# Presentation: 137000

## Latest Thinking on M&V of Energy Savings – IPMVP Perspective

- Satish Kumar
- Lawrence Berkeley National LaboratoryEfficiency Valuation Organization

## Outline

- Context
- M&V and UESCs
- About Efficiency Valuation Organization (EVO)
- IPMVP – Key Concepts
- Lessons Learned Applying M&V Methods
- Development of Risk and Responsibility Matrix
- Correct use of stipulations
- Conclusions

## Context

- According to the UN Development Report (1998)
- Asset of world’s three richest people > Combined GDP of 48 poorest countries
- # of obese people = # of people sleeping hungry ($1.2billion)
- While basic education for all would cost $6 billion, $8 billion is spent annually for cosmetics in the US alone
- While installation of water and sanitation for all would cost $9 billion plus some annual costs, $11 billion is spent annually on ice cream in Europe
- While reproductive health services for all women would cost $12 billion a year, same amount is spent on perfumes in Europe and the US
- Basic health care and nutrition would cost $13 billion; $17 billion a year is spent on pet food in Europe and the US

**Notes:**
Among the 4.4 billion people who live in developing countries, 3/5th have no access to basic sanitation, 1/3rd are without safe drinking water, 1/4th lack adequate housing, 1/5 with no modern health services, 1/5th of the children do not read beyond grade 5 in school, and 1/5th are under nourished

## Context

- $24 trillion worth of goods and services produced in 1998 - Six times in 1975.What are the energy implications?
- $35 billion is spent on business entertainment in Japan
- $50 billion on cigarettes in Europe
- $105 billion on alcoholic drinks in Europe
- $400 billion on narcotic drugs around the world
- $780 billion on the world's militaries.

## Sustainable Growth: Implications for the Developed Countries and the US

- In an increasing global world, is this kind of disparity in wealth sustainable?
- Can we continue to pay less than 50% of average gasoline price prevailing in the world?
- Can we emit 25% of world’s GHG emissions while supporting only 5% of the world’s population?
- If yes, for how long?
- If no, then get ready to face resentment, which will manifest itself in multiple ways

## Role of M&V in UESCs

- UESCs are not ESPCs
- Performance guarantee is not required
- Performance Assurance Guide can help in determining the level of M&V needed
- Reasonable amount of M&V makes good business sense

## Draft Performance Assurance Guide

- Motivation
- Section GC 12 of Model Agreement and Section GC 12 of GSA’s Guide: Each T.O. (task order) shall include procedures that are mutually agreeable to the parties to verify ECM (energy conservation measure) performance following installation
- Objectives
- Getting a good return on your investment (UESCs)
- Assurance that energy savings are real and will persist in future
- Responsibility for Performance
- Recommends Use of Risk/Responsibility Matrix
- Agency signing the UESC is responsible for the development and administration of a contract that provides adequate performance assurance and continued project performance.

## Benefits of M&V

- Helps assure that UESCs are good value for customers
- Introduces consistency in UESC project performance
- Performance Assurance Plan
- Consistent Annual Reporting
- Degree of stipulation, cost-effectiveness
- Reconciliation of utility bills with energy savings projection
- Risk Assignment and Management
- Helps in Performance Period Administration of projects
- Project Documentation
- O&M
- Repair and Replacement
- Helps in quantifying emission reductions from the UESC projects

## Elements of a Successful M&V Approach

- Cost-effective
- Don’t spend $10,000 to verify $5,000 of savings
- Focus on big ticket items
- Provide a framework for assigning and managing energy savings risks
- Reasonable
- Responsibility assigned to the party most likely to manage risk factors
- Flexible

## EVO – The Organization

- EVO is a non-profit organization responsible for maintaining existing and developing new protocols.
- Two main program activities
- International Performance Measurement and Verification Protocol (IPMVP) – 10 years old
- International Energy Efficiency Financing Protocol (IEEFP) – Just starting

## EVO Highlights

- Initial Development Impetus: Energy Policy Act and specifically ESPC legislation
- Total US Department of Energy Funding: Approx. 1 million dollar
- 300 volunteers from over 25 countries in last eight years
- Total Volunteer Contribution: Approx. 20,000 hours ~ US 4 million dollars
- Three editions of protocol have been translated in 10 languages and used in over 40 countries
- 5,000 copies of IPMVP volumes are ordered/downloaded annually
- Web site attracts 100,000 visitors annually

## IPMVP Adoption

- US Green Building Council LEEDTM requires the use of IPMVP for verifying energy savings in new construction
- IPMVP referenced by Italian Regulatory Authority for Electricity and Gas as one of the key documents to help with the M&V of energy savings in its national energy efficiency program
- IPMVP to be used in Conservation project performance assessment in the just released Ontario (Canada) Emission Trading Regulation
- US Army, Air Force, and Navy, and other Federal agencies require specification of IPMVP/FEMP M&V Guide in their ESPC programs
- State Performance Contracting Programs: California, New York, Wisconsin, and Texas are using IPMVP for state performance contracting or programs

## Sponsors

- US Department of Energy
- Bonneville Power Administration
- Energy Foundation
- Federal Energy Management Program
- General Services Administration
- NYSERDA
- Sacramento Municipal Utility District
- Southern California Gas
- Southern California Electric
- Pacific Gas and Electric

## Sphere of Influence of EVO

- Efficiency
- Valuation

**Renewable**
**Energy**
**Technology**

**Energy/Water **
**Efficiency**
**Retrofits**

**Performance**
**Verification in **
**Green Buildings**

**Energy**
**Efficiency**
**Financing**

**Quantifying**
**Emissions**
**From EE **
**Projects**

**Baseline**
**Determination in **
**Demand Response**
**Programs**

## Content of IPMVP Volumes

- Volume I - Concepts and Options for Determining Savings
- Defines basic M&V terminology
- General procedures to achieve reliable and cost-effective determination of savings
- Applicable to energy or water efficiency projects in buildings and industrial plants
- Volume II - Concepts and Practices for Improving IEQ
- Reviews IEQ issues that can be influenced by an energy efficiency project
- Focuses on maintaining acceptable indoor conditions under an energy efficiency project
- Volume III – Specific Applications
- M&V of Renewable Energy Systems
- M&V in New Construction
- Emissions Reduction From Energy Efficiency and Renewable Energy Projects

## Key Concepts

- The Basic Savings Equation (IPMVP):
- Savings =  Baseline Energy Use - Post-retrofit Energy Use +/- Adjustments

## Baseline and Post-Retrofit Energy Use

## IPMVP Options

| M&V Option  | Measurement Requirements  | Basis of Savings Calculations  |
| --- | --- | --- |
| Option A – Partially Measured Retrofit Isolation  | Combination of measured and stipulated factors. Spot or short-term measurements at the component or system level.  Stipulated factor is supported by historical or manufacturer’s data.  | Engineering calculations, component or system models. |
| Option B – Retrofit Isolation | Spot or short-term measurements at the component or system level for constant loads. Based on continuous measurements taken at the component or system level for variable loads. | Engineering calculations, component or system models. |
| Option C – Whole Facility | Based on long-term whole-building utility meter, facility level, or sub-metered data. | Regression analysis of utility billing meter data. |
| Option D – Calibrated Simulation | Computer simulation inputs may be based on several of the following: engineering estimates, spot-, short-term, or long-term measurements of system components, and long-term whole-building utility meter data. | Computer simulation model calibrated with whole-building and/or end-use data. |

## What Can (And Will) Go Wrong – The Case for Adjustments

- Facility usage changes
- Facility equipment changes
- Facility undergoes construction and a new wing is added
- Unusually hot year
- Unusually cold year
**Quiz Question: Why don’t I See the Savings in My Utility Bills?**

## M&V – A Puzzle or a Tool for Ensuring Program Integrity?

## Risk and Responsibility Matrix

- R&R Matrix is a summary of responsibility assignments for key contract elements
- Looks at risks and who logically can take responsibility for the risks
- Starting point for the development of the M&V strategy
- Savings risk exposure for life of contract

## Risk and Responsibility Matrix

- Financial risks
- Addresses the money-related risks to the project (implementation and financing costs, and translating energy to dollar savings)
- Operational risks
- Customer is typically responsible
- Performance risks
- Service provider is typically responsible

**Notes:**
General Principles of Assigning Risks and Responsibilities
Logic and cost-effectiveness drive responsibility allocation.
Responsible party then predicts likely tasks/costs to fulfill responsibility, makes sure they’re covered in ESPC or agency budget (government pays foreseeable costs). 
Unforeseen costs are paid by the party who caused the cost, or by party who is responsible for that risk area.

## Cash-flow Uncertainty vs. Risk Tolerance

**Agency Risk Tolerance**

**Cash-flow Uncertainty**

**Agency Cash-flow**

**$/yr**

**Expected Cash-flow**

**Risk Management Need**

## M&V and Risk Management

- Optimize M&V based on risk management needs
- M&V is not an end in itself!

**Agency Risk Tolerance**

**Uncertainty w/ no risk mgmt**
**$0 for M&V**

**Agency Cash-flow**

**$/yr**

**Expected Cash-flow**

**Uncertainty w/ some risk mgmt ****$X for M&V**

**Uncertainty w/ more risk mgmt**
**$2X for M&V**

## M&V and Risk Management – Illustrative Example

| Project | Capital | Uncertainty | M&V – Risk Management |
| --- | --- | --- | --- |
| Lighting Retrofit | Medium | Low | Agency mostly stipulates savings and absorbs risk |
| Controls/Commission | Low | High | Since capital is low, agency mostly stipulates, in lieu of increased M&V costs |
| Chiller retrofit | High | Medium | Agency requires increased M&V due to savings uncertainty and high capital |

## Detailed Guidelines: Why?

- 1999 report shows that Option A is most common in SuperESPC.
- Option A using 100% stipulated values very common.
- IPMVP 2001 now calls for ‘...at least one parameter to be measured’.
- And most importantly...
**Option A ******** Stipulated Savings !!!**

## Role of Stipulation in Developing a Balanced M&V Strategy

- Appropriate use of Stipulations
- Customer willing to accept risk
- Customer has previous experience
- Probable success of ECM (standard technology, no state of the art system)
- Small savings and/or small uncertainty
- Greater M&V costs not justified
- Stipulations don’t add to uncertainty
- Monitoring serves no other purpose

## Role of Stipulation in Developing a Balanced M&V Strategy

- Acceptable
- Engineering analysis
- Measurement-based models
- Manufacturer’s data
- Standard tables
- TMY weather
- ANSI/ARI/ASHRAE
- Facility logs

- Unacceptable
- Undocumented assumptions
- Proprietary algorithms
- Unsupported handshake agreements
- Guesses at parameters
- Models based on questionable data
- Other buildings

## Conclusions

- UESC customers interested in actual realization of energy savings
- M&V work by IPMVP and FEMP Quality Assurance and Improvement team very relevant
- M&V tools are flexible, adaptable, and can be customized per program needs
- Benefit from the existing free M&V resources

## Thank you for your attention!!!

- Important web sites:
- IPMVP: _[www.ipmvp.org](http://www.ipmvp.org/)_
- LBNL A-Team: ateam.lbl.gov/mv
- National M&V Team: _[www.dc.lbl.gov/mv](http://www.dc.lbl.gov/mv)_
- For more information:
- 	Satish Kumar, LBNLEmail: _[skumar@lbl.gov](mailto:skumar@lbl.gov)__Phone: 202-646-7953_