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Commercial Whole Building Performance:

How to Make it Work in California

Key findings from a workshop organized by the

California Commissioning Collaborative

May 2012

Acknowledgements The California Commissioning Collaborative is grateful to the many people who helped to organize and participate in the whole-building workshop. Leo Carrillo of PG&E in particular was instrumental in developing the agenda, securing panelists for the day, and organizing the conference space. Don Frey of LightLouver led the closing round table discussion for the workshop. We also appreciate the preparation and efforts of all of the panelists and moderators. Finally, we are grateful to all the attendees who devoted a full day to an important topic for promoting energy efficiency in California.

Glossary BC British Columbia

CCC California Commissioning Collaborative

CPUC California Public Utilities Commission

CSU California State University

EBCx Existing building commissioning (also known as retrocommissioning, RCx, recommissioning)

EIS Energy Information Systems (also known as energy management information systems, EMIS)

EMS Energy Management Systems (also known as building automation systems, BAS, and energy management control systems, EMCS)

ESCO Energy service company

EUI Energy Use Intensity

FDD Fault Detection & Diagnostic [software tools]

IOU Investor-owned utility (PG&E, SCE, SDG&E, SoCal Gas)

M&V Measurement & Verification

SMB Small-to-medium-sized business

TRC Total Resource Cost

UC University of California

Table of Contents

1. Background to the Workshop ............................................................................................................... 1

2. Rethinking Efficiency To Achieve Deep Energy Savings ........................................................................ 2

3. Program Approaches: Lessons from Innovation ................................................................................... 2

4. Savings Methodology and Keys to Industry Acceptance ...................................................................... 4

5. Whole Building Performance in Practice: Customer Needs ................................................................. 5

6. Enabling Technologies, Part 1: Energy Information Systems (EIS) ....................................................... 6

7. Enabling Technologies, Part 2: Building Controls ................................................................................. 7

8. Final Takeaways (Roundtable) .............................................................................................................. 8

9. Detailed Notes from Panel Discussions .............................................................................................. 10

Commercial Whole Building Performance: How to Make it Work in California 1

1. Background to the Workshop This report summarizes the outcomes from an all-day workshop conducted at PG&E’s San Francisco Headquarters on May 3rd, 2012, entitled Commercial Whole Building Performance: How to Make it Work in California. The workshop, organized by the California Commissioning Collaborative, brought together a broad cross-section of energy efficiency industry experts representing utilities, regulators, building owners, technology vendors, commissioning providers, and others for a series of presentations and discussions. The group explored how commercial whole building approaches can provide a pathway to deeper energy savings through retrofits, commissioning and other measures, as well how associated savings quantification challenges may be addressed using advanced technology and innovative methods.

The goal of this workshop was to elicit bold ideas, lessons learned and collaboration opportunities among industry practitioners, technology vendors, and utility program administrators and regulators interested in developing data-driven savings methodologies to enable scalable whole building-based approaches to energy efficiency. Soon, all buildings are likely to be able to provide data at 15-minute or hourly intervals – how can energy efficiency programs take full advantage of this data?

The workshop objectives were to:

• Establish a common understanding of terminology used in discussing “whole building savings” and drive for clarity among stakeholders regarding specific approaches and goals

• Inform and educate key industry stakeholders on the opportunities and obstacles related to whole building savings measurement and verification

• Characterize the evolving role that emerging technology may play in enabling whole building-based approaches

• Clarify the proof points around savings quantification that IT-enabled, performance-based efficiency programs must address

The workshop was divided up into five panels, followed by a roundtable discussion highlighting the key points overall. The five panels were:

• Program approaches: Lessons From Innovation • Savings Methodology and Keys to Industry Acceptance • Whole Building Performance in Practice: Customer Needs • Enabling Technologies Part One: Energy Information Systems • Enabling Technologies Part Two: Controls

This document is a record of the workshop presentations and discussions; each panel is summarized, and more detailed notes on presentations/discussions are in the appendix. It should be noted that, although the workshop was attended by a broad industry cross-section, the outcomes of the workshop summarized here are a mix of data and opinions. No attempt has been made to verify data or opinions presented through the workshop, or to perform any expanded research on the topics covered.


Moderator: Leo Carrillo, PG&E Presenters: • Dave Hewitt, New Buildings Institute • Graham Henderson, BC Hydro • Greg Cunningham, Enovity • Karl Brown, California Institute for

Energy and Environment (CIEE) • Tom Rooney, TRC Solutions

2. Rethinking Efficiency To Achieve Deep Energy Savings Meeting California’s aggressive long-term goals (50% of existing commercial buildings to be zero net energy by 2030) will be a major undertaking, requiring deep and holistic savings in commercial buildings. It is acknowledged that achieving such bold goals requires a reassessment of all elements of energy efficiency programs, encompassing the approaches to achieving those savings, the means of quantifying those savings, and the strategies for seeing that those savings persist.

Opening remarks outlined both the opportunities and the challenges associated with whole building approaches to energy efficiency. Technology advances and recent research studies suggest that innovative, whole building approaches may be viable in the foreseeable future. Availability of high resolution energy use data, sophisticated software tools, and hardware with integrated controls provide the means to reap deeper savings and to accurately quantify those savings without the need for expensive and subjective measure-by-measure savings calculations. Not only that, but the tools can ensure that savings persist long term.

3. Program Approaches: Lessons from Innovation Whole building approaches and savings verification can be the key not only to unlocking savings potential but also to streamlining programmatic approaches and increasing confidence in realized savings. The increasing prevalence of interval metering and energy management systems (EMS) has resulted in exponential growth in data availability, but there is a need to find scalable and cost-effective approaches to fully utilize that data within programs. Web-based advanced Energy Information Systems1 (EIS) show considerable potential for translating building data into normalized performance baselines against which customized program savings may be quantified. This savings quantification capability is being tested through BC Hydro’s Continuous Optimization program. Scalable application of calibrated building energy models have also been employed in whole building approaches, as demonstrated with New Jersey’s Pay For Performance program. California’s Monitoring Based Commissioning and UC/CSU/IOU Partnership are employing whole building approaches, but in general the savings methodologies employed in California remain rooted in conventional savings quantification approaches to ex-ante and ex-post savings that do not scale well for small- to mid-sized commercial buildings (SMBs).

Key Takeaways from Panel Discussion • Implementing pay-for-performance incentive programs, may initially require a higher risk

appetite among utilities and possibly channel partners and customers as well, until the concepts are proven from an evaluation perspective

1 More details on EIS can be found at http://eis.lbl.gov/


• While commissioning programs have been running in California for at least 8 years, there has been little or no measurement of persistence from those programs; this is largely due to the stop-start nature of utility program cycles, where persistence measurement was not feasible within any single program cycle.

• Incorporation of automated Fault Detection & Diagnostic (FDD) tools within existing programs has required considerable investments of time to overcome the ‘learning curve’ in using those tools. In addition to the time factor, there is also the cost of connecting to the existing building controls and systems.

• While BC Hydro’s Continuous Optimization Program has achieved rapid market penetration, the success is not considered to be due to owner’s enthusiasm for EIS software or existing building commissioning (EBCx) services per se, but for the benefits they bring to building operators and owners in terms of energy management and addressing cost/performance risks. The program has identified 11% energy cost savings across 417 sites, and projects are currently in the process of implementing measures.

• The design of BC Hydro’s Continuous Optimization Program functions successfully within a regulatory structure that is very different to California’s. One cited example is that BC Hydro is more concerned with savings at the program portfolio level, with less stringency placed on a project-by-project basis.

• The implementation of EIS within a programmatic approach is thought to be beneficial for the long term (i.e. beyond the initial program under which it was installed). These longer-term benefits may be in the form of future program engagement, or through non-programmatic actions such as owner-organized behavioral programs.

• Small-to-medium commercial is considered an untapped segment with a high portion of floor space; there are no cited successful holistic programmatic approaches tailored to SMB customers, although there is ongoing R&D evaluating monthly utility data to identify energy efficiency potential at the site level.

• Combining retrofits, EBCx, and demand response presents not only technical challenges in terms of sequencing and measuring energy savings impacts, but also logistical challenges due to utilities administering these programs separately.


Moderator: David Jump, QuEST Presenters: • Carmen Best, CPUC • Jim Kelsey, kW Engineering • Jessica Granderson, Lawrence

Berkeley National Laboratory • Joan Effinger, PECI • Jon McHugh, McHugh Energy

Associates

4. Savings Methodology and Keys to Industry Acceptance This panel explored California’s current regulatory framework, technical aspects of quantifying project savings (accounting for state codes and standards, and individual calculations vs. whole-building approaches), guidelines, and tools that can automate whole-building M&V. Buildings energy use data is now available at a higher resolution (often 15-minute interval data), and standardized procedures should make it much easier to take a whole-building view of projects.. Technical challenges remain, however, and there is no agreed framework for addressing central concerns such as uncertainty, data collection period, and accounting for non-project related impacts.

Key Takeaways from Panel Discussion • CPUC’s ultimate objective is to validate the cost effectiveness of programs at the utility program

portfolio level. • CPUC’s evaluation approach is bounded by the Total Resource Cost (TRC) calculation protocol

and the E3 calculator. • Innovation in program design can drive changes in program evaluation processes. • Setting a program-level TRC target can prohibit adoption of newer technologies which may be

essential for meeting long term savings goals – this is a key challenge. • Lack of accepted specifications/guidelines around whole-building quantification of savings based

on interval meter data is holding back introduction of programs; it is also resulting in EIS tool vendors having no point of reference for validating the performance of their software.

• There is, at present, no vehicle in California for approving guidelines or specifications around baseline estimation/ normalization and the quantification of whole building savings using interval meter and other types of data.

• Resolving the question of attribution is critical to unlocking the potential for whole-building savings quantification. This applies at two levels, [a] attributing savings to a defined project, and [b] attributing savings to individual measures within that project.

• More research is needed for developing agreed-upon data requirements, relating to duration of data collection, time of year, uncertainty level, and independent variables. Requirements may vary by building type. Program funders need to specify their requirements based on such research.

• It is recommended to review the relationship between utility rebate program eligibility requirements and building code baselines. The current policy requirement that customized retrofit projects only claim savings beyond code baseline presents three key challenges:

o There is currently no accepted methodology in California to for adjusting existing building energy baselines to account for present-day building codes for whole building approaches based on interval data.


Moderator: Don Frey, LightLouver LLC Presenters: • Michael Bangs, Adobe • Carlos Santamaria, Glenborough • John Elliott, UC Merced

o Ever-increasing stringency of code requirements means that average/poor performing buildings will need to make ever increasing improvements just to meet code (and not get rebates for doing so), and may simply choose not to undertake improvement projects.

o Utilities, through their codes & standards programs, can claim savings based on market-wide assumptions regarding the proportion of buildings being built or renovated to code, and they can claim savings for improvements beyond code through rebate programs. Distinguishing between these two different types of savings can be challenging, diverting resources away from core program activities.

5. Whole Building Performance in Practice: Customer Needs This workshop was primarily centered on applying whole-building approaches through utility programs. Beyond the technical and regulatory challenges, programs should be designed to meet customers’ needs. This panel explored owners’ priorities and needs around building performance, and the relative merits of whole-building approaches vs. measure/system-level approaches. The panel provided perspectives from both the public and private sectors; it should be noted that the panel consisted of large commercial building owners who are more sophisticated and progressive in terms of energy efficiency than most building owners.

Key Takeaways from Panel Discussion • While owners will track energy use/cost trends at the whole building level, they typically

manage energy efficiency investments on a system-by-system basis. • The “Whole Building Approach” does not have a consistent meaning for owners. • A common concern with monitoring is determining how to manage and respond to the data that

is generated and presented. • The question of whether owners would forgo upfront rebate payments in return for longer-term

performance-based payment brought two contrasting responses: o Private sector (Glenborough/Adobe): Prefer the rebate upfront. Buildings are highly

dynamic (2 years is a long time, for example). An exception would be made if a contractor was guaranteeing (or at least sharing) the savings risks, as happens with a typical ESCO arrangement.

o Public sector (UC Merced): Longer-term arrangement is more attractive, as it gives more freedom and flexibility upfront.

• Investments in energy efficiency may be limited by labor resource, access to capital, or other factors.

• The value of energy efficiency investments goes beyond the dollar amount of the upfront rebate; investments consider internal rate of return (IRR), net present value (NPV), asset value,


Moderator: Mary Ann Piette, Lawrence Berkeley National Laboratory Presenters: • Andy Tang, SciEnergy • Bill Koran, Northwrite • David Helliwell, Pulse • Ken Kolkebeck, FirstFuel

and long-term savings potential. Beyond quantitative metrics, they may also consider other factors such as tenant comfort, lease renewal rates, and market positioning.

6. Enabling Technologies, Part 1: Energy Information Systems (EIS) Although EMS have become more sophisticated, it is rare that they are used for monitoring energy use. A new product category, Energy Information Systems (EIS), has emerged in the market place, with many EIS tools offering sophisticated energy monitoring capabilities. This panel explored how EIS applications may fit into the bigger energy efficiency picture, in the same way that commissioning has been embraced in response to the realization that widget-based approaches were missing operational savings. EIS can be instrumental in supporting commissioning and in ensuring persistence of savings, but there are some key questions to address with EIS: what are we paying for? What will it do? Who is it for? This panel covered not only the current state of the art in EIS technology, but also issues around how EIS could interface with utility programs.

Key Takeaways from Panel Discussion • Echoing sentiments from the customer panel, EIS vendors asserted that attribution of savings to

specific measures is not critical to owners. • Whole-building savings calculation using energy data regression allows for uncertainty to be

quantified, which is not feasible when developing custom savings calculations via spreadsheets/simulation

• There is an unfounded fear among some that a whole-building approach to savings quantification is inaccurate, when in truth, whole-building savings calculations may provide estimates of savings uncertainty. Custom calculations are not required to provide estimates of savings uncertainty, thus there is no way to compare the accuracy of these methods fairly.

• The key is to collaborate to gain agreement on what is an acceptable level of uncertainty, rather than to dismiss the whole-building approach as inaccurate.

• Aggregation of data across multiple buildings is an accepted approach for evaluating demand response programs, and could be considered for energy efficiency programs too.

• EIS can be seen as supporting multiple aspects of energy efficiency programs: o An approach whereby an owner chooses to undertake a project and the EIS is installed

to support that project by highlighting load profiles, quantifying savings, and alerting to persistence problems.

o An approach whereby whole-building utility data can be analyzed across a mass of properties at the utility level (i.e. not via any installed hardware or software on site), thus highlighting buildings with the greatest opportunity. This can be a customer engagement tool, to encourage them to participate in programs.


Moderator: Mary Ann Piette, Lawrence Berkeley National Laboratory Presenters: • Harry Sim, Cypress Envirosystems • Morne Erasmus, Redwood Systems • Tanuj Mohan, Enlighted • Wade Cameron, Siemens

• There are no standardized cost guidelines for installing EIS; vendors often have multiple offerings, and the pricing structure has many other variables.

• Using EIS to support a long-term monitoring approach can address concerns over measure life for commissioning-related measures.

• EIS offerings have the ability to capture savings that arise from retrofits, operational changes, and behavioral changes; this can be a major benefit, but the extent to which this is true is largely dependent on how utility programs handle such savings (i.e., if savings from each measure need to be separately documented).

• As of yet, there are no defined protocols for EIS-based M&V methods to handle ‘non-routine adjustments’ (building-related changes that occur in parallel with a project but are unrelated to the project itself).

7. Enabling Technologies, Part 2: Building Controls Building system controls are moving forward in multiple directions, driven by advances in technology and market needs. In general, digital control systems are becoming more sophisticated, data access is becoming easier, and continuous monitoring is being built into systems. The addition of wireless capabilities is offering more flexibility, less disruption during installation, and opening up possibilities for smaller buildings to install controls. Finally, lighting and plug load fixtures with integral control & sensing capabilities are also adding flexibility and scalability for building controls.

Key Takeaways from Panel Discussion • 70% of commercial floor space is pneumatically controlled, with limited control and data

trending capability. Technology is available that can be retrofit to pneumatic systems to wirelessly add DDC control and reporting capability.

• Advanced controls, especially wireless controls and lighting fixtures with integral controls, have great potential for expansion into small-to-medium building sectors. In some cases, controls that are designed for lighting may have spare capacity that could be utilized for HVAC or refrigeration control.

• Energy savings may be the primary driver for owners to implement projects, but they may find additional use for the data that is being generated, such as understanding space utilization patterns, improved asset management, demand response, and transferring technology to other buildings.


8. Final Takeaways (Roundtable) The level of participation at the workshop, and the breadth of expertize represented, indicated the strong level of interest in the whole-building topic among all industry stakeholders. It was also useful in highlighting that while the issues around whole-building approaches are complex, many of these challenges are already being addressed nationwide and internationally through programs, regulatory approaches, and technology. A common underlying theme running through all the day’s panels was that continuing the status quo would not be sufficient to meet California’s bold energy savings goals, and that there is an unprecedented array of options for bringing innovation to programmatic approaches.

The workshop concluded with a roundtable discussion highlighting the key issues raised throughout the day, differentiating those that could be addressed over the near-term versus those that required longer-term attention. These issues have been grouped below, under general headings of regulatory issues, the value proposition, and technical approach.

Regulatory Issues • Attribution is perhaps one of the most critical challenges in implementing whole-building

approaches within utility programs, and is viewed from two angles: o What proportion of the observed savings can be attributed to the sponsored energy

savings project? This is an all-encompassing issue for the CPUC, which has a regulatory mandate to assess the cost effectiveness of publicly-funded programs.

o How can the observed savings be attributed to specific measures? This issue can impact more at the utility level, where traditionally individual measures may be spread across multiple programs/departments. It can also present a challenge in cases where measures within a package have varying effective useful life (EUL) values.

• The CPUC’s evaluation approach is bounded largely by TRC calculation protocols and the structure of the E3 calculator. As such, introduction of integrated whole-building approaches may necessitate review and revision of both tools.

• The question of measuring savings at the project or the program level is challenging for both the CPUC and utilities. While both will assert that the primary concern is to meet savings and cost-effectiveness goals at the program (or program portfolio) level, EM&V protocols which extrapolate total program savings from small samples drive utilities to rigorously verify savings on a measure-by-measure basis. This additional rigor significantly increases program costs, thus making these programs less cost-effective.

• The historical 3-year utility program cycles (and, more recently, the one or two year transition periods) are not conducive to successful whole-building approaches, or commissioning in general.

Value proposition • It is recognized that the increasing availability of high resolution energy use data (15-minute

interval data, and in some cases sub-metered data) presents a valuable energy management resource, but one whose potential has yet to be fully realized. One stream of data can have multiple uses, including:


o High level screening of buildings, to identify high energy users and potentially even specific opportunities.

o Customer engagement, by providing owners with visibility of a major operating cost that can be influenced relatively easily; Modern EIS provide a tool for continuous improvement and enhanced management of assets.

o Automated Fault Detection and Diagnostics (FDD) at the system/component level. o M&V for projects. o Persistence assurance.

While it is easy to see the potential benefits, there are questions that need to be addressed in order for EIS to be integrated into programs, such as: What is the program paying for? What will the tool do? Who is it for?

• The idea that quantifying whole-building performance can lead to programs based around longer-term pay-for-performance approaches seems attractive. The realities are complex, however:

o For utilities it can be an attractive way to manage the risk around persistence, although it should not be underestimated that staged performance payments may necessitate a major structural change in how utilities manage customer rebate payments.

o Under a pay-for performance arrangement, owners will be taking on a greater risk; for private commercial owners this may be unattractive as there can be many factors outside of utility programs that will affect building energy use, thus complicating the performance measurement approach. Secondly, if assuming more risk owners may become more risk averse in how they select measures (typically deeper savings projects and innovative technologies will be greater risk) – this second factor may equally affect private and public sector owners.

Technical Approach to Quantifying Savings at the Whole-Building Level • While there is a growing body of research and case studies around whole-building approaches,

and a recent guideline from the CCC, there is still a need for detailed technical guidance on a number of key aspects:

o What are acceptable levels of uncertainty in savings calculations? Such guidance may vary based on building type and measure type.

o How long does data need to be collected for baseline and post-project periods? This is further complicated by a question of when data should be collected.

o Which are the statistically significant independent variables by building type, use and climate zone for which data must be collected to normalize load baselines, and how might these be determined?

o How to address non-routine adjustments, whether using EIS tools or ‘manual’ data regressions, is not yet fully defined.

• EIS offer powerful automated analysis capability that can serve multiple purposes. However, there are no specifications against which these tools can assess their capabilities. In the absence of such specifications vendors don’t know how best to promote their tool to utilities, and utilities have no way to compare and/or approve tools.


9. Detailed Notes from Panel Discussions

Panel 1: Program Approaches: Lessons from Innovation

Panel Discussion Points • Building codes are moving more towards performance-based approaches as an option to

prescriptive measures. While this is typically based on comparing simulation models rather than performance measurement, it does at least acknowledge building performance as being holistic rather than a bundle of equipment/measures.

• ‘Outcome-based” codes would take a further step forward, and require performance measurement after construction/renovation. This approach is proposed but not yet implemented anywhere in the US. There would be a high level of synergy between outcome-based codes and whole-building approaches for utility programs.

• In order to take a whole building approach to energy efficiency, need to consider Design, Operations, and (for leased properties) Tenants: taking a ‘DOT’ approach.

• Building energy performance disclosure regulations (such as state of California’s AB 1103 and San Francisco’s Existing Commercial Buildings Energy Performance Ordinance) are pushing building owners to take a holistic view of energy performance, and to acknowledge how their buildings perform relative to their peers; this helps utilities to open up conversations with owners about whole-building performance

• Office of the Future is an example of a program operating within California that has a goal to measure savings holistically – one of the main objectives was to recognize the benefits of control systems. Some initiatives that seek to go after deeper savings may hit a ‘TRC wall’

• UC/CSU/IOU Monitoring-Based Commissioning Partnership o 156 buildings commissioned, representing approximately 15% of total floorspace.

Program targets buildings >50,000 square feet; smaller buildings such as labs are also included if they have a high EUI

o Programs do not address or monitor persistence of savings; although the programs have been running since 2004, this has been broken up into multiple programs cycles, none of which were long enough to track persistence. UC Berkeley and UC San Diego have recently implemented dashboards, which are intended to improve persistence

o Initial pilot in 2004-05 included commissioning only; subsequent programs took a “hybrid” approach that incorporated retrofits and commissioning

o For the 2009-2012 program cycle, savings were paid based on measured savings at the campus level rather than targeting average savings across the whole program portfolio.. This has shifted the risk to the college campuses, who have become more conservative in their project proposals and less willing to take on deep savings projects

o Project savings have been measured using IPMVP Option C, using 3 months pre and post energy usage data (excluding January and July data). Other IPMVP verification approaches are valid if savings estimates are <5% of whole building energy use

• Monitoring-Based Persistence Commissioning (MBPCx) Program


o MBPCx piloted in the 2006-09 cycle, and continued for the 2010-12 cycle. Focus is on HVAC; lighting measures excluded

o Split incentive payment: 50% at owner commitment, 50% following verification of installed measures

o Employs automated Fault Detection & Diagnostic (FDD) tools: PACRAT, APAR/VPACC, and SciEnergy (pilot)

o Steep learning curve reported on using FDD o Creative financing solutions are needed to encourage owners to implement o Metering of end uses is highly beneficial; finding a way to incentivize metering would

help • Continuous Optimization Program, BC Hydro

o 2 complementary program elements: EIS (also termed “EMIS”), and commissioning (commissioning includes staff coaching). BC Hydro pays for metering upgrades too.

o 3 EIS vendors approved for the program: Pulse, Energent, and Energy Profiles. EIS used for load profiling, benchmarking, bill analysis, energy anomaly detection, and M&V

o Owner makes an upfront commitment to implement measures up to a certain payback, or to repay BC Hydro’s investigation costs

o Rapid market penetration: 81 customers, 417 sites, 61m sq.ft o Savings, based on investigations: 7.7% electric, 14% fuel, 10.8% overall cost savings o Program intends to measure effective useful life (EUL) rather than develop blanket

assumptions) o There is no established process for adjusting baselines (for example, if occupancy or

operating hours change during the project), but M&V is happening at the program level rather than the project level, so it is less critical on a case-by-case basis

o Regulatory environment in BC is less stringent than in California; each program is responsible for meeting TRC targets

o Program is considered and monitoring, targeting, and reporting (MT&R) approach rather than an existing building commissioning (EBCx) approach. This works well for a long term strategy, compared with a single project intervention – now that the monitoring technology is in place, there are opportunities for follow up and go deeper. Some owners are already looking to use the EIS to drive and measure behavioral savings.

o Customer interest is believed to be driven, not by and interest in EBCx, but rather: The energy management / MT&R framework. Part of this is to communicate

energy performance to tenants Risk management (relating to energy cost s and cost of investing in energy

efficiency improvements • New Jersey’s Clean Energy Program Pay-For-Performance

o Approach is mainly for retrofits, and has a 15% minimum savings requirement o ‘Market-based’ approach, whereby the program develops an infrastructure of qualified

partners to provide program services o 3-step program process:


Energy Reduction Plan (ERP), based on Energy Star benchmarking, ASHRAE Level 3 audit. ERP applies ASHRAE 90.1 as the minimum performance standard

Confirmation of installed measures – site inspection, review BAS trends, staff training

Verification one year post-construction, as per ASHRAE Guideline 14 using utility bills

o Multi-family constitutes 35% of applications received; schools encompass 19% of applications

o Incentives go directly to owners, but contractors need to sign off on installed measures beforehand; this helps ensure that the contractor gets paid

• Options for smaller buildings o For RTUs programs like AirCarePlus have been employed o ‘FirstView’ is a tool that develops an energy signature from monthly utility data, which

could be useful for smaller buildings where interval data is seldom available o It’s reported that there is 1.3 billion sq.ft of floorspace made up of a local retail

establishment with one or two stories of office space above – this is considered an area of very large untapped opportunity

o In general, smaller building are considered higher risk in terms of energy efficiency programs

• When considering more holistic approaches (eg. Combining retrofits, commissioning, demand response), potential for customer confusion needs to be considered. Often these programs are run completely separately, so customers need to interface with multiple program representatives. Commissioning and demand response are complementary, in that they are both built around the BAS.

Panel 2: Savings Methodology and Keys to Industry Acceptance

Panel Discussion Points • CPUC Program evaluations

o From the regulators’ point of view, the key evaluation objectives are: Savings and emissions impacts Success of program interventions Potential for future interventions

o While the CPUC’s evaluations result in analysis of specific projects, the end goal is focused on entire utility program portfolios.

o Policy drivers for CPUC include the Energy Action Plan, AB 32, AB 758, and the California Long Term Strategic Plan (CLTEESP). CPUC has a legislative mandate to assess cost-effectiveness of program portfolios.

o CPUC’s evaluation approach is created to fit within a framework bounded by [a] California’s TRC calculation protocol, and [b] the E3 calculator (which utilizes a parameter-based approach). While there is some flexibility in terms of how programs


are evaluated, these two elements determine the extent of that flexibility; if major changes are required to the evaluation approach, it would require changing the TRC protocol and/or the E3 calculator. Decision 10-10-033 outlines suggested improvements for evaluations.

o Application of a TRC threshold typically penalizes newer technologies, yet these are the technologies that can provide the technological leaps needed to achieve long term goals such as 50% of existing commercial buildings reaching ZNE by 2030 – this is a fundamental challenge within the current regulatory framework. Assessing utility programs at the portfolio level is one approach that could address that challenge.

o Evaluation approaches are in part driven by program designs; innovation in approaches to quantifying savings within programs can influence how those programs are evaluated. CPUC encourages program designs to incorporate measurement & verification, but does not collaborate or provide formal approval.

o Market transformation is a part of the CLTEESP, and it has been embedded in the program designs to some extent; it is acknowledged that there is some way to go, however, and the recent CPUC Proposed Decision calls out some hybrid approaches.

o There has been some consideration of integrating energy efficiency and demand response, although there is a regulatory challenge in that energy efficiency is evaluated by the CPUC and demand response is evaluated by the utilities.

• Ever-increasing stringency in building codes coupled with the requirement that utility retrofits use code as a baseline are combining to make it ever more challenging to find cost-effective savings through utility retrofit programs. Since utilities are the primary sponsor of code measure development, and thus claim the savings relating to those code measures, this means that utilities may (legitimately) be claiming savings up to and beyond code if owners implement retrofits that exceed code requirements.

• One proposed change to the requirement that utility retrofit measures can only claim savings beyond code is to be able to claim full savings (ignoring code baseline) through the end of life of the equipment being replaced. For example, if a chiller being replaced has 8 years life remaining, then full savings could be claimed for eight years, and only beyond that would the code baseline apply.

• Old utility SPC retrofit programs were based more on whole building M&V, and more recently the programs have shifted more towards energy savings calculations

• Using a whole building measured approach vs. individual energy savings calculations both have pros and cons:

Engineering Calculations Whole Building M&V o Results prior to install o Extensive data required o Assumptions required o Uncertainty difficult to assess o Hard to account for behavioral and

operational measures o No standards, only best practices

(reliant on QC and consensus)

o Results after implementation o Relatively few data sources required o Provides savings uncertainty o Accounts for behavioral and

operational measures o Standards and guidelines available o Can’t account for code baselines


• Current program processes using calculated approach require numerous hand-offs and customer touch-points, making the whole process lengthy and providing many opportunities for the process to break down. This limits the ability of providers/contractors to serve market needs. The multiple hand-offs and review steps are in part a result of the 2006-2008 program evaluations. It is not clear to what extent customers demand high confidence in savings results; there is a general perception that it is critical to them but some argue that waiting a long time for data is more of a hassle.

• Engineering approach to quantifying savings using whole building interval data o Regressions of energy use vs. outside air temperature may be sufficient to characterize

energy use (eg. For a grocery store) but for other building types additional independent variables may need to be identified (eg. Day of week for offices)

o Interval data provides extra capabilities for quantifying savings: Monthly data Interval meter data

o Applicable if project savings are >10%, with at least one year’s worth of post data

o Can quantify project savings below 10%, using less than one year of data

o The requirements for using interval data to quantify savings depend partly on the required confidence level. Based on limited case study examples (PECI), projects achieving ~5% savings2 could be verified using a 80% confidence interval, but savings would need to be higher than 5% when using a confidence level of 90%3

o The duration and time of year of data collection affect the accuracy of the results. Projects with higher savings can have shorter monitoring periods. To maintain the same level of accuracy, the required monitoring length increases as the amount of savings decreases.

o There is a growing body of research on the underlying engineering fundamentals around whole building savings verification, but there needs to be a defined framework that determines the requirements around confidence level, time of year, and duration of monitoring.

• One major question that crosses both the engineering and the regulatory angles is: how can a whole-building approach attribute savings to programs/measures?

• The use of EIS software tools that automate M&V using interval data is commonly discussed, but there is a gap in terms of defining standards that these tools should meet in terms of accuracy, reliability, confidence levels, etc. There are no defined performance metrics for monitoring tools, as there are for other engineering-related technologies (eg. SEER, COP, W/sq.ft., etc.) There also needs to be a defined methodology for dealing with non-routine adjustments.

• Another challenge in using EIS tools for programs is that some vendors consider their calculation algorithms to be proprietary and so may not disclose them to utilities wishing to apply the tools

2 Savings value quoted is based on DEER and/or ex ante custom savings calculations 3 Effinger, Joan, Effinger, M., and Friedman, H. (2011, October). Case Studies in Using Interval Data Energy Models for Savings Verification: Lessons From The Grocery Sector. ICEBO, New York, NY. http://repository.tamu.edu/handle/1969.1/128804

http://repository.tamu.edu/handle/1969.1/128804


within their programs. Generally these EIS tools are employing methodologies based on IPMVP Option C, but the actual calculation methodology is not transparent.

• An alternate approach that could be considered is to calibrate EIS models against simulation-based code baseline requirements.

• Ongoing activities that are supporting whole-building savings approaches include: o CEC universal translator project. o LBNL exploratory project using EIS on their own buildings.

• Further proposed research topics: o Required monitoring duration. o Quantifying uncertainty and assessing risk. o Distinguishing approaches for different building types and characteristics. o Persistence strategies related to whole-building savings approaches.

Panel 3: Whole Building Performance in Practice: Customer Needs

Panel Discussion Points • What does “whole building” mean to building owners?

o It can mean a combination of monitoring, demand-side management, on-site generation, and offsets

o It can mean setting clear design targets for new construction, and then managing to them on an ongoing basis; regularly benchmarking performance

o It can mean a higher level of scrutiny and review, compared to implementing individual measures

• Common concern with monitoring: what do you do with the data once it’s available, and how do you respond to what you see?

• Owners can have varying approaches to technology when it comes to investing in energy efficiency:

o Some may take the opportunity to invest in cutting edge technology which is higher risk; if it doesn’t work out, then the investment can help the long term evolution of the technology anyway.

o Others may avoid those risks by applying proven technology that can be deployed quickly. They may also look to their peers for success stories as a major factor in choosing whether or not to invest themselves.

o These two approaches are not mutually exclusive; the overall financial package (including utility incentives and financing) can play a major role in decision-making.

• Occupancy-based monitoring is a newer approach (beyond energy tracking and monitoring of typical BAS points), that can drive controls based on occupancy patterns at a very granular level. This can influence energy use as it is believed that, at any given time, 30% of an office is unoccupied.

• Owners’ approach to energy efficiency is driven by the whole package, not just the technology and the direct savings – on-bill financing is an example of a good facilitating mechanism that can


take the investment off the owner’s balance sheet and thus provide very strong investment metrics (eg. Net present value, internal rate of return ).

• UC Merced is relatively new (2005) and has been growing rapidly – 5,000 students now, with an eventual goal of 25,000. Currently 1.2m sq.ft of space, covering a wide variety of space types. Energy efficiency targets were built into all new construction projects, and these targets have been used to manage ongoing use.

• The value of energy efficiency compared to other considerations: o Presenting the case for investments in energy efficiency includes IRR, increases in asset

value and net operating income, and can also cover qualitative elements such as tenant comfort, lease renewal rates, market positioning.

o For incentive programs it’s important to communicate the long term savings potential, not just the initial dollar amount that’s offset by utility rebates

o Ownership approach can also be a major factor – if an owner will be holding a building for the long term (eg. Ten years or more) then they will be more likely to invest in efficiency measures with a longer payback period.

• Projects are more often targeted on a system-by-system basis, as this is easier to justify and to manage. Portfolio owners will look for improvements that can be transferred to other properties, which is easier to manage at a system-by-system level.

• The panel did not have strong opinion on quantifiable energy savings in relation to projects. There is a general need to track energy use and see that the trend is downward, but measure-by-measure attribution was not highlighted as critical. In some cases energy efficiency measures are implemented because they are the ‘right thing to do.’

• The question of whether owners would forgo upfront rebate payments in return for longer term performance-based payment brought two contrasting responses:

o Private sector (Glenborough/Adobe): Prefer the rebate upfront. Buildings are highly dynamic (2 years is a long time, for example). An exception would be made if a contractor was guaranteeing (or at least sharing) the savings risks, as happens with a typical ESCO arrangement.

o Public sector (UC Merced): Longer term arrangement is more attractive, as it gives more freedom and flexibility upfront.

• Factors that limit energy improvements vary from company to company – in some cases labor is the limitation, in other cases it can be access to financing.

• Data security was not cited as a barrier to energy efficiency among the panelists. One exception might be if occupancy-driven controls are in place, and an owner doesn’t want to share detailed occupancy data.

Panel 4: Enabling Technologies, Part 1: Energy Information Systems (EIS)

Panel Discussion Points • Following from an earlier discussion, it was repeated that owners are not concerned with

attribution of savings on a measure-by-measure basis. Whether or not a specific project reaps


the predicted savings is less important than seeing reductions in the monthly bill. It was also asserted that utilities should share the same general viewpoint.

• The issue of data availability was raised – gaining access to realtime energy interval data is not always easy, especially for an EIS vendor who has to interface with many utilities (same can be said of owners of building portfolios that spread across different utility territories).

• The primary enabling technology for EIS is digital utility metering. • To supplement whole-building data collection, cross-referencing other sources can be useful,

such as CEUS (California’s Commercial End Use Survey). This was noted by Bill Koran of Northwrite.

• Engineers are not necessarily good statisticians, and vice versa – both specialties can be beneficial for developing EIS analysis routines however.

• When applying regression analysis to whole building energy use, uncertainty of the regression can be quantified – this is considered a key benefit of this approach. However, defining uncertainty may lead to the perception that the approach is not sufficiently accurate – accepted methods for calculating savings (eg. Spreadsheet calculations) cannot quantify uncertainty, so whole building savings quantification should not be rejected out of hand because of the uncertainty values. The better approach is to collaborate and determine what is an acceptable level of certainty.

• Panel moderator Mary Ann Piette noted that aggregation of data across multiple buildings is an accepted approach for evaluating demand response programs, and could be considered for energy efficiency too.

• One vendor stated that the two biggest success factors are: o Simplicity: a programmatic approach that is easy to understand and apply o People: considering the human element, especially important for persistence

• In general with programs, every time you ask the customer to make a choice, it will slow the process down and raise potential barriers. For this reason, David Helliwell of Pulse stated a preference for programs that are built around a single EIS vendor, thus taking away one of the owner’s decision-making steps.

• Among the panelists, separate applications of EIS were presented: o An approach whereby an owner chooses to undertake a project, and the EIS is installed

to support that project by highlighting load profiles, quantifying savings, and alerting to persistence problems. Application of Pulse under BC hydro’s Continuous Optimization Program is an example of this approach.

o An approach whereby utility data can be analyzed across a mass of properties at the utility level (ie. Not via any installed hardware or software on site), thus highlighting areas of opportunity. This can be a customer engagement tool, to encourage them to participate in programs. Ken Kolkebeck noted that FirstFuel is applied in this way.

• Ken Kolkebeck of FirstFuel noted that their energy data analysis routines were developed not just by engineers with buildings experience, but also by econometrics experts with experience in analyzing large datasets with many independent variables.


• There are no standardized cost guidelines for installing EIS; vendors often have multiple offerings (eg. From a simple public kiosk to custom dashboards with advanced analytics), and the pricing structure has many other variables.

• When commissioning is supported by EIS, the goal can change from performing EBCx every 3-5 years, to performing it once and then maintaining performance long term.

• When comparing a whole-building approach to quantifying savings to more established methods such as DEER, one industry expert in energy savings calculations (Bill Koran of Northwrite) asserted that he would trust a data-driven whole building approach over his own calculations.

• Using EIS within a program framework, with a long term monitoring approach, can address concerns over measure life for commissioning-related measures.

• EIS have the ability to capture savings that arise from retrofits, operational changes, and behavioral changes; this can be a major benefit, but the extent to which this is true is largely dependent on how utility programs handle such savings (ie. When each savings source needs to be separately documented).

• The question of how EIS handle building-related changes that are unrelated to a given project was raised (eg. If occupancy changes significantly, or if PC monitors are changed out). There is no clear framework for handling this in EIS, but some of the points raised included:

o There is a time series element, so if the non-project impacts can be specifically dated, it enables the EIS analysis routines to factor it into calculations.

o If an EIS vendor is capturing a growing body of building-related data, then over time it will be able to more clearly define the impacts of non-project impacts and develop standardized ways of handling such changes.

Panel 5: Enabling Technologies, Part 2: Controls

Panel Discussion Points • 70% of nonresidential floorspace is covered by pneumatic controls, which have limited control

and no data trending capability. Upgrading these buildings to full Direct Digital Controls (DDC) is not only expensive, it can also be very disruptive to occupants during installation.

• Harry Sim of Cypress Envirosystems presented a retrofit system that can be overlaid onto a pneumatic system, to bring wireless control and data collection capabilities more in line with DDC controls.

• Morne Erasmus of Redwood systems Presented a DC LED lighting system whereby each fixture has a sensor, and a central driver can control lighting levels based on occupant conditions.

• The energy savings potential presented by enhanced controls was likened to a ‘trojan horse,’ meaning that the initial driver for an owner may be energy savings, but once installed they can find other uses for the data that is being generated (for example, understanding occupancy patterns can be a useful management tool). One presenter talked of three levels beyond the initial scheduling/setpoint measures:

o Improving asset management. o Load management (eg. Demand response).


o Enterprise adoption. • Energy savings through lighting controls were said to be mainly driven by occupancy variation;

the savings are more pronounced for buildings with a 60-hour work week than a 40-hour work week, as there would more likely be irregular occupancy at the start and end of the day.

• Advanced controls, especially wireless controls and lighting fixtures with integral controls (as presented by Tanuj Mohan of Enlighted, for example), have great potential for expansion into small-to-medium buildings. In some cases, controls that are designed for lighting may have spare capacity that could be utilized for HVAC or refrigeration control.

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