ENERGY PERFORMANCE CONTRACTS MONITORING AND VERIFICATION
A retrofit at Ealing Town Hall – aimed at cutting CO2
by 1,000 tonnes per annum – was funded through RE:FIT,
an energy performance contract model that transfers risk of performance to energy service companies
E
nergy performance guarantees and contracts are on the increase. The reductions in public sector budgets and a squeeze on finances in general
are leading many organisations to find ways of cutting costs without large capital outlay. This is leading to a growth of third-party financing of energy conservation measures (ECMs), where the financial savings from reduced energy consumption are used to pay back the capital, cover the operational costs, and reduce overall costs for the end user. In an energy performance contract (EPC)
the contractor will often provide the capital, install and operate the ECMs, and provide contractual guarantees on the magnitude of the resulting savings. The client then pays a flat fee over the life of the contract, with the proviso that, if the savings are not being realised, then the contractor will refund the difference. It is essential to have a well defined energy performance baseline, founded on sound principles, from which to calculate expected savings, and a fully agreed and transparent process for measurement and verification (M&V) of the true savings going forward. There are a number of variants on EPC including client or other investor funding, energy supply and billing arrangements, or shared savings models (where the client pays the contractor a proportion of the actual savings). However, the principle is always the same – that energy savings fund investment and operation of energy conservation measures and, if set up correctly, it is a winning arrangement for both parties. ECMs can include anything that saves
Measurement and verification should cost no more than 10% of the annual savings, although set-up costs may exceed this in the first year
energy from changing light fittings to boiler replacements or building fabric upgrades, and even behaviour-change programmes. The concept also extends to renewable energy and CHP schemes. The difficulty with ECMs is that energy consumption is rarely fixed, particularly in buildings. It will vary according to a number of factors including weather, occupancy patterns and behaviour, processes, and operational changes. This makes it very difficult to predict with any certainty just how much a building would have used in any given period of time, and therefore to state exactly what savings have been made for a particular ECM. If a contract is to serve its purpose, it
needs to ensure that neither party is exposed to unexpected or unmanageable risk. For example, if gas consumption were to rise unexpectedly high in a particular month, it must be ascertained whether this is due to failure of an ECM (contractor pays), natural weather effects (terms of contract apply),
www.cibsejournal.com
or to some operational change outside the contractor’s control (client pays). In setting up a M&V process the contractor
will conduct investment grade audits, which form the basis of the business plan for an EPC. This will also involve the need to develop the baselines from which to determine the savings. It is in everyone’s interest that these baselines are scrutinised by an independent third party, and that the subsequent M&V is also conducted by that party. North America has a strong track record
in energy performance contracting and energy service companies (ESCos). The need for impartial arbitration and de-risking contracts has resulted in the Efficiency Valuation Organisation (EVO) producing the International Performance Measurement and Verification Protocol (IPMVP). This sets out the principles of M&V that, if followed correctly, should result in conflict-free EPCs. There is also work under way to develop an ISO in the 5000x series for M&V that will be based on the same principles.
•Option A – retrofit isolation with key parameter measurement
•Option B – retrofit isolation with all parameter measurement
Principles of M&V IPMVP provides a framework for defining the scope of a project, determining baselines, and measuring and reporting savings. It also incorporates guidelines on the cost of an M&V activity, and the trade-off between cost and statistical uncertainty in the results (for example, the greater the required accuracy, the higher the cost). At its heart are the four ‘options’ for an M&V activity, briefly defined as follows:
• Options A and B both look at isolated subsystems that are locally metered. Option A
• Option C – whole facility measurement • Option D – calibrated simulation
allows some of the influencing factors to have an assumed impact. For example a re-lamping exercise may
have the before and after power consumption measured accurately, but the hours of operation assumed. Option B requires that no assumptions are made and that all factors are metered or measured. This will add costs, but improve accuracy and confidence in the results.
Option C may commonly be used for a building with a number of ECMs installed, where it is difficult to separate their impacts – particularly where some ECMs have interactive impacts of overall energy consumption. Each of options A, B and C above rely on baselines
December 2012 CIBSE Journal 43
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68