Support for Facility Energy and Demand Savings
Before a distributed energy project is installed, sponsors assess feasibility through technical and economic analyses. They weigh financing options and select a contractor. They establish ways of measuring and verifying project impacts to ensure that energy and demand savings are real and support the financing. Our project support team provides the analytical foundations at each step, especially for alternative financing vehicles such as energy savings performance contracts (ESPCs) that are financed with savings on energy costs.
In providing support for energy projects, we seek to understand:
- What new and emerging tools do federal facilities have for managing their energy and demand requirements while meeting their essential missions?
- What are the underlying determinants in energy costs and how are they expected to change over the next 20-30 years?
- What methods for measuring and verifying energy savings strike the right balance between establishing confidence in an energy project and the cost and effort involved?
- What are the non-energy benefits of federal energy management projects and how can they be reliably estimated?
We provide essential understanding of ESPC project viability and implementation in several ways.
Energy cost analysis
ESPCs are built on a guarantee of the energy savings that finances the project. Understanding how energy prices are likely to change in the future is therefore critical to calculating the economic viability of a project. We track utility rates and develop the federal government's primary methods and guidance for projecting those rates over the multi-year life of large energy projects. With partners at the National Renewable Energy Laboratory, we offer ways for federal entities to quantify the impacts of adopting a given rate structure. We also support tracking of incentives offered by utilities and other entities for reductions in energy and demand.
Project Policy Support: Measurement and Verification
We help develop the policy foundations for financing and executing large federal energy projects. We and partners at the National Renewable Energy Laboratory and Oak Ridge National Laboratory provide key protocols and guidance to federal entities on measurement and verification (M&V) of the energy, demand, and operations and maintenance savings from projects.
Because those savings finance the projects, these M&V protocols - especially the measurement techniques, sampling and engineering calculations - form a backbone for ESPC projects and are critical from start to finish. They quantify the baseline energy performance of a building or component for comparison against the planned and actual savings from the project. They are essential to formulating an M&V plan to last the effective life of all new efficiency actions. They are key to a project sponsor confidently accepting the work when complete. Every year thereafter, they enable assessments of project performance and financing payments. The protocols thus are essential determinants of the financial success of a project.
An introduction to M&V and how it applies to federal ESPC projects may be found here. This July 2020 webinar goes into more detail. We recently summarized the history of federal development and use of M&V in the following report.
Berkeley Lab support of measurement and verification for ESPC projects also includes development and updating of federal guidance on estimation of the resulting savings in operations and maintenance costs.
Demand Response and Time-Variable Pricing
Our team tracks demand response opportunities and time-variable rates available to federal sites and other commercial and industrial entities. Demand response (DR) is a short-term, voluntary decrease in electrical consumption by end-use customers that is generally triggered by compromised grid reliability or high wholesale market prices. In exchange for conducting (and sometimes just committing) to curtail their load, customers are paid or their bills credited.
The majority of U.S. utilities offer their commercial and industrial customers at least some kind of DR option. In addition, the country’s seven independent system operators/regional transmission organizations (ISO/RTOs) each sponsor DR programs. We survey formal DR programs and wholesale markets where DR and capacity may be credited. A webinar summarizing DR and time-variable pricing for federal entities may be found here with a more extensive 2021 training available here. The slide deck for this training can be accessed here.
The Philadelphia Customs House is a key example. The General Services Administration used demand response to reduce peak electricity demand for the building, for example, by pre-cooling it early on summer mornings before staff arrived. The pre-cooling cut peak power demands from 2,000 kW to 1,600 kW, saving about $100,000 annually on utility demand charges.