Practical Experiences in Applying Savings M

1
Practical Experiences in Applying Savings MV

• By
• Thomas K. Dreessen
• CEO, EPS Capital Corp.
• EVO Board Member
• and
• Pierre Langlois
• President, Econoler International
• EVO Board member
• October 19, 2005

2
Program

• 1300-1310 Introduction
• 1310-1325 Presentation of EVO
• 1325-1400 Overview of the International
  Performance Measurement Verification
  Protocol (IPMVP)
• 1400-1445 How to apply IPMVPs Options in
  practical ways
• 1445-1500 Break
• 1500-1545 ESCO Strategies for Valuing Savings
  and Mitigating Related Performance Risks
• 1545-1700 Actual Project Examples in Applying
  Savings MV
• 1700-1730 QA and Conclusion

3
Introduction

• Your Trainers
• Tom Dreessen CEO, EPC Capital Corp.
• www.epscapital.com
• Pierre Langlois President, Econoler International
• www.econolerint.com

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 (OM)
• Verify cost savings guarantee is met
• Allow for future adjustments, as needed

5
Introduction

• MV 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 MV 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
• 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
• 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 MV
  Protocol
• Created by an international committee seeking to
  reduce uncertainty in MV
• Developed and managed by EVO, inc.
• available free
• www.ipmvp.org

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 MV plan for a specific project.
• IPMVP was written to allow maximum flexibility in
  creating MV plans that meet the needs of
  individual projects, but also adhere to the
  principles of accuracy, transparency and
  repeatability.

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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 MV state of the art practices through
  constant evolution

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IPMVP

• What IPMVP does not cover
• Operations and Maintenance
• Detailed Metering Specifications, or
  instrumentation guidance.
• Calculating the Cost of MV (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 MV terminology and defines various
  MV 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

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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
• MV Guidelines for New Construction (under
  development)
• MV of Renewable Energy Systems
• Standard Protocol for Determining Baseline for
  Demand Response Programs (Draft)
• Emissions Reduction

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IPMVP MV Options

• The IPMVP MV guidelines group MV methodologies
  into four categories Options A, B, C, and D
• The options are generic MV 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
  MV.

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IPMVP MV 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

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IPMVP MV 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.)

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IPMVP MV Options
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MV 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.

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Basics of MV
WWHH
Baseline
Savings
Energy
Post-Retrofit
Time
22
Basics of MV
WWHH?
Savings
Baseline
Energy
Post-Retrofit
Time
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MV 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

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MV 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.

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MV Options - Practical Application

• Step 2 Develop Project Specific MV Plan
• The project specific MV 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 MV activities
• Schedule for all MV activities

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MV Options - Practical Application

• Step 2 Develop Project Specific MV Plan
  (continued)
• The project specific MV 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 (OM) cost
  savings claimed
• Define OM reporting responsibilities
• Define content and format of all MV reports
  (Post-Installation, Commissioning, and periodic
  MV)
• How why the baseline may be adjusted

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MV 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 MV activities
• Commissioning of installed equipment and systems
  is required
• Commissioning assures that the building systems
  perform according to the design intent.

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MV 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 MV plan are
  implemented
• Verification methods may include surveys,
  inspections, spot measurements, and short-term
  metering
• The results of the commissioning and MV
  activities are presented in a Post-Installation
  MV Report

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MV 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 MV 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

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MV 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

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MV Options - Practical Application
Savings
Monthly check
Cost of MV/Savings
Simple 1 time check
MV cost
Complexity of the process
32
ESCO Strategies - Valuing Savings Mitigating
Related Performance Risks

• The primary purposes of MV 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, MV
• is critical to success of project
• maximizes the persistence of savings over
  contract term
• verifies the savings achieved and valued in
  contracts

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ESCO Strategies - Valuing Savings Mitigating
Related Performance Risks

• The right level of MV is determined by degree of
  savings certainty
• Projects with high degree of certainty require
  minimal MV
• Projects with low degree of certainty require
  more MV
• Factors that affect cost and level of MV
• 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 MV procedures for an ESCO contract are
• Define general MV approach for inclusion in the
  contract
• Define site-specific MV plan for project being
  installed
• Define pre-installation baseline energy
• Define post-installation system and use
• Conduct MV 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.)

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ESCO Strategies - Valuing Savings Mitigating
Related Performance Risks

• Possible Solutions
• Savings shortfall
• Utilize multi-level savings estimate review
  process
• Fix long-term maintenance, MV and other ESCO
  costs
• Savings Persistence
• Establish calculation methodology during
  feasibility stage
• Implement MV plan at beginning of construction
• Isolate Savings Measures from total bill

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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, MV protocol, and maintenance
  responsibilities
• Short timeline for providing energy bills
• ESCOs ability to bill estimated savings if bills
  not provided
• ESCOs ability to self-perform maintenance and
  charge owner for work and any related lost
  savings

39
Actual MV Project Commercial Building in
Canada Econoler International
Training and energy management were also part of
the project.
40
Actual MV 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 1999 2.5 million
• The energy bill of year 2001 1.9 million
• Savings 0.6 million

41
Actual MV Project Commercial Building in
Canada Econoler International

• MV Approach (OPTION C)
• Whole building/plant approach using main electric
  utility meter data
• Measurement done based on the baseline developed

42
Actual MV 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
Actual MV 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
Actual MV Project Commercial Building in
Canada Econoler International

• Accuracy/Cost
• of project cost 5-15
• Accuracy 5-10 (annual)
• Accuracy 20 (monthly)

45
Actual MV Project Hospitalin USA - EPS
Capital Corp.
46
Actual MV Project Hospitalin USA - EPS
Capital Corp.

• MV Approach OPTION A
• Actual Before/After Measurements at Installation
• Stipulated Usage Factors

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Actual MV Project Hospitalin 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 Sample Hours of Use (based on actual logged use)
Steam Traps Steam Loss Sample Extrapolated Actual
Power Factor Utility Bill 100 Annual Savings
Sterilizer Steam Loss 100 Annual Savings
Chiller Plant kW/Ton 100 Ton Hours
48
Actual MV Project Hospitalin USA - EPS
Capital Corp.

• Appropriateness of MV 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 MV Project Hospitalin 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 MV Project Textile Millin India - EPS
Capital Corp
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Actual MV Project Textile Millin India - EPS
Capital Corp

• MV Approach OPTION B
• Before/After Measurements
• Continuous Monitoring based on actual usage

52
Actual MV Project Textile Millin 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 100 Continuous
Refining Power Reduction kW/kWh 100 Continuous
Wastewater Aeration kW/kWh 100 Continuous
Steam Condensate Steam 100 Continuous
On-site Power Generation kW/kWh 100 Continuous
53
Actual MV Project Textile Millin India - EPS
Capital Corp

• Appropriateness of MV 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 MV Project Textile Millin 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 MV Project Steel Millin Russia - EPS
Capital Corp
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Actual MV Project Steel Millin Russia - EPS
Capital Corp

• MV Approach OPTION B
• Before/After Measurements
• Continuous Monitoring based on actual usage

57
Actual MV Project Steel Millin 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 100 Continuous
Furnace Burner Controls Fuel/MT of steel 100 Continuous
Ore Separation Roller Screens kW/kWh 100 Continuous
58
Actual MV Project Steel Millin Russia - EPS
Capital Corp

• Appropriateness of MV 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 MV Project Steel Millin 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

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Conclusions

• EVOs IPMVP can play an important role in the
  development of the ESCO concept in Asia, in order
  to provide expertise and credibility to MV
  activities.
• Measurement of savings is key because it is the
  ROI (Return On Investment) for energy
  efficiency.

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Conclusions

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

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EVO

• Join us today
• www.efficiencyvaluation.org
• Download IPMVP Volumes
• www.ipmvp.org
• Contact us
• Tom Dreesen
• CEO EPS Capital Corp
• tkd_at_epscc.com
• Pierre Langlois
• President Econoler International
• planglois_at_econolerint.com