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M&V in ESPC: The U.S. Federal Experience and Implications for Developing ESPC Markets...

by Philip Coleman, Shankar Earni, Robert S Slattery, Christine E Walker
Publication Type
Conference Paper
Book Title
Energise 2020 Energy Innovation for a Sustainable Economy Paper Proceedings. New Delhi 2020: Alliance for an Energy Efficient Economy
Publication Date
Page Numbers
216 to 221
Conference Name
Energise 2020: Energy Innovation for a Sustainable Economy
Conference Location
Hyderabad, India
Conference Sponsor
Alliance for an Energy Efficient Economy
Conference Date

The United States Federal Government has been conducting guaranteed savings energy savings performance contracts for over 20 years and now relies on ESPC for the majority of its energy efficiency work. Along with a related financed project type, these deals resulted in $4.2 billion of project investment in the five years ending in 2016, a pace that has even accelerated since.

Measurement and verification (M&V) on the projects is the key to assuring savings realization and persistence. Perceived as a weakness or burdensome added cost in the early years of the program, M&V has become a strength. All energy conservation measures (ECMs) have some form of measurement – defined as a measured baseline establishment followed by at least one measurement of the main energy-saving parameter for a given ECM taken in the performance period. The government’s in-house energy consulting office, the Federal Energy Management Program (FEMP), now recommends measurement of these “Option A” M&V ECMs throughout the contract term, usually annually. Moreover, a significantly higher percentage of projects are now characterized by more ambitious M&V, including Option B (all parameter measurement) for most generation (including renewable) and some efficiency measures, and more frequent Option C (whole facility utility bill analysis) for “deep retrofit” projects with multiple, interactive ECMs.

Coincident with this progress in M&V has been a much greater embracing of ESPC by the federal agencies, resulting in the enormous rate of projects now executed. This paper traces the evolution of M&V in federal ESPC and argues that the heightened credibility of the estimated (and guaranteed) savings has contributed significantly to the procurement vehicle’s long-term viability. This focus on savings integrity via M&V has been learned over two decades for U.S. federal ESPC, but countries with developing ESPC markets would be wise to emphasize it as their markets emerge, allowing them to avoid some of the “growing pains” experienced in the U.S.