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Cost Avoidance 1: M&V Fundamentals
Steve Heinz, PE, CEM, CMVPFounder & CEOEnergyCAP, Inc.
What is M&V and why is it important?M&V is “Measurement & Verification” of energy and cost savings resulting from an energy efficiency initiative.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
It’s important! M&V is one of the six foundational pillars of energy efficiency:
Manufacturer
Contractor (Installer)
Designer (Engineer/specifier)
Building owner (Savings beneficiary)
Financer (Owner or third party)
M&V
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
M&V ties it all together!
Contractor(Installer)
Manufacturer
Financer(Owner or third party)
Building Owner(Savings beneficiary)
Designer(Engineer/specifier)
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
QuizIn 2014 we spent $3M on electric bills. We hired an Energy Manager on 1/1/2015 who implemented a comprehensive energy management program. In 2015 we spent $4M.
We should:A. Fire our Energy Manager
B. Praise our Energy Manager
C. We need more information before making a decision
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
In 2014 we spent $3M on electric bills. We hired an Energy Manager on 1/1/2015 who implemented a comprehensive energy management program. In 2015 we spent $4M.
But we also added 75,000 sq ft, increased occupant count by 7%, increased weekly operating schedule by 9% and absorbed a 5% electric price increase. Oh, and we had a record-setting hot summer.
We should:A. Fire our Energy Manager
B. Praise our Energy Manager
C. We need more information before making a decision
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
In 2014 we spent $3M on electric bills. We hired an Energy Manager on 1/1/2015 who implemented a comprehensive energy management program. In 2015 we spent $4M.
But we also added 75,000 sq ft, increased number of occupants by 7%, increased operating hours by 9% and absorbed a 5% electric price increase. Oh, and we had a record-setting hot summer.
Based on the 2014 baseline, our M&V software calculated that without our energy management program we would have spent $4.8M in 2015. It looks like we avoided a cost of $800,000 in 2015.
We should:B. Praise our Energy Manager
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
This illustrates a key concept: “Measurement and verification” of energy savings is necessary because you can’t simply compare year-to-year out of pocket expenditures. You have to compare what you did spend with how much you would have spent in the absence of energy efficiency, in other words how much you avoided spending.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
IPMVPThe U.S. Department of Energy and other impartial agencies funded the development of the IPMVP (The International Performance Measurement and Verification Protocol) beginning in the mid-1990’s.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
IPMVP (cont’d)
Today it is managed by an international nonprofit agency called The Efficiency Valuation Organization.www.EVO-World.org
The Federal Government uses a version of it to value the savings for all Federal energy projects.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
IPMVP Options for M&VA. Retrofit isolation. Measure and estimate
parameters. (“Key Parameter Measurement”)Example: Lighting retrofit
B. Retrofit isolation. Submeter actual energy use.(“All Parameter Measurement”)Example: Chiller replacement
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
IPMVP Options for M&V (con’t)C. Compare before/after utility bills. (“Whole Facility”)
Example: Behavior-based program
D. Comprehensive computer modeling. (“Calibrated Simulation”)Example: HVAC controls retrofit
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
EnergyCAP uses only Option C
IPMVP Option CCost Avoidance=BATCC Cost–Current Cost
Baseline cost: $1,000 KWH: 10,000
Current cost: $1,200 KWH: 8,000
BATCC cost: $1,500 (10,000 kWh x $0.15/kWh)
Cost avoidance: $300
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Adjust the baseline to current conditionsDegree days imported from AccuWeather®
(see www.WeatherDataDepot.com)
Energy unit price
Floor area
Changes in length of billing period
Occupants, hours, production
New equipment
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
WARNING!Cost avoidance calculations are seldom as simple as “plug and play.”
Adjusting the baseline to current conditions for significant changes in occupancy and equipment requires high skill level engineering analysis plus accurate details about what changed and when.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Savings: Adjusted baseline minus today’s actual bill
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Savings: Adjusted baseline minus today’s actual bill
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Savings: Adjusted baseline minus today’s actual bill
Limitations of Option C M&VWhen you have implemented several projects, it’s difficult to discern the results of each individually.
The further back the base year, the less reliable the calculations due to many changes in occupancy, equipment, etc.
When peak demand charges are a major cost driver, there are valuation complexities.
Non-standard baseline adjustments require engineering analysis, high skill level and substantial time commitment.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Savings Reports can be:1. Ongoing. Calculate and report savings periodically
throughout the life of the contract or program. EnergyCAP approach.
2. One-Time Stipulated. All parties agree to a one-time calculation; no further reporting is needed. This approach is favored by most ESCOs for most retrofit projects.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
All calculation formulas are documentedand flow charted
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
EnergyCAP’s Cost Avoidance M&V module:
Adheres to the calculation requirements of IPMVP
Has been used with essentially the same format & calculations since 1985
Cost avoidance has been calculated for tens of thousands of buildings (over 20,000 buildings currently in EnergyCAP Online have active cost avoidance reporting)
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
ISO 50015 (Measurement and Verification of Energy Performance) says:
“The purpose of M&V is to provide confidence to interested parties that reported results are credible... [including] appropriate accuracy and management of uncertainty”
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
“But I don’t want appropriate accuracy or any uncertainty. I want a 100% accurate, 100% certain cost avoidance report.”
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Reports will always have an element of uncertainty and less than 100% accuracy because you can’t measure the absence of energy usage. We must estimate it using a consistently-applied recognized methodology.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
We must accept a certain level of accuracy and uncertainty.
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Resources:Become a member of EVO (www.EVO-World.org)
Download IPMVP from EVO (new 2016 Core Concepts due out this week)
CMVP–Certified Measurement & Verification Professional (www.AEECenter.org)
M&V Software: EnergyCAP w/cost avoidance
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
Discussion:A. Who has done energy managements projects?
B. How have you done or are you doing M&V, and how well has it met your needs?
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com
QuestionsVisit the Ace Place to learn more!
©2016 EnergyCAP, Inc. ▪ @energycap ▪ www.EnergyCAP.com