Catalyst 2016: Cost Avoidance 1: M&V Fundamentals

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


M&V ties it all together!

Contractor(Installer)

Manufacturer

Financer(Owner or third party)

Building Owner(Savings beneficiary)

Designer(Engineer/specifier)


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


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


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


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.


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.


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.


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


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


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


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


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.


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.


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.


All calculation formulas are documentedand flow charted


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)


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”


“But I don’t want appropriate accuracy or any uncertainty. I want a 100% accurate, 100% certain cost avoidance report.”


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.


We must accept a certain level of accuracy and uncertainty.


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


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?


QuestionsVisit the Ace Place to learn more!
