1. 34
aquarterlymagazineofthesocietyofenergyengineersandmanagers/India
importance of
MRV protocol
in ESCO projects
Avijit Choudhury
A project decision based on energy audit reports
sometimes turns out to be erroneous and risky. This is
the main reason why building ESCO projects have not
taken off till date in India. Investors' confidence level is
very low on the authenticity of data forwarded to them
during a tendering process. Tender documents are
prepared based on energy audit reports, and most of the
energy auditors/auditing agencies fail to prove the
veracity of their claim of huge savings on the ground. To
make ESCO projects a success story there is a need for
introducing proper MRV protocols for each and every
important segment. The building owners should also be
ready to bear the initial cost of measuring correct
baseline values before inviting bids from the ESCOs.
October-December2013

2. importanceofMRVprotocolinESCOprojects
In India's energy efficiency campaign, policy makers
have placed a lot of importance on ENCON project
implementations through the "ESCO" route. Under this
concept, the energy service company (ESCO) brings
in the finance and technology, carries out project
implementation and takes its investment back (along
with profit) from the accrued savings. To promote the
ESCO business in India, BEE (Bureau of Energy
Efficiency) has taken a number of steps, a few of
which are listed below:
Accreditation and gradation of ESCOs
Creating a Super ESCO: Energy Efficiency
Services Ltd (EESL) to nurture the small and
medium ESCOs, especially in sharing the
technical and financial risks.
Encouraging state designated agencies (SDAs) to
create "State Energy Conservation Funds" to finance
the ESCO projects in their respective states.
Removing the barriers for bank/other third-party
financing.
Introduction of third-party measurement, reporting
and verification (MRV) clause in municipal ESCO
projects and other tenders.
ESCO financing usually belongs to one of two modes:
35
October-December2013aquarterlymagazineofthesocietyofenergyengineersandmanagers/India

3. importanceofMRVprotocolinESCOprojects
36
October-December2013aquarterlymagazineofthesocietyofenergyengineersandmanagers/India
1. Guaranteed Savings mode: This was prevalent in the
market even before the creation of BEE or
introduction of the EC Act-2001. Under this scheme,
the "ESCO" guarantees a definite value or parameter
of energy efficiency of the supplied equipment under
agreed operating conditions. After installation and
commissioning, the ESCO ensures that the
guaranteed energy efficiency parameter is achieved
and maintained for a certain agreed period. For
example, in a fuel switch project (HSD or FO to rice
husk or wood chips), the biomass gasifier supplier
first ensures
that the yield (NM3
of producer gas/kg of husk or
wood) is assured and quality of producer gas
(especially in terms of GCV& tar content) is
maintained. The OEM runs the equipment continually
for a certain period, usually 1000 hrs. After this
period again the gasifier parameters are measured. If
the values are found to be at par with the committed
figures, the project owner makes the full payment to
the OEM or ESCO.
2. Shared-Savings mode: This model became much in
vogue after BEE and SDAs started promoting this
scheme. Under this scheme ESCO brings in the
finances to implement the ENCON project and
shares the saving with the client for a definite agreed
period of time frame to recover its investment and
profit.
ESCO runs the huge risk of generating
savings on a continual basis and getting it
approved by the client. ESCOs that undertook
street lighting projects suffered a lot in this
front. After replacement of old street lights it
was seen that electricity bill had gone up
instead of declining. When the matter was
analyzed, it was found that before the
implementation of the project, on an average,
only 65% to 70% of the bulbs used to glow,
as the remaining were either fused or stolen
or broken. After the ENCON project
implementation, when 100% of the bulbs
started glowing, naturally the electricity bills
went up and the municipality refused to pay
anything to the ESCO.
In both the above modes, ESCO runs the huge risk of
generating savings on a continual basis and getting it
approved by the client. From the past experience we see
that ESCOs that undertook street lighting projects
suffered a lot in this front. After replacement of old street
lights it was seen that electricity bill had gone up instead
of declining. Then from where will the ESCO recover its
investment? When the matter was analyzed, it was found
that before the implementation of the project, on an
average, only 65% to 70% of the bulbs used to glow, as
the remaining were either fused or stolen or broken. After
the ENCON project implementation, when 100% of the
bulbs started glowing, naturally the electricity bills went
up and the municipality refused to pay anything to the
ESCO. Thus for an ESCO two factors are very important:
First one is correct definition and determination of
energy base line
Second one is an MRV, i.e., Measurement,
Reporting and Verification, protocol
As an ESCO we have felt on different occasions that
without proper MRV the financial viability of any project
cannot be ascertained. A project decision based on
energy audit reports sometimes turns out to be
erroneous and risky. Given below is a case study of one
ESCO building project.
Case Study
We, as an energy service company, were approached to
undertake a project on a standalone air-conditioning
system of one hospital building in Rajasthan. The energy
audit report of the hospital building was handed over to
us to study the savings potential and submit a suitable
proposal for implementation based on savings-sharing
formula.
Recommendations of the audit report
The details of the existing system are presented in
Table 1.
Table . Basic data of the existing system
No of air conditioner (window)
units to be changed 35
Running hours per day (hr/day) 9
Running days per year (days/year) 240
Average specific power consumption
(kW/ton of refrigeration) 2.13
Rated capacity of each existing
window ac (TR) 1.5

4. Methodology adopted for kW/ton measurement as
seen in the report :
Measurement of kW/ton is from the condenser
side.
Dry and wet bulb temperatures of air were taken at
condenser inlet and outlet to ascertain inlet and outlet
air-enthalpy.
Air flow rate to the condenser was measured by
anemometer and power consumption of the AC by
power analyzer.
Measurement was taken by the audit team
between 10:30 am and 11:45 am.
Temperature setting of the AC was kept at 24°C
during measurement and data collection.
Room sizes were not mentioned in the report.
Occupancy level of each room also was not
mentioned in the report.
Savings projected in the report
The energy audit report proposed a new system with
savings potential as detailed in Table 2.
Table . Energy Saving Potential as Projected by the Energy Audit Report
Parameter Quantity Unit
Specific Power
Consumption of the
proposed window AC
(1.5 ton capacity each) 1.528 kW/ton
Projected savings on
electricity in a year
(from all 35 units) 11,26,403.00 kWh/year
Unit cost of electricity 3.75 Rs/kWh
Monetary savings 5,05,613.00 Rs/Year
Investment per AC unit (all
inclusive: transportation,
labour, insurance etc) 37,000.00 Rs/AC
Total investment
(for 35 units) 12,95,000.00 Rs
Simple pay back 2.73 Years
Simple ROI (Return
on investment) 36.30 %
importanceofMRVprotocolinESCOprojects
37
October-December2013aquarterlymagazineofthesocietyofenergyengineersandmanagers/India

5. project
s Though the savings seems to be an
attractive proposition, careful study reveals
ESC
O
that total savings of 1,26,403 units or 3612
i
n
units per AC per year is based on the fact
protoco
l
that the auditor had considered full
MR
V
compressor load of AC for the entire
o
f
importanc
e
duration of the -hour cycle. In other words,
the reading on the power analyzer was
extrapolated by the auditor for the entire
operational cycle without due consideration.
Theoretically also it can be proved that the
power drawn by an air-conditioner shall vary
during its running cycle.
Apparently it looks quite an attractive proposition.
However, careful study reveals that total savings of
1,26,403 units or 3612 units per AC per year is based
on the fact that the auditor had considered full
compressor load of AC for the entire duration of the 9-
hour cycle. In other words, the reading on the power
analyzer was extrapolated by the auditor for the entire
38
operational cycle without due consideration.
Theoretically also it can be proved that the power drawn
India
by an air-conditioner shall vary during its running cycle.
The following points may be reviewed in this regard:
manager
s
Power consumption of a window AC is mainly
an
d
owing to its compressor - fan power is
engineer
s
insignificant.
When the AC is started the compressor runs on
of
energy
full load till the desired room temperature (24°C
setting in this case) is achieved. This means that if
societ
y
the initial room temperature is say 30°C, the
compressor will run continuously till 24°C is
of
the
achieved inside the room.
magazin
e
As the room temp starts reducing the temperature
differential between inside and outside the room
a
quarterly
also increases which results in increased heat flow
from outside through the walls, roof, door opening,
2013
etc. Gradually a steady state is reached when heat
gain by the room is offset by the heat absorbed by
-
December
the AC machine. During subsequent hours, the AC
has to take care of that heat flux only, which passes
through the walls, roofs and window glass. Since
Octobe
r
concrete, glass etc. are very good insulators, heat
gain by the room will be much less to put any
significant load on the compressor.
Therefore, to recheck the data of the audit report, we
deputed one engineer to the site to log the energy
consumption of one sample air-conditioner for the
entire 9-hour cycle. The data collected by on-site
measurement is given in Table 3.
Table : Data Collected by Onsite Measurement
Onsite measurement was done by a
data-logger for 9 hours
Room size (room no
316 A, on the third floor;
only one wall facing the
outside/ambient temp) 10ft × 10ft × 9ft
Ambient temp
recorded at 9 am,
12.15 pm & 3:30 pm
(avg RH was 87%) 33.7, 40.8, and 43.8°C
Power consumed by AC
from 9 am to 12 pm 5.85 kW (61% loading)
Power consumed by AC
from 12 pm to 3 pm 5.4 kW (56.34% loading)
Power consumed by AC
from 3 pm to 6 pm 4.35 kW (45.38% loading)
Total power consumption
by AC in a day 15.6 (54.25% loading)
From the above it is clear that there is a huge gap
between the baseline given in the audit report and the
baseline drawn by the data logger. As per the report the
average power consumption of one window AC in a day
was 2.13 × 1.5 × 9 = 28.76 kW, whereas in actual it was
just 15.6 kW. When we recalculated all

6. the technical and financial parameters with 54.25%
loading factor we found the anomalies listed in Table 4.
Table . Implications of Lack of Proper MRV
Percentage error in
baseline value (%) 84.32
Actual kW savings (units) 37035 (less by 241%)
Actual Payback in years 9.32
Actual ROI (simple,%) 10.72
The proposal which was prima facie looking fairly
attractive now loses its shine. Had we gone ahead with
the investment just based on the energy audit report,
we were bound to incur huge financial losses with poor
cash flow and recovery.
This is the main reason why building ESCO projects
have not taken off till date in India. Investors' confidence
level is very low on the authenticity of data forwarded to
them during a tendering process. Tender documents are
prepared based on energy audit reports, and most of the
energy auditors/auditing agencies fail to prove the
veracity of their claim of huge savings on the ground.
To make ESCO projects a success story there is a
projec
ts
need for introducing proper MRV protocols for each
and every important segment. For a commercial
in
ESCO
building, MRV guidelines on HVAC, lighting and DG
system is a must to boost the investor confidence
protoc
ol
level. Till any National MRV Protocol is published, the
MR
V
following basic guidelines are suggested for any
ESCO project in commercial buildings:
o
f
importanc
e
Put one parallel meter to the main electricity
meter supplied by the SEB.
Make separate feeders for different loads like
lighting, HVAC etc.
Put sub-meters on the different feeders.
Record the readings for a 1-year cycle to take
care of seasonal load variations.
Draw a baseline from these installed meter readings.
Allocate 5% to 7% of your total project cost for
MRV aspects
In the past we have seen various
government agencies making the efforts for
preparing DPRs for clusters of buildings in
different states like Uttarakhand, Rajasthan, 39
and Punjab for initiating ESCO projects
/India
through the shared-savings route. However,
managers
due to the lack of proper MRV guidelines,
those DPRs were acceptable neither to the
an
d
building owners nor to the ESCOs for
engineer
s
further implementation.
ofenergy
The building owners should also be ready to bear the
societ
y
initial cost of measuring correct baseline values before
of
the
inviting bids from the ESCOs. In the past we have seen
various government agencies making the efforts for magazin
e
preparing DPRs for clusters of buildings in different
states like Uttarakhand, Rajasthan, and Punjab for
quarterl
y
initiating ESCO projects through the shared-savings
route. However, due to the lack of proper MRV
a2013
guidelines, those DPRs were acceptable neither to the
building owners nor to the ESCOs for further
-December
implementation.
Mr. Avijit Choudhury is an
Accredited Energy Auditor & Lead
October
Auditor for ISO-50001. He is the
Associate General Manager & Business Head-Energy
,UL Management Systems Solutions India Pvt. Ltd.