Session 4: Advanced Topics in M&V for ESPC M&V Building on the Basics Bob Slattery Oak Ridge National Laboratory August 10, 2016 Rhode Island Convention Center Providence, Rhode Island
Basics: What is M&V, and why do you need it? M&V refers to any activities aimed at determining whether the savings guarantee is being met The guarantee and annual M&V are legally and contractually required within Federal ESPCs When M&V is done well, it will: Reduce uncertainty of the savings estimates Increase the likelihood that the savings will materialize Allocate risks appropriately between customer and contractor Potentially identify operations & maintenance issues 2
Basics: M&V in the ESPC Process Baselines Defined in Investment Grade Audit (IGA) and Proposal M&V Plan Developed as part of Proposal Post Installation M&V Report Annual M&V Verification of Energy Conservation Measure s (ECM) ability to perform Activities per M&V Plan Findings documented in M&V reports 3
Basics: Change Happens The Only Certainty Over Time is Change Energy Savings Performance Contracts (ESPCs) are an effective tool for implementing energy efficiency measures, but getting construction finished and paying the invoices is not enough in federal ESPCs. Things WILL change over the life of the contract use of buildings, mission, etc. The ESCO is responsible to verify that the savings has occurred in accordance with the M&V Plan and Contract The Agency is ultimately responsible for ensuring that the ESCO performs the M&V and delivers on the guarantees. 4
GAO ESPC Audit Summary Government Accountability Office (GAO) issued an audit report entitled: Energy Savings Performance Contracts: Additional Actions Needed to Improve Federal Oversight (June 2015) Audit Purpose: GAO was asked to review federal use of ESPCs since 2005. The report examines the extent to which (1) agencies have used ESPCs and plan to use them; (2) projects have achieved their expected cost and energy savings; and (3) agencies have overseen and evaluated such projects.
GAO Acknowledgements/Recommendations GAO acknowledgements: Agencies have taken steps to address 2005 findings (tracking/admin) ORNL report: program wide verified savings equal to 106% of guaranteed savings Each of the 7 agencies examined has established central ESPC offices to support individual sites with developing and implementing ESPC projects Several agencies have increased the role of central offices in oversight of ESPCs since last audit General Recommendations Evaluate training needs on M&V oversight activities, Agency oversight: monitor agency witnessing and M&V report review Improve the reporting of annual savings, account for agency impact to savings Implement systematic evaluations of ESPC portfolios.
The Role of Witnessing A Definition: Agency observation and understanding of ESCO s M&V procedures, tests, and calculations Why witness? Helps to ensure compliance with M&V plan Gain independent confirmation of ECM performance (and savings) Be prepared for future audits Part of agency ESPC administration responsibility Promote mutual understanding and ownership in agency ESCO partnership N 7
Witnessing: Best Practices Designate a knowledgeable government witness to accompany the ESCO during M&V activities. Take a graded approach. Focus on: Cri cal systems EMCS set points, chiller/boiler performance tests ECMs generating the most energy/cost savings Sampling proper installation of ECMs such as lighting, motors, VFDs Utilize FEMP Guidance on Witnessing 8
Witnessing: FEMP Guidance Guide to Government Witnessing and Review of M&V Activities, March 2014 Level 1: Minimum Oversight Review of M&V plan prior to site visit Review inspection/measurement data forms (sign and date) Confirm that recorded data is consistent with expected ECM operation Level 2: Recommended Practice (includes Level 1) Conduct spot check of ESCO M&V activities, verify compliance with M&V plan Review instrumentation calibration requirements per M&V plan Level 3: Best Practice (includes Level 1 and 2) Accompany ESCO personnel during the site visit data collection, witness the inspection, measurement and performance tests and observe installation and removal of monitoring equipment 9
Witnessing: Additional Best Practices Witnessing should be performed at each M&V event during project development Establishing Baseline Post Installation Annual Performance Period Obligations of witnessing in accordance with FEMP guidance are written into the Task Order Appendix with concise list of witnessing requirements/elements by ECM included in ESCO s M&V Plan Contactor Officer s Representative (COR) delegation letters should include designation of the COR as M&V witness. 10
Annual M&V Reporting GAO Audit and FEMP Assessments find that Agency impacts to savings are not always clearly documented. DOE IDIQ contract references post installation and annual M&V reporting requirements related to performance issues: J 9.2.3G/J 10.2.2G: Detail any performance deficiencies that need to be addressed by ESCO or agency. J 9.2.3H/J 10.2.2H: Note impact of performance deficiencies or enhancements on generation of savings. Annual M&V report template currently in place since 2004 (via FEMP M&V Guidelines) requires reporting in the Executive Summary on performance issues: 1.5 Performance and O&M Issues Note impact of operating deficiencies or enhancements on generation of savings. Note impact of maintenance deficiencies on generation of savings. Detail any deficiencies that need to be addressed by ESCO or Government.
Annual M&V Report Template Enhancements Two additional tables have been added to the annual M&V report template contained with M&V Guideline v4.0 to improve the transparency of agency impacts
FEMP Guidance on M&V Report Review Reviewing Post Installation and Annual Reports for Federal ESPC Projects, February, 2007 M&V report review ideally ensures that: M&V plan was followed Field measured values were carried over to report Factors held constant for calculations are per task order Calculations are correct and performed according to plan Utility and escalation rates used to calculate cost savings are correct Report is complete and provides all required information Savings guarantees were met Performance Issues are documented with needed corrective actions 13
M&V Report Review Best Practices Verify that annual M&V reports document whether all parties and the delivered energy and cost savings meet the TO requirements Ensure that annual M&V report is in accordance with the M&V plan in the TO Put procedures in place to ensure prompt review of the ESCO's annual M&V report, in accordance with FEMP guidance Hold a meeting where ESCO delivers the annual M&V report, presents results, and answers questions The requirement for this annual meeting can be included in the M&V plan 14
Conclusions Witnessing Enables agencies to ensure that M&V is being performed in accordance to the contractual requirements. Provides first hand exposure to issues requiring agency attention to ensure that savings persist. Documented review of annual report Important to certify that ESCO is verifying savings in accordance with M&V plan, but also identifying deficiencies outside their responsibility that agency should be addressing. Changes to annual report template build upon existing reporting requirements and will bring added transparency to an agency s understanding of project performance.
Questions? Bob Slattery Oak Ridge National Laboratory slatteryrs@ornl.gov 16