Measuring Energy SavingsWe live in a fast paced world.  We are driven to implement projects quickly – on time and under budget.   On a daily basis, we are faced with decisions regarding which projects to implement and we carefully analyze the project’s cost, the estimated return (or cost savings), the payback period and the overall return on investment.   But one of the most important elements of a project is not its cost or its estimated return.  At the end of the day, one of the most important aspects of a project is the measurement of the project’s actual performance.

Take energy efficiency projects for example.  All around us, there seems to be a pent-up demand for energy efficiency in residential, commercial and industrial buildings.  A 2012 study by the American Council for an Energy Efficient Economy (ACEEE) estimates that by 2050, with the right investment into energy efficient technologies and materials, buildings in the United States can reduce energy use by up to 60% (as compared to business-as-usual energy use).  As buildings and equipment get older, as energy rates continue to rise, and as leaders of organizations face decisions about which energy projects to implement, one of the key considerations should not only be “how much is it going to cost?” or “how much can I reduce energy use?” but also “how will I measure the results?”

There are many reasons to measure and verify energy projects on a regular basis. M&V can be used to monitor equipment performance, to accurately assess energy savings (or avoided energy costs) attributable to a project, to offer assurance that a cost savings guarantee or promise is being met or to maximize long term energy savings by allowing for future adjustments as needed.   As part of a project’s overall implementation strategy, organizations should set up a measurement and verification plan that can help to evaluate the success of a project.  A comprehensive M&V plan will include these steps:

  1. Outline project objectives and intended results.
  2. Document baseline energy usage (using two or more years of historical data).
  3. Determine expected avoided energy use (cost savings) taking changes in energy costs, weather variability and building use into consideration.
  4. Review contracts and agreements including guarantees from energy savings performance contracts or energy use projections from contractors.
  5. Define performance measurement – How often will measurement occur?  What types of tools will be used? How will usage be adjusted for changes in weather and usage?

One of the greatest challenges in evaluating the success of an energy project is determining how to measure its actual results. Energy savings are essentially avoided costs – what did not happen – but energy consumption is what is most easily measured. The difference between actual energy consumption and what energy consumption would have been had energy efficiency measures not been implemented provides a measure of energy savings. This is one of the reasons that a baseline calculation of energy usage before a project is implemented is so important when measuring the success of projects.  Actual computation of a project’s energy savings will involve compiling measured energy data (from utility bills and meters) with a calculation of weather and usage adjustments.  There are many tools and resources that can be used to assist an organization in measuring energy savings, ranging from simple Excel spreadsheets to detailed computer simulation models.  The key is finding the solution that best meets the needs of your organization given time, staff and capital constraints.

Recently, the Environmental Finance Center presented a webinar titled “Measuring and Verifying Your College’s Energy Savings.” The webinar was sponsored by the Jessie Ball duPont Fund and discussed why measurement and verification is important, examined different types of measurement and verification tools available, and helped colleges develop measurement and verification plans.  Although the webinar was developed for small liberal arts colleges, the information can be useful to any organization that is considering investment in energy projects.  You can view a recording of the webinar by clicking this link.

As the old saying goes, “You can’t manage what you don’t measure.”   In fact, measurement may be what matters most.