Catalyst 2016: Cost Avoidance 1: M&V Fundamentals.

Cost Avoidance 1: M&V
Fundamentals
Steve Heinz, PE, CEM, CMVP
Founder & CEO
EnergyCAP, 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)

Quiz
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.
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
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:

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.

IPMVP
The 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&V
A. 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 C
Cost 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 conditions
Degree 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&V
When 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 documented
and 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?

Questions
Visit the Ace Place to learn more!

Catalyst 2016: Cost Avoidance 1: M&V Fundamentals.

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Catalyst 2016: Cost Avoidance 1: M&V Fundamentals.