Turning Policy Into Performance: Implementing an Advanced M&V Framework

Welcome to the first installment of a new blog series called Turning Policy into Performance. In this series, we'll take a look at how states can implement decarbonization and climate goals with energy efficiency programs.

State decarbonization goals look to transform the energy system through lowering emissions, relying on new sources of energy (renewable and distributed), and empowering consumers to understand their energy usage. In the past few months Massachusetts and Rhode Island have passed laws committing to lowering carbon emissions and furthering state climate goals. Once these laws are passed, though, how do states tackle the task of achieving these policies? One important regulatory mechanism is metrics – specifically changes in the evaluation, measurement, and verification of energy efficiency programs.

Metrics Matter

Energy efficiency programs have long operated with a goal of lowering energy usage in buildings. Buildings account for 40 percent of national emissions and are a highlighted priority in numerous state plans, whether committing to make them electric, net zero, or just more efficient. What has become apparent is that, through decarbonizing the grid, we will need identify ways to meaningfully lower the emissions—or more precisely the energy use—of buildings.

With the right tools, energy efficiency programs can be transformed to lay the foundation for a more equitable, decarbonized grid. Metrics are the hammer, screwdriver, and wrench that can change the way programs work, tweaking the way regulators operate cost-benefit tests and program administrators report goals. Implementing these tools will change the purpose and role of energy efficiency programs so that they can be designed to incentivize multiple activities geared towards state energy and environmental policy goals.

From These Goals…

Current policy is to set annual targets for programs that lower overall energy usage annually. To achieve these goals, customers exchange lightbulbs, invest in new appliances, and install insulation. Metrics to monitor these programs are straightforward; they identify energy savings goals, compare the costs of programs, and identify the most efficient way to achieve the savings targets. On the backend, there is usually a set of evaluation protocols and methodology with evaluations performed separately for each program administrator. This create barriers when states seek to implement decarbonization goals because climate and other decarbonization policies focus on outcomes that are more encompassing than traditional utility energy efficiency programs.

…To These Goals

To achieve decarbonization targets, states need to shift the goals of these programs to align with climate, electrification, and other state-level policies. Instead of evolving new ways to tackle EM&V for decarbonization, states can bake these policies into energy efficiency portfolios by implementing NEEP’s Advanced M&V (M&V 2.0) framework and metrics that align with these goals. M&V 2.0 looks to account for, understand, improve, and communicate the results of multiple energy efficiency activities geared towards a state’s climate policy. This is done through creating an inclusive and transparent process that allows for input from various stakeholders, the alignment of both energy and environmental policy, and provides for continuous feedback to regulators and implementers.

The Framework

To start this process, NEEP has proposed a framework that can help states implement their own M&V 2.0:

1. Creation of policy goals: This step is likely to happen through legislation on the state level.

2. Identification of proper metrics: This step will happen at various regulatory agencies charged with implementing the goals, and include feedback from program administrators and other stakeholders. At NEEP, we have identified five policy areas for states to consider when implementing decarbonization policies. To see more on our work in this area go to NEEP’s Advanced M&V (M&V 2.0) webpage.

3. Application of metrics through the implementation of programs: This step encompasses a cost-benefits analysis, setting program goals, and reporting metrics through implementation.

4. Transparency in data: This step can be accomplished by ensuring that, throughout implementation, there is an accessible and readable database that tracks programs.

5. Accountability to regulators and other stakeholders: This step can be accomplished by ensuring that, through the program design and implementation process, there is an opportunity for stakeholders and regulators to review and adjust programs or to provide feedback on whether programs are achieving the identified objectives.

This framework is the first step in starting the process to shift the goals of energy efficiency programs to align with climate, electrification, and other state-level policies. In future blogs, NEEP will look at state-specific decarbonization and climate policies and how they can be implemented in energy efficiency programs.