeration systems, says Stephen Reeson, energy manager at the FDF.

"We had a large response to the survey almost 50%. And it showed that refrigeration was on a lot of people's minds." But the real worry was the widespread ignorance of refrigeration systems among food companies, says Reeson. In fact, 73% of FDF members admitted they had limited knowledge of designing refrigeration systems. Only 1% said they knew what they were doing. It was a similar picture with servicing, says Reeson, with 52% saying they had limited knowledge.

"There's no rocket science in this. It's all basic common-sense business practice. It's really about trying to get people to shift their mentality. It's a message we need to keep repeating and banging on about."

So you've learned how to specify your refrigeration plant and you've learned to go for the lowest life-cycle costs. Now, would you like to learn how to get a 28% discount on the capital cost, courtesy of the taxman? Matthew Hicks, associate with Davis Langdon, the global construction consultancy, and his colleague David Henry are enthusiastic teachers.

Know your allowances

It is all do with knowing which bits of your refrigeration plant qualify for enhanced capital allowances, they say. The capital allowances regime allows companies to offset a percentage of the capital cost of a piece of plant against corporation tax in its first year (and the same percentage of the remaining cost in subsequent years).

Then in 2001, a system of enhanced capital allowances (ECAs) was introduced for energy efficient capital plant (15 qualifying technologies). This gave companies 100% tax relief on the capital cost of qualifying plant in the first year. But according to Henry, that wasn't much of a carrot since kit that qualified tended to attract a price premium. "By the time you were paying the price premium for ECA-qualifying equipment, versus the fact that you could buy normal plant at 25% capital allowance per annum, many companies thought why bother?"

However, that changed in April 2008 when normal capital allowances were divided into two bands one at 10% a year covering most capital equipment; and the other at 20% a year covering things like carpet and furniture. (The ECA rates stayed at 100%).

"Suddenly, things changed," says Henry. "Manufacturers were not able to get the tax relief out as quickly. It now takes 14 to 18 years to get the same amount of tax relief out. So people are now looking at ECA-qualifying equipment because they can get 100% tax relief in the first year." And with corporation tax at 28% that is, in effect, a 28% discount on the price.

Henry explains: "If you were to spend £1,000 on ECA-qualifying equipment, then a 28% corporation tax payer is saving £280 off the tax bill for that year. But if that kit didn't qualify for ECA (ie it attracted only the 10% capital allowance), then they would only get £28 tax relief in that first year. So there is now a significant difference."

But the problem, says Hicks, is that food companies usually leave capital allowances claims to their accountants, who, not having been told any better, will just use the 10% general capital allowance claims. Food firms need to make sure they specify the right equipment that could qualify for ECAs, he argues. Also make sure you look at the right firms. "There are several chiller manufacturers, but there are only certain ones that will have products listed on the ECA website (www.eca.gov.uk). You need to see what's listed and work with the firms to see if they have got products that are on that list, or which can be put forward for inclusion."

The problem with ECAs, says Henry, is that things come on the list but they also go off the list as manufacturers change model ranges or as the eligibility criteria change. The eligibility criteria are revised each summer and tend to get more stringent. "You could be designing a system in January and by the time you are looking to order stuff in September, you might find some bits of equipment no longer qualify. It can be a bit of a minefield for specifiers if they are not working closely with the manufacturers and the Carbon Trust." FM

KEY CONTACTS

■ Davis Langdon 01733 362000

■ FDF 020 7836 2460

■ FRPERC 01472 582430

■ RD&T 0117 928 9300