Measurement and Verification

Use Measurement and Verification to Justify Energy Project Financing

You need experience to get a job, but you need a job to get experience. Likewise, you need energy efficiency to save money, but you need money to finance energy efficiency projects. These double-edged swords keep us from progressing in every industry, and energy projects tend to get the boot in these dilemmas.

I think it’s fair to say that we all want to support energy efficiency. It’s good for the environment, it saves money, it increases tenant satisfaction, and it makes buildings more marketable. Sign me up, right?

Not so fast. That’s all well and good, except you can’t make the breakthrough to these benefits without capital for the initial investment. And that’s where we get stuck.



Challenge #1: Energy Project Financing

Most facilities budgets only account for day-to-day operations, and do not leave room for proactive commissioning improvements. Even with the understanding that we pay for energy whether or not we do something to control consumption, it often seems pragmatic to continue paying for wasted consumption every month than to find enough money to start an energy project.

Bringing in a third party investor is another story, which brings in new risks. Sometimes it is inevitable that your buildings will need expensive upgrades. If you have a faulty BMS or HVAC system, you can’t get away without commissioning. However, once again, it is significantly less expensive to spend on energy projects that will keep your buildings progressively improving over time, instead of waiting for a major problem that needs to be fixed immediately. 


Challenge #2: Building Owners Lack Incentives to Invest in Energy Efficiency

For the most part, building owners bill back utilities to tenants. Therefore, tenants are the ones that directly receive the monetary benefit of energy efficiency projects. So, what is there to incentivize building owners to take the initial burden of investing in efficiency?

The truth is that the building owners will not necessarily see their ROI in cash value. Instead, they will have more marketable buildings with increased value and higher tenant satisfaction. Because the payback is not straightforward, building owners do not always take action to make relevent upgrades.


Challenge #3: Complicated Measurement and Verification

You’re presented with a potential energy project that will save you and your tenants money, and it sounds pretty good. But how much money will it really help you save?

Measurement and verification (M&V) is a major barrier for starting energy projects, because there are so many factors that it’s nearly impossible to make an accurate savings estimate. Your energy bills vary from month to month for dozens of reasons. Changing weather, varying tenant activity, deteriorating equipment, and scheduling issues are just a few.

Measurement and Verification is supposed to calculate savings, but tends to be a complicated process. Historically, a third party has gone into a building with meters, before and after the implementation of an energy retrofit. The consumption difference between the two meter readings is calculated to measure savings. Unfortunately, this method does not allow for predicting savings, and is often an inaccurate way to attribute savings, due to the number of contributing factors.



These three challenges have one thing in common: money. With financing, the problem is where to get the money. With minimal building owner incentives, it’s the lack of direct ROI. And with measurement and verification, the problem is the lack of ability to make accurate attributions.

Real-time data helps solve all three of these problems, by making measurement and verification an easier, more accurate, in-house solution.


Real-Time Data Increases Transparency for M&V

With twelve data points per year from utility bills, you have almost no way of attributing costs to a particular cause. If your only way to verify the success of your energy project is to look at your bills, you’ll never know the extent to which a given project actually caused any change.

With real-time data you can actually track your energy consumption every minute throughout each month, which will give you enough information to find patterns in your building’s energy consumption, giving you a better idea of the success of your project. For example, if you replace all of your lights and find that you are consuming less during the day, but your baseload at night and on the weekends is still high, you can conclude that the new lights are reducing daytime consumption.

Collecting real-time energy data from your buildings can also help you track patterns in your consumption so you can predict the ROI of certain energy projects. The ability to accurately predict savings would help justify initial investments.


Submetering Helps With Predictions and Verification of Project Effectiveness

With utility bills as your only consumption data, you are blind. With submetering, you have complete transparency. Submetering allows you to divide your building by use, to help you determine which commissioning projects will yield the most long-term value, and exactly how valuable they will really be. If you see that your HVAC system, which you’re considering upgrading anyway, is using 60% of your building’s energy, then it’s definitely time for the upgrade. But if you find out that your lighting system is what’s using 60% of the energy, that’s where you should put your money.

Once you make the upgrade you’ll be able to track exactly how much the project is saving, by collecting real-time data from the corresponding meters, allowing for accurate measurement and verification.


Use Weather Normalization Data to Draw a Clear Connection Between Projects and Savings

Real-time data allows you to calculate energy consumption before, during, and after energy projects. Normalized weather data allows you to see their true impact.

For example, if you do a window retrofit, and find that you’re not saving as much as you originally expected, you can use weather normalization data to see why that is. With windows, you are working to keep the outside weather out, so you can heat and cool the building with less power. With traditional measurement and verification methods, you would see energy consumption before the new windows, in the spring when the weather was cool, and then measure consumption again, after retrofit, in the heat of summer.

Since HVAC systems obviously need to work harder in the summer than in the spring no matter what, you may not be seeing the full extent of your savings. However, by correlating real-time energy data with the weather, you can predict and estimate how well your new windows are performing compared to your old ones.

Real-time data allows you to keep consistent and clear measurement and verification of energy projects, making investments more justifiable and clarifying the bottom line. Real-time analytics have the potential to help predict savings before an energy project is started, so you can pick the best financing options and calculate ROI, before making any changes to your buildings.

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