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DOE Releases New Protocols to Determine Energy Efficiency Savings

On May 15, 2013, The Department of Energy (DOE) released new protocols “Methods for Determining Energy Efficiency Savings for Specific Measures” to improve the credibility of energy efficiency savings estimates throughout the United States. DOE has listed six goals for these protocols: 1) strengthen the credibility of energy efficiency program savings calculations; 2) provide step-by-step protocols to determine those savings for common energy efficiency measures; 3) reduce the development and management costs of EM&V; 4) support consistency and transparency in how savings are calculated; 5) allow for comparison of savings across similar efficiency programs; and 6) increased the acceptance of reported energy savings by financial and regulatory communities. The protocols were designed for widespread use, but are particularly useful for stakeholders in states where energy efficiency is relatively new and it is important to document savings accurately.

Utilities, contractors, and energy efficiency program administrators in the U.S. use different methods for calculating expected savings for customers who retrofit or adopt energy efficiency programs. Twenty-six separate jurisdictions have implemented efficiency mandates for utilities to meet. Half of these jurisdictions mandate savings increases of 10% by 2020 and six require savings of 20% or more in the same time.1 Investment in energy efficiency has increased steadily in recent years and obligatory savings goals are being considered in new places. The method by which the energy savings are measured will have a significant impact on determining whether or when these goals have been reached.

The DOE protocols, developed as part of the Uniform Methods Project in collaboration with the nation’s leading technical energy efficiency experts, are not uniform standards to be adopted by all jurisdictions that design energy efficiency programs, but rather a set of guidelines for jurisdictions to follow. The DOE states clearly that the protocols “do not provide stipulated values for energy savings,” but rather a common framework by which states, utilities, or localities can adopt regulations that follow the industry’s best practices. The voluntary guidelines give no specific criteria for measuring statistical confidence or for measuring the accuracy of savings estimates.

This project will unfold over two-phases. In this first phase, the protocols are only for seven measures, which primarily relate to residential and commercial facilities including: refrigerator recycling, commercial lighting, commercial lighting controls, residential lighting, residential furnaces and boilers, residential and small commercial unitary and split system air conditioning equipment, and whole-building retrofits. The DOE chose these measures because they are ubiquitous across jurisdictions, represent a diverse set of end uses, and have high potential savings potential.2 In the second phase, the list will be expanded.

Although the protocols potentially hint at a future national evaluation, measurement, and verification (EM&V) program, they do not purport to establish one. A reason that the protocols are not yet setup as mandatory standards is that a major question for energy efficiency measurements, “how good is good enough?”, does not have a common answer.3 Energy efficiency savings measurements compare the energy usage of a system to what it was assumed that system would have consumed without the energy efficiency system in place. The fact that these estimates rely on numbers that do not actually exist is one reason that different jurisdictions have widely varied answers to the above question.

U.S. energy efficiency policy has largely been driven by a mix of building codes, appliance and equipment efficiency standards, and programs paid for by utility customers. In response to a need by state regulators to evaluate the success of efficiency programs paid for by rate-payers through utilities, local evaluation systems were established. These guidelines contain different protocols, definitions of savings, and levels of rigor applied in savings determinations, which have made it difficult to compare savings resulting from ratepayer-funded energy efficiency programs across jurisdictions.

One example of this inconsistency is how a “baseline measurement” is made. Baseline or “business as usual” conditions are an estimate of the amount of energy used by a system prior to a retrofit or in the absence of energy efficiency measures. Comparing the actual energy usage of a retrofitted system against these baseline figures relies on “counter-factual” situations because these figures are by definition invented. States, regulators and utilities can utilize a range of options, including making estimates based on control groups, to come to this baseline number.

The differences serve the individual needs of jurisdictions. For example, one state may have very limited goals for energy efficiency without an established history of ratepayer-funded programs. Another state could have a long history of energy efficiency programs with stringent building codes and a demand for a high level of savings. In the latter state, stakeholders would likely have a need for a much more rigorous EM&V to ensure compliance than in the former state. The state with a long history of energy efficiency programs may not find it beneficial to compare its results to a state with a less rigid focus on increasing energy efficiency or vice-versa. The professional efficiency evaluation community has attempted to develop common practices and standard terms for efficiency evaluations, but so far it has not been successful in part because of the advantages states gain from adopting EM&V programs tailored to the states’ unique situations.

As investments in energy efficiency increase across the country, driven in part by The American Recovery and Reinvestment Act of 2009 (ARRA), and make-up a significant share of many utilities’ integrated resource portfolios, there is a growing demand for publicly available information on how the savings are determined and achieved.4 Further, if confidence in the reliability of figures grew, it would spur more investment in energy efficiency. The DOE protocols look to do both.

Additionally, energy efficiency has steadily become a national issue. Although a federal initiative, ARRA offered funding for state and local governments to develop their own programs to reduce greenhouse gas emissions and improve energy efficiency. One bill, the American Clean Energy and Security Act of 2009, or the Waxman-Markey bill, would have subsidized energy efficiency technologies and federally mandated energy efficiency in buildings, home appliances, and electricity generation. The bill passed the House on a partisan vote, but failed in the Senate.

The political stalemate in Washington may not derail energy efficiency legislation. Both Republicans and Democrats have praised the virtues of energy efficiency, which saves money for businesses, cuts fuel consumption, and lowers pollution. In the Senate, the Shaheen-Portman Energy Efficiency Bill would accelerate the deployment of technologies and practices that would increase industrial energy efficiency and improve productivity. Among other goals, it would expand the existing DOE Loan Guarantee program to include efficiency retrofits. The bill passed through the Senate Committee on Energy and Natural Resources on a bipartisan 19-3 vote. Of the passage, Senator Portman (R-OH) and Senator Shaheen (D-NH) said that it “is clear that energy efficiency is one area where we can all find common ground,” even when bipartisan agreement is rare.5 Clearly, there is federal movement to promote energy efficiency.

Even though the DOE protocols are not a national EM&V program, they exist as a “common basis for assessing and comparing the performance and effectiveness of energy efficiency policies and investments across programs, portfolios, and jurisdictions.”6 If adopted widely, the protocols could provide consistent measurement across the U.S. in how these savings are calculated. Ideally, this kind of consistency will enable increased financing for energy efficiency measures as lenders and investors look to standardized metrics for risk assessment and pricing purposes.

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1 “Methods for Determining Energy Efficiency Savings for Specific Measures,” Department of Energy, May 2013, 1-2.

2 Ibid., 1-3-1-6

3 “National Energy Efficiency Evaluation, Measurement and Verification (EM&V) Standard: Scoping Study of Issues and Implementation Requirements,” State & Local Energy Efficiency Action Network, April 2011

4 “Methods for Determining Energy Efficiency Savings for Specific Measures,” 1-3.

5 “Shaheen-Portman Energy Efficiency Bill Passes Senate Energy Committee With Strong Bipartisan Support,”

6 “Methods for Determining Energy Efficiency Savings for Specific Measures,” 1-2.

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Sahir Surmeli

Member / Co-chair, Energy & Sustainability Practice

Sahir Surmeli is a Mintz business counselor who advises companies, boards, entrepreneurs, investment banks, and venture and private equity investors as they build and grow companies. He handles public offerings, 144A and private financings, acquisitions, joint ventures, and strategic partnerships.