This post was written by Jeremy Eddy, Managing Director/V.P. of Opinion Dynamics, as part of its membership in NEEP’s Allies Program.
When it comes to the advancement and integration of distributed energy resources (DERs) in a growing number of utility jurisdictions, things are moving at a fast and furious pace. The traditional “pipes and wires” model of utilities generating and distributing power in a one-way flow is giving way to a networked two-way flow of information and energy resources. The proliferation of smart meters and advanced metering infrastructure (AMI), has opened up many exciting possibilities for energy efficiency projects to contribute to the integration of DERs and the vitality of utilities. But those possibilities are not without some interesting challenges which evaluators and regulators will need to tackle as we travel along the automated measurement and verification (auto M&V) road.
AMI Can Jumpstart the Journey
Thanks to AMI, it is increasingly possible to describe energy consumption or energy savings in every hour of a year for every building. After normalizing for weather and, in some cases, for other factors, changes in consumption at the meter before and after an energy efficiency project can potentially yield quick turnaround on savings. Knowing both the location as well as the daily and yearly load-shape patterns for buildings allows these savings signals to make it possible for utilities to deliver geotargeted energy efficiency by strategically grouping projects. This can deliver higher value to system operators and enable energy efficiency participation, at a targeted level, alongside other DERs such as demand response, energy storage, and distributed generation in meeting the needs of the grid, the needs of end users, and in helping meet greenhouse gas emission reduction goals. Another benefit is improved cost-effectiveness. With increased data made available through AMI, the potential for the reduction in costs associated with the evaluation, measurement, and verification of savings from energy efficiency measures allows for a wider variety of measures to become available over a broader array of geographic areas and building types then are currently cost-effective.
One of the attractive opportunities that this movement brings to light is the possibility of having energy savings ”units” bought and sold in energy markets. By commoditizing energy efficiency savings, attracting investments from larger capital markets becomes a viable next step. For the realization of commoditizing to come to fruition, energy savings measurement needs standardized, automated units with near real-time turnaround that is both reliable and robust. However, there are some key considerations and hurdles associated with making automation of credible energy savings happen and be market-ready.
Avoid the Speed Bumps
Occupancy changes, equipment or schedule changes, non-routine weather events, or even customer participation in multiple, overlapping energy efficiency projects are some examples of situations that can create ”noise“. This noise in the analysis of the AMI data can potentially confound the signal or energy savings results. While looking at projects in aggregate versus individually may help to dilute the noise, there’s still a risk of losing the signal. Geotargeted programs and project location are also key to determining how the projects are aggregated. Additionally, some building circumstances don’t lend themselves to an auto M&V approach; new construction projects are the perfect example.
Currently, AMI data is not a panacea. The notion of standardizing and automating energy savings calculations also presumes that the requisite data is (1) consistently available, and (2) consistently accurate, but, in fact, it can be notoriously difficult to obtain while requiring significant effort and expertise to clean and prepare the data for savings analysis. What additional challenges to the standardization and automation of energy savings calculations need to be addressed?
For starters, standardizing the measurement of energy savings can lead to tradeoffs with accuracy, and depending on the situation this tradeoff may or may not be worth the cost. Second, when it comes to weather-sensitive measures, time is needed to monitor performance over different seasons, which reduces the ability to turnaround savings feedback in near real-time. Finally, commoditized energy savings require safeguards.
For example, the challenges noted above could be fodder for market ‘sharks’ who could profit from claiming savings that are not valid, such as a commercial property owner whose retail tenants are going out-of-business. The property owner could easily claim the associated decline in energy use as energy savings to gain a profit. Safeguards could and should be designed to ensure that that types of false savings claims don’t happen.
As the dust has settled a bit on early claims regarding the transformative potential of auto M&V, a few themes have come to light that show auto M&V tools and methods represent a useful and evolving tool-set in the hands of various stakeholders, but not a silver bullet. Establishing standards and protocols are important to build shared ownership and buy-in regarding energy savings data management, calculations and system boundaries. This is critical if the tools and savings are to meet users’ needs and be considered credible by all stakeholders.
Deciding on the Data: Satisfying Different Audiences
Different audiences have different needs for data and how it is interpreted. For example, those interested in commoditized energy savings focus on general change in energy consumption. In contrast, program administrators need to meet regulators’ needs to demonstrate the cost-effectiveness of programs and determine if ratepayer funds are being used responsibly. These different needs translate into different baseline assumptions and different statistical criteria associated with the savings estimates.
Defensibility of the measurement approach
It is important to keep in mind the adage, “measure what you care about, or you will end up caring about what you measure.” Open-source codes are currently being offered by various software developers and are useful tools to our industry. However, the guts and features of the software should not be treated as a substitute for healthy dialogue about what stakeholders needs or the best way to meet them.
Build on successes
Pay-for-performance programs are one example of how auto M&V tools can be used effectively. Such programs allow implementers to be compensated based on achieved energy savings measured at the meter. The tools and protocols for savings measurement are made available in advance, so the implementer can anticipate and gauge their performance using the same tools that will be used by the program administrator or independent third-party evaluator.
There is much we can learn from our experience. For example, where AMI data is available, sharing between administrators and evaluators minimizes the risk associated with differences in measurement approaches between claimed and verified savings. Any program environment where auto M&V tools and methods are woven into the program design and execution can create a context for ‘kicking the tires’ of the tools and improving them over time. Another learning opportunity is in “triangulation” - applying multiple tools and approaches to a single data source and assessing the degree to which they yield similar savings estimates. Comparing results can highlight opportunities for improvement and yield helpful insight, especially when this approach is used to provide rapid, early feedback so that any problems with a project or program can be rectified. This type of application requires lower accuracy criteria than verifying savings, leads to better program results, and provides valuable opportunities to test and refine tools and methods.
Experience-to-date shows that auto M&V tools are already proving their worth as a source of rapid empirical feedback on changes in usage at the meter; whether at the whole building level or in settings where individual end-uses or pieces of equipment are sub-metered, but we still have a long road ahead. A host of hurdles around standardization and stakeholder needs must be addressed before broadly financed markets for commoditized and standardized units of energy savings become established. The ongoing evolution of auto M&V helps move energy efficiency further forward in participating with other DERs as an optimized resource in the modern and future grid.
You can read more about this topic on the newly published report from Opinion Dynamics.