How to make M&V in commercial buildings reliable for pay-for-performance markets and energy performance contracts.
In order to create demand for energy efficiency, secure its value as a grid resource, and guarantee performance contracts for customer savings, we must increase confidence that savings are real and reliable. This is particularly important in commercial efficiency, where providers are often required to account for a range of “non-routine” changes (such as a change in tenants or end uses) that occur during the performance period of a project.
Historically, accounting for the impact of such changes has created substantial uncertainty for all parties, and has lead to ongoing disputes about what are the “real” savings. Addressing this uncertainty becomes increasingly important as the efficiency marketplace moves toward a pay-for-performance paradigm in which customers and utilities bank on cash flows based on M&V results.
To solve for this problem, OpenEE automates routine adjustments for weather using the OpenEEmeter, based on methods that have been validated by independent engineers on the IPMVP technical committee to comply with IPMVP requirements for routine adjustment and uncertainty analysis.
We then set up an auditable system in which non-routine adjustments are defined contractually in advance and tracked and approved over time, based on IPMVP Option C, Whole Facility approach. Handling and quantification of non-routine adjustments often requires a site visit and professional assessment, as it is often not possible to determine with complete confidence if a change in consumption is the result of a non-routine change that should trigger an adjustment or a sign of a maintenance or other fault.
In the past, a nearly complete lack of specificity about the precise nature of non-routine changes has left far too much discretion in the hands of engineers, creating cash flow and savings uncertainty. In pay-for-performance markets and energy performance contracts, this often creates a conflict of interest in which the party that makes adjustments to the baseline, which directly affects savings, is also the recipient of funds based on this calculated value.
To account for this, every project must include an M&V Plan and Contract (M&V Template) that pre-defines non-routine adjustments. Use of ICP Investor Ready Energy Efficiency project certification reduces approval and due diligence costs by defining a standardized and independently verified process with standard data and necessary performance period plans in place.
This solution automates routine adjustments, then establishes an M&V contract in advance between aggregators and building owners that includes an auditable process for the execution and acceptance of pre-defined non-routine adjustments.
Standardizing and automating routine and non-routine adjustments for commercial buildings creates a transparent and auditable process to arrive at savings performance, which is particularly important for projects that carry a performance guarantee or insurance, or that are participating in pay-for-performance.
Process for automation and standardization of commercial M&V:
To learn more about how Open Energy Efficiency is helping support commercial M&V, contact us for a demonstration of the OpenEEmeter platform.