Domestic use of Energy Conference 2002 1 THE POSITION OF MEASUREMENT AND VERIFICATION IN DEMAND- SIDE MANAGEMENT PROJECTS IN SOUTH AFRICA Prof. L J Grobler and W.l.R den Heijer Potchefstroom University for CHE ABSTRACT DSM projects. This process is known as (M&V). Measurement and verification (M&V) form a crucial part of any demand-side management (DSM) project. It DSM Implementation Project environment enables the quantification and assessment of the savings that result from the DSM intervention. M&V provide all Client ESCO the stakeholders involved in the DSM project with an impartial determination of the savings. International measurement and verification protocols were utilised to develop a M&V system for South African DSM. Eskom Bank A process for M&V was developed in such a way as to facilitate agreement between the stakeholders and the M&V team. M&V plans and M&V baseline reports need to be submitted before any measurement activities begin. M&V Team environment These reports form the basis of project buy-in from the Project level DSM stakeholders. Figure 1: Stakeholders in Demand-Side Management 1. INTRODUCTION This article will describe the importance of measurement and verification during demand-side management. The basic Eskom has embarked on a national demand-side concept behind M&V will be described and how experience management (DSM) initiative in the industrial-, was gained from international M&V protocols and adjusted to commercial- and residential sectors. The projects that fall contribute towards the South African DSM market. The under the scope of DSM form part of Eskom’s long-term principal stages in a DSM project are provided. The article strategy to reduce South Africa’s electricity demand then describes the position of measurement and verification as during peak periods. it applies to the life cycle of DSM projects, especially to the South African situation and local energy market. The other stakeholders in DSM, apart from Eskom, are the end-users, the financial institutions and the Energy 2. THE IMPORTANCE OF M&V Service Companies (ESCOs). The end-users want to reduce their energy costs when they reduce their peak The importance of M&V for the success of DSM in South demand. The financial institutions want to protect their Africa is becoming more apparent. The whole process is investments in DSM projects. The Energy Service designed to quantify and assess the savings that result from Companies wants to share in the energy cost savings DSM projects in an impartial manner. If the DSM impacts are when they implement DSM under risk. known, one can track and evaluate (T&E) the performance and progress of all the DSM activities, which will help to The principal questions that all DSM stakeholders want identify focus areas for DSM, as well as potential problems. answered are: How much are we saving and how long M&V will enable Eskom to evaluate the verified savings will the savings continue to last? The dynamics in DSM against their DSM targets and help with proper projects make it difficult, and certainly not advisable, to implementation of DSM projects. M&V is therefore an assign any one of the stakeholders to deliver an objective essential step to follow any DSM activity assessment of the savings. The quantification and assessment of the savings must remain impartial and the Measurement and verification encourage investment in the process transparent. The long-term success of many DSM industry and reduce the risk for financial investors. DSM projects is often hampered by the inability of M&V helps to overcome barriers to DSM implementation. It project partners to agree on the quantity of savings that will also become a crucial requirement when participating in has been obtained. It is for this reason that another party international markets such as the Clean Development needs to be included in the DSM process to determine and Mechanism, which allow countries to benefit financially from verify the savings. emission reductions that result from DSM activities. The process of M&V provides credibility and broadbased Accurate measurement, a replicable methodology, as well acceptance to the energy market. as a consistent and reliable process are some of the requirements to determine the savings that result from The process of M&V provides valuable feedback to Domestic use of Energy Conference 2002 2 stakeholders regarding the savings and how it is longer satisfied. influenced. Efforts can thus be focussed to optimise the impacts of DSM. The fact that the savings are measured The use of baselines to M&V makes the M&V process a and verified encourages better design and management of negotiated process. The reason for this is that baselines DSM projects. M&V not only gives demand and cost describe a hypothetical scenario, which cannot be measured. savings, but can also reduce energy consumption and All the involved stakeholders (the client, Esco and financier) emission impacts as well. must agree on the method of savings calculation. The quantity of savings should reflect the detail level of the M&V efforts. 3. HOW DOES M&V WORK? Small savings will be measured and verified by a simple M&V process. The detail level of the M&V process will The 2000 International Performance Measurement and increase with the quantity of savings. Verification Protocol (IPMVP) and the Measurement and Verification for Federal Energy Project guidelines 4. DSM PROJECT STAGES (FEMP) were used to gain experience in the M&V field. These protocols were adjusted for the South African Project identification: The potential for DSM and energy situation. The M&V process was streamlined and efficiency savings is identified during this stage. structured in a more focussed manner for each type of project. Energy audit and assumptions: An energy audit is conducted of the building and/or its systems to determine the The M&V process is implemented at various levels of type, quantity and rating of all energy using systems. This complexity and effort. This depends on the project information is used to determine the potential savings that can complexity, the budget available to M&V and the be achieved from the DSM activities. The audit usually accuracy level required by the various parties involved. consists of a preliminary walk-through followed by a detailed audit. Assumptions are also stated regarding system Any DSM project has three basic stages. These stages are information that isn’t available. Factors that could influence the pre-implementation phase, the implementation phase the potential to generate savings with DSM are identified. and lastly the post-implementation phase. The timeline for each of these phases may vary according to the project complexity and a range of other factors. These stages can Project Identification be seen in Figure 2 as the “Actual” designated line. Energy Audit / Assumptions Savings = [ Baseline – Actual ] ± Adjustments Adjustment to Baseline Baseline Maximum demand [kW] Recommendations for Savings Implementation Actual Approval for Funding Pre-implementation Post-implementation Implementation of DSM Time Detail Design Figure 2: Rationale of M&V saving calculation process. Implementation A system has a specific energy demand before any DSM intervention. This energy demand is reduced by a certain amount. In order to determine what the savings are, we Commissioning need to establish what the energy demand after implementation would have been, had DSM intervention not taken place. This is achieved through the use of Operation & Maintenance baselines that describe the energy consumption based on certain known input variables or patterns. Baselines enable the calculation of the savings that were achieved by the DSM intervention by obtaining the Figure 3: DSM Project stages difference between the baseline and the actual energy demand. All baselines are based on certain assumptions Recommendations for implementation: A better estimate of and criteria. Adjustments are made to the baseline when the potential savings can be calculated once building and any of these assumptions become invalid or criteria is no system information has been gathered. Upon evaluation of the Domestic use of Energy Conference 2002 3 various potential DSM activities, and a feasibility study, Develop M&V plan: The M&V plan states the activities and the DSM activities that show the greatest potential are procedures that will be followed to M&V the DSM activities. recommended, based on their individual and combined The plan should include a description of the project and state feasibility. the assumptions and variables that could influence the saving potential of the DSM activities. The M&V activities are Approval for funding: Approval for project funding is clearly stated as well as the manner in which a baseline will be granted once it has been established that the obtained and under which circumstances it will be adjusted. recommended DSM activities will deliver satisfactory results within a feasible budget and timeframe. A metering plan must be included to state the equipment and schedule that will be used during metering. An overall Detail design: A detail design is made of the schedule for the project must be provided as well as the costs recommended DSM activities once project funding has to M&V. A description is included of every deliverable for been approved. the M&V project. Implementation: The DSM activities are implemented Develop M&V baseline report: The M&V baseline report based on the detail design. must include all information relevant to the development of the baselines. The complete procedure must be included as Commissioning: Commissioning of the installed well as the variables that would be used to characterise the equipment is necessary to ensure that actual baseline. Baseline adjustments, and how these will be done, implementation has been done in the correct manner and also need to be stated in this report. The baseline report is the equipment and systems are performing to the critical to the M&V project since it is a key contributor to specified requirements. M&V project buy-in. Figure 4: Position of M&V in DSM Get buy-in on M&V plan and M&V baseline report: As Operation and maintenance: The building and systems was mentioned, M&V deals with negotiated savings. The need to be maintained to ensure that the DSM activities process and procedures need to be mutually acceptable to all deliver the optimum level of performance and continue to the parties involved in the process (Esco, Client, M&V team). save energy and energy costs. Upon delivery of the M&V plan and the M&V baseline report, all parties need to review the plan and report and state any 5. POSITION OF M&V IN DSM changes that should be made to the plan. Domestic use of Energy Conference 2002 4 Once they all are satisfied and buy-in is obtained, M&V International M&V protocols were used as a basic framework can proceed. If this is not the case, the M&V plan and/or to develop a M&V protocol for the South African DSM the M&V baseline report must be refined and submitted activities and energy market. The M&V process was again until buy-in is obtained. developed with a number of basic steps that allow for measurement before and after DSM intervention. Delivery of final M&V plan and M&V baseline report: The final M&V plan and M&V baseline report is Baselines are used during the savings calculation process. The delivered only after all parties have met mutual agreement use of baselines for M&V makes the M&V process a on all the issues involved with the M&V of the savings. negotiated process. All the stakeholders involved must agree on the method of savings calculation. In order to facilitate Pre-implementation measurement: Pre-implementation agreement between the various stakeholders, a number of measurement is required to determine a baseline against reports are submitted to obtain buy-in into the project. The which the new energy performance after implementation first of these reports is the M&V plan. The next document is can be compared to calculate the savings. the M&V baseline report. Acceptance and stakeholder buy-in into the method to M&V will depend on these two reports. Post-implementation audit: The post-implementation go hand-in-hand with the commissioning of the equipment 7. REFERENCES and systems after implementation. This forms part of the M&V team’s responsibility to verify that the  U.S. Department of Energy, Office of energy efficiency implementation have indeed taken place to specification. and renewable energy. International Performance This stage usually consists of a walkthrough audit. Measurement and Verification Protocol: Concepts and options for determining energy savings. October 2000. Post-implementation measurement: This stage is extremely important because it helps to determine the  U.S. Department of Energy, Office of energy efficiency actual energy performance of the building or system after and renewable energy. M&V Guidelines: Measurement implementation. and Verification for Federal Energy Projects. Federal Energy Management Program. September 2000. Calculate savings and adjust baselines: The data obtained from post-implementation measurement is used  Radloff, F.G.T. Monitoring and Verification in calculations and compared to the baseline energy Framework Document: Existing / Retrofit projects. performance to determine the savings due to the September 2001. Report developed for Eskom under the implemented ECMs. Measurement and Verification Steering Committee. M&V report: The M&V report is basically a report 8. AUTHOR(S) containing all the information relevant to the project and most importantly, the findings. The various impacts of Principal Author: Prof. LJ Grobler holds a PhD degree in the implementation ECMs are reported. Mechanical Engineering from the University of Pretoria. He is presently a professor specializing in energy engineering Monthly and annual savings report: Data need to be and energy management at the Potchefstroom University for submitted to the regional M&V Centres in a set format CHE, where he is an associate professor. He has been each month. This is the responsibility of the M&V teams. certified as an Energy Manager by the Association of Energy This data is then transferred to the National M&V Centre Engineers in the USA. His address is: where it is then used to generate a monthly savings report. The School for Mechanical and Materials Engineering The monthly savings report is then distributed to all the Potchefstroom University for CHE, PO Box X6001, relevant stakeholders for each DSM project. An annual Potchefstroom. 2520 savings report is generated once a year. Co-author: Willem den Heijer holds an M.Eng. degree in This report is generated from all the monthly data that are Mechanical Engineering from the Potchefstroom University received from the regional M&V Centre and the M&V for CHE. At present he is busy with his Ph.D. degree and is teams. Both the monthly- and annual savings reports are senior project engineer for Energy Cybernetics, specialising required for the duration of the M&V project. in energy performance services and project management. His address is: 6. CONCLUSIONS The School for Mechanical and Materials Engineering Potchefstroom University for CHE, PO Box X6001, M&V is a critical part of demand-side management Potchefstroom. 2520 projects. It enables the quantification and assessment of the savings that result from the DSM activities. This is Presenter: Prof. LJ Grobler will present this paper. done in an objective and impartial manner to protect all the stakeholders in the DSM process.