Assuring Success in Energy Efficiency

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Energy Performance Contracts

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M&V for Energy Performance Contracting

An Energy Performance Contract (EPC) offers a financing mechanism designed to accelerate investment in cost effective Energy Conservation Measures. An EPC is a partnership between a customer and an energy services company that allows the improvement of building energy efficiency without any upfront capital costs to the end client.

Under an EPC, the energy services company will probably implement a number of Energy Conservation Measures (ECMs). But what is different about an EPC compared to a normal programme of upgrades is that the provider will guarantee that the energy savings delivered will pay for the capital investments in new equipment.

What does EEVS do?

EEVS sits independently from all parties in an Energy Performance Contract, reporting to all. Its services are paid for by either the financer (or their assurance provider), or the EPC provider. In the UK, many Facilities Management companies (FMs) are formulating EPCs to offer to their clients.

Energy Performance Contracting

The EPC provider expects to be paid for the savings they achieve by implementing products and services in the client's site, and the client expects to pay for them provided the price of a saved kWh is less than the cost of buying a kWh. There is a clear value for both parties in having an independent evaluation of the savings achieved. Without this, either the EPC provider or end client determines the savings, both of whom have a financial interest in the outcome. Experience elsewhere in the world has shown that this is a recipe for disagreement.

Benefits for the EPC Provider

EEVS uses IPMVP to 'measure' the savings achieved by the EPC's implementation of technologies or other measures. For a simple EPC, this saving is directly proportional to the amount the client pays. The EPC provider can be confident that the savings figure is correct and unbiased, and the financer can see the returns emerging from the project.

To assist the EPC, EEVS can also break down the savings from each ECM deployed in the project. From an M&V perspective, this can be technically difficult, depending on the level of metering available on site. However, this may allow the EPC to draw on any performance guarantees offered by the equipment suppliers, which in turn reduces their risk, and that of the financer.

Benefits for the Client

The client can also be confident that the savings figure is correct and unbiased. Using IPMVP for measurement & verification allows us to build a 'savings meter' to clock up avoided kWhs from energy efficiency projects. This simple tool enables the savings measured by EEVS to be communicated internally and externally, in the knowledge that they are fully auditable and supportable.