# Presentation: 300840

## Measurement & Verification Section

- _Part 1: M&V Overview_
- M&V in the Five Phases
- _Part 2: Risk Assessment_
- Risk Assessment and Allocation
- _Part 3: FEMP M & V Methods_
- Methods and Applications
- _Part 4: M & V Plan Review_
- Checklist
- _Part 5: M & V Case Studies_
- Application of lessons

## Part 1: M&V Overview

- Purpose of M&V
- M&V in the five phases
- Contractor responsibilities
- Owner responsibilities

## Purpose of M&V

- Performance Contracting is an arrangement where the exact benefits are only known afterwards
- There is an element of risk related to the uncertainty of the delivered benefit
- M&V quantifies the savings
- M&V allocates risk between parties
**M&V supports the guaranteed savings **

**Purpose of M&V**

## Savings

- ESPC can recognize two types of savings:
- Energy Cost Savings
- Energy-Related Cost Savings

**Purpose of M&V**

## Energy Cost Savings

- Reductions in energy use
- Reductions in peak demand
- Reductions in energy rates
- Shifting time-of-use to lower-cost periods
- Converting to less expensive fuels
- Self-generation (and cogeneration / CHP)
- Reduced water and other utility use

**Purpose of M&V**

## Energy-Related Cost Savings

- Energy-related cost savings are primarily due to reduced O&M expenses:
- Parts & labor costs
- Emergency repair costs
- Equipment replacement costs
*Cost savings must come from existing budgets or it will be difficult to pay the ESCO!*

**Purpose of M&V**

## Super ESPC is Guaranteed Savings

**1  2  3  4  5  6  7  8  9  10  11  12  13  14****	****	****Contract Year**

**Savings**

- Actual
- Estimated
- Guaranteed

- Actual saving will fluctuate, but should always be greater than the guaranteed amount

**Notes:**
Performance contracting financing is a ‘pay for savings’ arrangement  An initial investment made by the ESCO is designed to reduce utility bills,providing sufficient savings so that the ESCO can be paid from the savings during the performance period  After the performance period, the Owner (customer) realizes all savings  In a guaranteed savings arrangement such as the ESPC program, M&V is used to show that savings meet or exceed the guaranteed amounts  

## Why You Need M&V  

- Savings are guaranteed, but actual savings fluctuate every year
- M&V demonstrates guarantee is met
- M&V identifies problems
- M&V verifies continued success of projects
- “What you don’t measure, you can’t manage ” (Jack Welch, former GE CEO)

**Purpose of M&V**

## M&V During the Five Phases

| Phase | ESCO Activity | Owner Activity |
| --- | --- | --- |
| 1  Planning |  | Consider project motivation |
| 2  Project Development | Develop Initial Proposal, M&V Overview, Risk & Responsibility Matrix  | Review IP, M&V Overview, Risk & Responsibility Matrix |
| 3  Negotiation and Award | Perform Detailed Energy Survey, Develop BaselineSubmit R&R Matrix, M&V Plan, Cx Plan | Review M&V Plan, Cx Plan, R&R Matrix
Witness DES, M&V, and Cx activities  |
| 4  Implement construction
 | Commission Project,Submit Cx and Post-Installation M&V Reports | Witness Cx, M&V activities  
 |
| 5 Performance Period | Submit Annual Reports,
Savings reconciliation | Perform O&M, witness M&V, approve Reports  |

## Phase 1: Planning

- _What are project motivators?_
- Improved comfort, better performance
- Reduced energy costs
- Reduced O&M costs
- _What does M&V need to accomplish?_
- Monitor equipment performance
- Find additional savings
- Improve O&M
- Enforce guaranteed savings

## Owner Responsibilities

- _Define project goals in terms of:_
- Necessary performance improvements
- Energy cost savings
- Energy-related cost savings
- _Define M&V requirements:_
- Total energy & cost savings
- Equipment performance
- Long-term verification
- _These need to be included in the RFP!_

## Phase 2: Project Development

- _Contractor Responsibilities_
- Complete _*Risk & Responsibility Matrix*_
- Develop _*M&V Overview*_* *in Initial Proposal
- Explain and justify overview:
- How will risks & responsibilities be assigned?
- How will contractor prove performance?
- What will be measured?
- What will not?

## Responsibility Matrix

- The _*Risk & Responsibility Matrix*_ describes how the contractor will address risk factors that affect savings and project economics. These are broadly characterized as:
- Financial and Economic
- Facility Usage and Operations
- Equipment Performance
- R&R Matrix drives M&V Overview

## M&V Overview

- The _*M&V Overview*_ (a.k.a.  Initial M&V Plan) is submitted as part of Initial Proposal.  It is not a complete plan, but:
- Describes intended approach
- Purposely lacks detail
-  The M&V Overview allows the Owner and the contractor to develop a satisfactory M&V Plan
- The M&V Overview drives the Detailed Energy Survey

## Owner Responsibilities

- _Owner Responsibilities_
- Discuss planned physical or operational site changes with contractor
- Provide energy use and rates to contractor
- Review R&R Matrix, M&V Overview and assumptions
- Provide critical comments and feedback
- Engage Project Facilitator and third-party support

## Phase 3: Negotiation and Award

- _Contractor Responsibilities_
- Modify Risk & Responsibility Matrix
- Perform _*Detailed Energy Survey*_ and document baseline information
- Finalize _*Site-Specific M&V Plan*_
- Develop _*ECM Commissioning Approach*_

## Detailed Energy Survey

- M&V Plan drives Detailed Energy Survey (DES) activities
- The _*Detailed Energy Survey*_ defines the _*baseline*_ of the facility, which consists of:
-  Energy use and cost history
-  Equipment list and measured performance
-  Factors that influence energy use
-  Operations and maintenance costs
**If this information is not documented, it is lost.  It cannot be determined after installation.  **

## Site-Specific M&V Plan

- R&R Matrix drives M&V Plan
- The _*Site-Specific M&V Plan*_ includes:
- What will be done (and when)
- How will performance be verified
- Who will conduct these activities (and when)
- How will savings be calculated
- How will baseline be adjusted to account for varying conditions
- O&M reporting requirements for Owner

## Commissioning Approach

- ECM Commissioning (Cx) approach is not a complete plan
- Describes (generally) how each ECM will be commissioned prior to acceptance

## Owner Responsibilities

- Review M&V Plan and Cx Approach
- Provide critical comments and feedback
- Approve Site-Specific M&V Plan and Cx Approach
- Participate in and witness DES activities
- Review DES baseline information
- Engage Project Facilitator and third-party support

## Phase 4: Implementation

- _Contractor Responsibilities_
- Submit _*Commissioning Plan*_
- Commission measures
- Submit _*Commissioning Report*_ and _*Post-Installation Report*_

## Commissioning Plan & Report

*Commissioning* (Cx) is the process of ensuring that systems are installed, tested, and capable of meeting design intent
- The _*Commissioning Plan*_ defines start-up procedures and functional performance tests for each piece of equipment as well overall systems
- The _*Commissioning Report*_* documents* the commissioning activities and any issues that were discovered and resolved

## Post-Installation Report

- The contractor submits the _*Post-Installation Report*_ after the project has been installed. It includes:
-  Project description
-  List of installed equipment (as built)
-  Performance measurements
-  Expected savings for the first year

## Owner Responsibilities

- Witness M&V and commissioning activities. *Be involved!*
- Approve Commissioning and Post-Installation reports
- Engage Project Facilitator support

## Phase 5: Performance & Close-Out

- _Contractor Responsibilities_
- Provide agreed-upon performance-period services
- Perform required operations & maintenance
- Submit _*Annual Reports*_
- Take corrective action (if needed)
- Annual savings reconciliation (if needed)

## Annual Reports

- The contractor submits _*Annual Reports*_ to demonstrate that savings have occurred.  They should include:
-  Project description
-  Performance measurements – this year
-  Realized savings for the year
-  Comparison to the guaranteed amounts
- Reports should also contain:
- Problems that need Owner attention
- Operations & maintenance and repair & replacement activities conducted

**Notes:**
It is useful to include documents and supporting calculations electronically as a CD-ROM with the data and supporting calculations  

## Owner Responsibilities

- Contract administration
- Perform agreed-upon operations & maintenance
- Submit proof of preventive maintenance
- Witness verification activities
- Review & approve Annual Reports
- End of contract term

## Review and Discussion

- Actual savings from Super ESPC are only known after project implementation
- Savings guarantees are only as good as the M&V supporting them
- The Owner sets the M&V goals; the ESCO implements the plan

## Review Questions

- Why is M&V needed?
- Who is responsible for M&V?
- How are M&V and commissioning different?

- Click hereto go to M&V Part 2

**Notes:**
Answers:

1) Energy services and/or the promise of lower utility costs 

2) Energy cost savings and Energy-related cost savings 

3) Any two of the following:
Energy Prices
M&V Costs
Operating Hours
Loads
Weather
User Participation
Equipment Performance