Capacity Building of Banks and Financial Institutions for Energy Efficiency Project Financing

1. Capacity Building of Banks and Financial Institutions for Energy Efficiency Project Financing Module 5Measurement and Verification Partnership to Advance Clean Energy-Deployment (PACE-D)Technical Assistance Program

2. Presentation Outline • Why Measurement and Verification (M&V)? • Key Considerations in M&V • Basic Concept of M&V • M&V Methodologies • M&V Protocols • Common Issues • The M&V Document • Case Studies

3. Why M&V Measurement and verification: • Is needed to confirm project energy savings and validate that anticipated or guaranteed performance has been achieved • Presents common definitions, terminology and procedures for energy-efficiency projects • Improves communication and understanding among project implementing partners • Provides a risk management tool to financing entities • Minimizes disagreements and disputes • Facilitates persistence of energy savings

4. Key Considerations in M&V

5. Who Should Conduct M&V?

6. How much does M&V cost? • The costs of M&V depend on the energy efficiency technologies and measures to be implemented and the approach and methodology to be utilized • M&V costs 5 to 10% of project investments • Trade off between • accuracy of the M&V • cost of M&V • Simple approaches are preferred to reduce costs and minimize potential for disputes

7. Who Pays for M&V Costs? • If the project host conducts or engages a third party to conduct M&V, the host directly pays the M&V costs • If the ESCO conducts or engages a third party to conduct M&V, the M&V costs are part of ESCO’s costs • In either case, the M&V costs are an integral element of project cost and an allowance needs to be made in the project budget and financing plan for these costs • While the M&V is specified in the Energy Services Agreement between the ESCO and host, the lender needs to understand and approve the M&V approach and costs

8. Key Elements of an M&V Plan

9. Basic M&V Concept

10. Assessing Energy Savings

11. M&V Methodologies

12. M&V methodologies

13. M&V Protocols

14. IPMVP • Developed by a coalition of researchers and practitioners • Managed by independent organization (EVO) dedicated to provision of tools to quantify the results of EE projects and programs. • Provides flexible framework of M&V options that allows practitioners to craft the right M&V Plan for their project • Internationally recognized and accepted • Certification program for M&V professionals • Implemented in India by Alliance for Energy-Efficient Economy (AEEE) International Performance Measurement and Verification Protocol

15. M&V Training and Certification in India • First M&V Seminar Delhi April 2005, PCRA hosted for EVO • M&V Fundamentals trainings in various cities of India • Application of M&V to Government Schemes – Building Codes, PAT, DSM • CMVP Certification Training & Exams in Delhi – Nine rounds completed more than 100 professionals certified • EVO has Certified 5 Indian Trainers as CMVP Trainers • AEEE has conducted M&V Training in Manila and Bangkok • Opportunity to widen M&V capacity building to South & West Asia

16. India has over 100 CMVPs

17. M&V Approaches in IPMVP • Retrofit Isolation Methods • Option A – Partially measured or one time measurement • Option B – Longer or continuous measurements • Whole Facility Methods • Option C – Whole facility energy analysis • Option D – Computer simulation

18. Illustration of IPMVP Options

19. Adjusting for Changes in Baseline

20. Adjusting for Changes in Baseline Facility Use or Operating Conditions Occupancy Possible Changes in Baseline Equipment Operating Schedules Environmental Conditions Additions to Energy-Using Equipment Facility Refurbishment or Rehabilitation

21. IPMVP M&V Options

22. Option A • Simple approach (and low cost) • Performance parameters are measured (before and after), usage parameters may be estimated • Used where the “potential to perform” needs to be verified but accurate savings estimation is not necessary • Key features • Low cost • Simple procedure • Requires agreement among parties

23. Option B • Under Option B, some or all parameters are measured periodically or continuously • Applicable where accurate savings estimation is necessary and long-term performance needs tracking • Reduced uncertainty, but requires more effort • Key features • “Real” M&V • Improved O&M • Ongoing Commissioning • Remote monitoring

24. Option C • Option C looks at energy use and cost of entire facility, not at specific equipment • Conceptually simple, may be difficult in practice • Key features: • Can consider weather, occupancy, etc. • Useful where total savings need to be valued but component savings do not • Commercial software is available that simplifies implementation • May require baseline adjustments

25. Option D • Option D treats building as computer model • Flexible, but requires significant effort • Applications: • New construction • Energy management & control systems • Building use changes • Building envelope modifications & additions • Uses specialized software that requires substantial experience • Requires measurements for calibration

26. Example of Lighting Project M&V - Option A • Baseline is 100 W light bulb and new lamp is 25 Watt compact fluorescent • Wattage verified by measurements/specifications • Assume 3,000 operating hours per year: • Previous experience • Estimate by owner • Calculated Savings are: 3,000 hr/yr * (0.1 - 0.025 kW) = 225 kWh/year

27. Lighting Project M&V - Option B • Install meters on lighting circuits (before lighting retrofit is implemented) • Measure consumption before and after retrofit for a specified time period • Calculate savings

28. Lighting Project M&V - Option C • Used when lighting is the dominant load • Document baseline utility bill • Obtain post-installation utility Bills • Calculate savings

29. Lighting Project -Option D • Used when interactive effects need to be estimated • Input lighting and HVAC system into simulation program. • Calibrate model and calculate pre- and post-installation lighting and interactive HVAC energy use for determining savings.

30. M&V Options with Multiple End-Uses

31. Common M&V Issues • Factors affecting saving performance • Predictability, measurability, factors such as weather, occupancy, equipment intensity, ability of EEMs to deliver savings, implementation effectiveness, occupant – operator cooperation, equipment deterioration and life • Evaluating saving uncertainty • Instrumentation error, modeling error, sampling error, planned and unplanned changes • Minimum energy Standards • Minimum operating conditions

32. Common M&V Issues (continued) • Energy Prices • For simplification, price is specified • Verification by a third party • Third party can resolve issues • Baseline adjustments • Routine and non-routine • Cost • Cost to owner against benefits

33. M&V Information Document • Project site and measures • M&V option selected - Options B or C • Details for calculations • Data collection plans • Assumptions • Energy rates • Baseline equipment and conditions • Equipment, space conditions, assumptions, energy use relative to production, adjustments – how and when

34. M&V Information Document (continued) 5. Post-installation equipment and conditions • Plan for defining new equipment and space conditions, assumptions and stipulations • Metering • Schedule of metering (duration/when), who will provide, data validation, sampling • Measurement and verification activities • Who conducts M&V, analysis and prepare report, quality assurance, reports defined and post installation energy use relative to production 8. Initial and annual cost

35. Thank youDilip R. LimayeMahesh PatankarFinance TeamUSAID PACE-D Technical Assistance Programdlimaye@srcglobal.commahesh@mpensystems.comwww.pace-d.com