Transcript Using Risk Modeling to Optimize M&V in ESPC Projects

There is Much More to Protocols
than Good M&V
Steve Kromer
Chair, IPMVP Inc.
Paolo Bertoldi
European Commission DG JRC
M&V Purposes
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Verify performance of energy efficiency
projects and programme
Assists in budgeting
Use of standardized M&V methods
reassures project financiers that projects
are “bankable.”
Facilitates emissions trading
What is M&V?
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Measurement of Energy Savings
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Savings = Reductions resulting from equipment and operational
changes to a facility to improve its energy use.
Verification of successful achievement of:
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Savings anticipated in the energy audit, and/or
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Savings as claimed
So M&V is:
Determining and evaluating actual savings achieved by a
project or programme
Quantifying What’s Not There
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“Savings” are the product of energy
efficiency projects.
“Savings” may occur, but can never be
measured directly.
“Savings” may vary, depending on how
changes are addressed
Watt-hour (Wh) meters and
What Would Have Happened (WWHH) Meters
WWHH meter
1,000,000
kWh
750,000
500,000
Baseline Period
250,000
Wh Meter
Performance Period
Watt Meters and What Meters
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Watt Meter – Measures Energy
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Can be calibrated
Reflects accuracy of the hardware
Accuracy can be specified and tested
What Meter –
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Is calculated
Is as accurate as the model
Accuracy cannot be tested directly
M&V Theory
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Savings cannot be measured directly
Each project needs a different M&V Plan defining
how to determine savings.
For each project,
decide:
the boundary of measurement – just the retrofitted
system or the whole facility?
 the method of adjustment for routinely changing
variables
 where and how to measure the baseline energy use and
conditions
 who, what, where, and when to measures changes from
baseline conditions
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Three Typical Time Periods
Installation Period
1,000,000
kWh
750,000
500,000
Baseline Period
250,000
Jan-93
Jul-93
Jan-94
Jul-94
Performance Period
Jan-95
Jul-95
Jan-96
M&V Theory (cont)
M&V Planning must consider:
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Facility Characteristics
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Contractual Environment
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ESCO contract allocates risks arising from changes occurring
within the boundary of measurement
Value of expected savings
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“Fixed” parameters and use/operating data from the investment
grade audit
M&V costs must be REASONABLE relative to savings
Uncertainty of metering and analysis
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Cost of M&V should reflect acceptable level of uncertainty for
the parties
M&V in Practise
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Find the right amount of M&V for each project:
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How much can you assume parameters vs measure them?
Number of meters and their accuracy
Length of the measurement period, before and after retrofit
Who collects what information about changes since the baseline.
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Baseline data is needed anyway - to design retrofits.
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Ongoing operations always change, and are always
monitored some way. The changes may not be
recorded without proper M&V.
M&V In Practise (cont)
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The presence of widely recognized M&V standards
gives potential clients and bankers comfort =
 MORE ESCO PROJECTS.
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Widely recognized standards define “good
practise,” minimizing arguments about actual
savings =
 FEWER DELAYS IN ESCO’S CASH FLOW
 FEWER BROKEN RELATIONSHIPS
M&V Protocol Development Activities (U.S.)
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IPMVP – Independent, volunteer
organization
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ASHRAE 14 – Engineering Standards
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FEMP – Federal contracting
What is IPMVP
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Savings verification framework for
commercial and industrial energy
conservation measures (ECMs)
Standardizes M&V terminology and defines
various M&V options
Risk management tool that allocates risks
between buyer and seller of energy services
Vision and Mission
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IPMVP’s vision is a global marketplace that
properly values energy and water efficiency.
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IPMVP’s mission is to promote worldwide
investment in energy/water efficiency projects by
helping to quantify and manage the associated
performance risks.
IPMVP Inc.
IPMVP Inc. is a non-profit organization, dedicated
to serving the energy and water efficiency
marketplace through:
• the development of M&V protocols;
• relevant M&V training and education materials;
• building and maintaining a community of IPMVP
users focused on advancing the state of M&V
around the world.
IPMVP – Three Volumes
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IPMVP Vol I: Concepts and Options for
Determining Savings (2002 Edition) - Currently
available in English, French, and Portuguese. Will soon
be available in Italian
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IPMVP Vol II: Concepts and Practices for
Improving Indoor Environmental Quality (2001
Edition)
IPMVP Vol III: Applications
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Concepts and Options for Determining Energy
Savings in New Construction
M&V for Renewable Energy Technologies
Conclusion
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Quantifying Project Results is tricky
Valuing Quantified Results Compounds
Trickyness
Protocols Provide Broad Instructions and
Options
Programs Dictate Cost and Accuracy
Each Project Needs an M&V Plan