1. Practical Experiences in Applying Savings M&VBy
Thomas K. Dreessen
CEO, EPS Capital Corp.
EVO Board Member
and
Pierre Langlois
President, Econoler International
EVO Board member
October 19, 2005

2. Program 13:00-13:10 Introduction 13:10-13:25 Presentation of EVO
13:25-14:00 Overview of the International Performance Measurement & Verification Protocol (IPMVP)
14:00-14:45 How to apply IPMVP’s Options in practical ways
14:45-15:00 Break
15:00-15:45 ESCO Strategies for Valuing Savings and Mitigating Related Performance Risks
15:45-17:00 Actual Project Examples in Applying Savings M&V
17:00-17:30 Q&A and Conclusion

3. Introduction Your Trainers: Tom Dreessen CEO, EPC Capital Corp.
Pierre Langlois President, Econoler International

4. Introduction Why Measure and Verify?
Accurately assess energy savings for a project
Allocate risks to the appropriate parties
Reduce uncertainties to reasonable levels
Monitor equipment performance
Find additional savings
Improve operations and maintenance (O&M)
Verify cost savings guarantee is met
Allow for future adjustments, as needed

5. Introduction
M&V is an evolving science, although common practices exist
These practices are documented in several guidelines, including
The International Performance Measurement & Verification Protocol (IPMVP 2001)
FEMP M&V Guidelines: Measurement and Verification for Federal Energy Projects Version 2.2 (2000)
ASHRAE Guideline 14: Measurement of Energy and Demand Savings (2002)

6. EVO Efficiency Value Organization (EVO) www.efficiencyvaluation.org
Formed in 2004, formerly IPMVP Inc, a non-profit US corporation
Provides tools to help energy efficiency projects be valued equivalently to new energy supply projects

7. EVO EVO Vision EVO Mission
A global marketplace that correctly values the efficient use of natural resources and utilizes end-use efficiency options as a viable alternative to supply options
EVO Mission
To develop and promote the use of standardized protocols, methods and tools to quantify and manage the performance risks and benefits associated with end-use energy efficiency, renewable energy, and water efficiency business transactions

8. EVO Protocols Coming soon - EVO subscriber services Industry Standards
Training, Certification
Under development
Building Community, Promoting Efficiency
USGBC - US Green Building Council - LEED
Metering International
Power Measurement - Webinars
APEC - IEEFP
Coming soon - EVO subscriber services

9. IPMVP - Overview
IPMVP stands for International Performance M&V Protocol
Created by an international committee seeking to reduce uncertainty in M&V
Developed and managed by EVO, inc.
available free

10. IPMVP - Overview
IPMVP is a framework of definitions and methods for assessing energy savings.
IPMVP framework was designed to allow users to develop an M&V plan for a specific project.
IPMVP was written to allow maximum flexibility in creating M&V plans that meet the needs of individual projects, but also adhere to the principles of accuracy, transparency and repeatability.

11. IPMVP - Benefits
Defines standard approaches to “measuring savings” to reassure clients
Leads clients and ESCOs to discuss the trade-off between measurement “accuracy” and measurement cost
Legitimized ESCO projects though International recognition
Updates M&V state of the art practices through constant evolution

12. IPMVP What IPMVP does not cover Operations and Maintenance
Detailed Metering Specifications, or instrumentation guidance.
Calculating the Cost of M&V (Balancing the cost and benefits)
Scientific/Engineering Rationale for adjusting the baseline for non-statistical changes

13. IPMVP – Added Value
Savings verification framework for commercial and industrial energy conservation measures
Standardizes M&V terminology and defines various M&V options
Risk management tool that allocates risks between buyer and seller of energy services
Allows parties to create transparent, repeatable contract terms governing savings settlement

14. IPMVP – Other Characteristics
Translated in more than 10 languages over the last five years
First Published 1996, and updated frequently
Broad International Support and Adoption
World standard

15. IPMVP - Documents
IPMVP Vol. I —Concepts and Options for Determining Energy Savings.
IPMVP Vol. II — Concepts and Practices for Improved Indoor Environmental Quality
IPMVP Vol. III
M&V Guidelines for New Construction (under development)
M&V of Renewable Energy Systems
Standard Protocol for Determining Baseline for Demand Response Programs (Draft)
Emissions Reduction

16. IPMVP – M&V Options
The IPMVP M&V guidelines group M&V methodologies into four categories : Options A, B, C, and D
The options are generic M&V approaches for energy and water saving projects.
Having four options provides a range of approaches to determine energy savings depending on the characteristics of the ECMs being implemented and balancing accuracy in energy savings estimates with the cost of conducting M&V.

17. IPMVP – M&V Options Type #1 Retrofit isolation and whole facility
Looks only at the affected equipment or system independent of the rest of the facility; whole-facility methods consider the total energy use while ignoring specific equipment performance.
OPTION A - Retrofit isolation with measured performance and stipulated operation
OPTION B - Retrofit isolation with measured performance and measured operation

18. IPMVP – M&V Options Type # 2 : Whole-facility method
Looks globally at the savings of a whole facility
OPTION C - Whole building or utility bill comparison
OPTION D - Calibrated simulation (using simulation tools as Trace, DOE-2, etc.)

19. IPMVP – M&V Options

20. M&V Options - Practical Application
Regardless of the Option followed, similar steps are taken to verify the potential for the installed Energy Conservation Measures (ECMs) to achieve savings
Step 1: Define the baseline conditions were accurately defined.
Step 2: Develop Project Specific Measurement & Verification Plan
Step 3: Verify the proper equipment/systems were installed and are performing to specification.
Step 4: Verify the equipment/systems continue to have the potential to achieve the predicted savings.

21. Basics of M&V Savings WWHH Baseline Energy Post-Retrofit Time

22. Basics of M&V WWHH? Savings Baseline Post-Retrofit Energy Time

23. M&V Options - Practical Application
Step 1 Define the Baseline
Baseline are define as part of the detailed energy survey (DES)
Baseline physical conditions (such as equipment inventory and conditions, occupancy, nameplate data, energy consumption rate, control strategies, and so on) are typically determined during the DES through surveys, inspections, spot measurements, and short term metering activities
Deciding what needs to be monitored, and for how long, depends on factors such as the complexity of the measure and the stability of the baseline, including the variability of equipment loads and operating hours, and the other variables that affect the load

24. M&V Options - Practical Application
Step 1 Define the Baseline (continued)
Baseline data are used to account for any changes that may occur during the performance period, which may require baseline energy use adjustments
In almost all cases, after the measure has been installed, one cannot go back and re-evaluate the baseline. It no longer exists!
It is very important to properly define and document the baseline conditions before the measure is implemented.

25. M&V Options - Practical Application
Step 2 Develop Project Specific M&V Plan
The project specific M&V plan includes project-wide items as well as details for each ECM, including:
Details of baseline conditions and data collected
Documentation of all assumptions and sources of data
What will be verified
Who will conduct the M&V activities
Schedule for all M&V activities

26. M&V Options - Practical Application
Step 2 Develop Project Specific M&V Plan (continued)
The project specific M&V plan includes project-wide items as well as details for each ECM, including:
Details of engineering analysis performed
How energy savings will be calculated
Utility rates and how they will be used to calculate cost savings
Detail any operations & maintenance (O&M) cost savings claimed
Define O&M reporting responsibilities
Define content and format of all M&V reports (Post-Installation, Commissioning, and periodic M&V)
How & why the baseline may be adjusted

27. M&V Options - Practical Application
Step 3: Verify the proper equipment/ systems were installed and are performing to specification.
Post-installation verification is conducted to ensure that proper equipment/systems were installed, are operating correctly, and have the potential to generate the predicted savings
The verification is accomplished through commissioning and M&V activities
Commissioning of installed equipment and systems is required
Commissioning assures that the building systems perform according to the design intent.

28. M&V Options - Practical Application
Step 3: Verify the proper equipment/ systems were installed and are performing to specification.
After commissioning is completed, the post-installation measurement and verification activities specified in the M&V plan are implemented
Verification methods may include surveys, inspections, spot measurements, and short-term metering
The results of the commissioning and M&V activities are presented in a Post-Installation M&V Report

29. M&V Options - Practical Application
Step 4: Regular-Interval Verification During the Performance Period
Verify that the installed equipment/systems have been properly maintained, continue to operate correctly, and continue to have the potential to generate the predicted savings
Frequent verification activities can be appropriate. This ensures that the M&V monitoring and reporting systems are working properly, it allows fine-tuning of measures throughout the year based on operational feedback, and it avoids surprises at the end of the year

30. M&V Options - Practical Application
Higher precision means higher cost
Sampling
Large quantity of equipment to measure means higher cost
Approach
Measuring power and hours of operation need better equipment
Frequency
Checking the savings monthly implies added cost

31. M&V Options - Practical Application
Savings
Monthly
check
Cost of M&V/Savings
Simple
1 time
check
M&V cost
Complexity of the process

32. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
The primary purposes of M&V is to reduce performance risk to an acceptable level, which is a subjective judgment based on the parties’ priorities and preferences.
In performance contracts, risks are allocated between the ESCO, Owner & Financier.
In performance contracts, M&V:
is critical to success of project
maximizes the persistence of savings over contract term
verifies the savings achieved and valued in contracts

33. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
The right level of M&V is determined by degree of savings certainty:
Projects with high degree of certainty require minimal M&V
Projects with low degree of certainty require more M&V
Factors that affect cost and level of M&V:
Value and level of uncertainty of estimated savings
Complexity of efficiency equipment installed
Amount and value of equipment installed
Number of interactive effects
Availability and capability of an existing controls system

34. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
Typical M&V procedures for an ESCO contract are:
Define general M&V approach for inclusion in the contract
Define site-specific M&V plan for project being installed
Define pre-installation baseline energy
Define post-installation system and use
Conduct M&V activities as set forth in contract
Calculate energy & operating savings over term of the contract
Calculate dollar savings and payments due to ESCO

35. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
Calculating Energy Savings:
Baseline energy use
- Post-installation energy use
= Energy savings
Baseline represents level of energy that would have been used if new equipment had not been installed - can be affected by a variety of factors:
Changes in building equipment, schedule, occupancy, operations or maintenance procedures, etc.
Unusually mild or severe winter

36. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
The ESCO “Performance Risk” equates to a Savings Guarantee to Owner or Financier that the total cost to implement the project will be “paid-from savings”.
Key areas of the Performance Risk are:
Savings shortfall
Savings persistence
Technical problems
Customer performance (data, maintenance, payment, etc.)

37. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
Possible Solutions:
Savings shortfall
Utilize multi-level savings estimate review process
Fix long-term maintenance, M&V and other ESCO costs
Savings Persistence:
Establish calculation methodology during feasibility stage
Implement M&V plan at beginning of construction
Isolate Savings Measures from total bill

38. ESCO Strategies - Valuing Savings & Mitigating Related Performance Risks
Possible Solutions (continued):
Technical Problems:
Ensure proper pass-through to contractors and vendors
Customer Risk – include in contract:
Clearly defined baseline, savings calculation methods, M&V protocol, and maintenance responsibilities
Short timeline for providing energy bills
ESCO’s ability to bill estimated savings if bills not provided
ESCO’s ability to self-perform maintenance and charge owner for work and any related lost savings

39. Actual M&V Project – Commercial Building in Canada – Econoler International
Training and energy management were also part of the project.

40. Project implemented in 2000
Actual M&V Project – Commercial Building in Canada – Econoler International
Project implemented in 2000
Annual use of the building constant for the baseline duration and for the duration of the project
The energy bill of year $2.5 million
The energy bill of year $1.9 million
Savings $0.6 million

41. Actual M&V Project – Commercial Building in Canada – Econoler International
M&V Approach (OPTION C)
Whole building/plant approach using main electric utility meter data
Measurement done based on the baseline developed

42. Actual M&V Project – Commercial Building in Canada – Econoler International
This approach is appropriate:
Large-scale project
Important energy saving (20% or more)
All parameters affecting energy usage can be clearly identified (baseline and after implementation)
Adjustments factors are simple
Individual measurement not required
Soft savings measures included (training, awareness)

43. Advantages of using OPTION C
Actual M&V Project – Commercial Building in Canada – Econoler International
Advantages of using OPTION C
The entire installation
Interactive effects between EE measures
Disadvantages of using OPTION C
More expensive than option A or B because based on monthly calculation

44. Accuracy: ± 5-10% (annual) Accuracy: ± 20% (monthly)
Actual M&V Project – Commercial Building in Canada – Econoler International
Accuracy/Cost:
% of project cost: 5-15%
Accuracy: ± 5-10% (annual)
Accuracy: ± 20% (monthly)

45. Actual M&V Project – Hospital in USA - EPS Capital Corp.

46. Actual M&V Project – Hospital in USA - EPS Capital Corp.
M&V Approach = OPTION “A”
Actual Before/After Measurements at Installation
Stipulated Usage Factors

47. Actual M&V Project – Hospital in USA - EPS Capital Corp.
Savings Measure
Item Measured
Level Measured
Item(s) Stipulated (based on post actual)
Water
Gallons
Sample
Toilets = # Flushes
Showers = # & Time
Lighting kW
Hours of Use (based on actual logged use)
Steam Traps
Steam Loss
Extrapolated Actual
Power Factor
Utility Bill
100%
Annual Savings
Sterilizer
Chiller Plant
kW/Ton
Ton Hours

48. Actual M&V Project – Hospital in USA - EPS Capital Corp.
Appropriateness of M&V Approach:
Large facility with continuous variable conditions
Actual Before/After Measurements verify savings
Control system in place verified stipulated usage
On-going measurement not required – verified equipment in place and operating.
High-level reconciliation to utility and system usage

49. Actual M&V Project – Hospital in USA - EPS Capital Corp.
Advantages of using Option A:
Cost effective for hospital variables
Actual savings verified with statistically valid samples
Easy to administer
Disadvantages of using Option A:
Not 100% accurate
Not reconciled to total utility usage
Does not track on-going facility changes

50. Actual M&V Project – Textile Mill in India - EPS Capital Corp

51. Actual M&V Project – Textile Mill in India - EPS Capital Corp
M&V Approach = OPTION “B”
Before/After Measurements
Continuous Monitoring based on actual usage

52. Actual M&V Project – Textile Mill in India - EPS Capital Corp
Savings Measure
Item Measured
Level Measured
How often Item Measured
Pocket Ventilation Pre-heat
Steam
100%
Continuous
Pumping Power Reduction
kW/kWh
Refining Power Reduction
Wastewater Aeration
Steam Condensate
On-site Power Generation

53. Actual M&V Project – Textile Mill in India - EPS Capital Corp
Appropriateness of M&V Approach:
Large facility with continuous variable conditions
Actual Before/After Measurements verify savings
Savings isolated from total energy costs
On-going measurement required to verify savings based on changing process operations
High-level reconciliation to utility and system usage

54. Actual M&V Project – Textile Mill in India - EPS Capital Corp
Advantages of using Option B:
Savings correlate with process changes
Actual savings verified with metered usage
Less performance risk for customer
Disadvantages of using Option B:
Expensive to install and monitor meters
Not reconciled to total energy costs
Difficult to establish baseline loads for varying process and energy consumption levels

55. Actual M&V Project – Steel Mill in Russia - EPS Capital Corp

56. Actual M&V Project – Steel Mill in Russia - EPS Capital Corp
M&V Approach = OPTION “B”
Before/After Measurements
Continuous Monitoring based on actual usage

57. Actual M&V Project – Steel Mill in Russia - EPS Capital Corp
Savings Measure
Item Measured
Level Measured
How often Item Measured
VSDs on Slurry Pumps
kW/kWh
100%
Continuous
Dry Magnetic Separators
Iron Ore Yield & kW/kWh
Furnace Burner & Controls
Fuel/MT of steel
Ore Separation Roller Screens

58. Actual M&V Project – Steel Mill in Russia - EPS Capital Corp
Appropriateness of M&V Approach:
Large facility with continuous variable conditions
Actual Before/After Measurements verify savings
Savings isolated from total energy costs
On-going measurement required to verify savings based on changing process operations
High-level reconciliation to utility and system usage

59. Actual M&V Project – Steel Mill in Russia - EPS Capital Corp
Advantages of using Option B:
Savings correlate with process changes
Actual savings verified with metered usage
Less performance risk for customer
Disadvantages of using Option B:
Expensive to install and monitor meters
Not reconciled to total energy costs
Difficult to establish baseline loads for varying process and energy consumption levels

60. Conclusions
EVO’s IPMVP can play an important role in the development of the ESCO concept in Asia, in order to provide expertise and credibility to M&V activities.
Measurement of savings is key because it is the “ROI” (Return On Investment) for energy efficiency.

61. Conclusions
Carefully crafted M&V strategies are a key tool to managing performance risks in projects.
The final M&V selected should balance need for accuracy with cost to install/perform.
More complex measures may require more complex and expensive M&V methods to determine energy savings
M&V costs should not exceed 3-5% of project cost

62. Download IPMVP Volumes: President Econoler International
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Tom Dreesen
CEO EPS Capital Corp
Pierre Langlois
President Econoler International