These remarks were delivered as part of the recent AESP annual conference.
There is a great deal of talk about “energy efficiency as a resource.” And that leads me to a question: can you envision a future where energy efficiency is deployed as a dispatchable resource – at the right times and locations – and the impacts are not monitored, measured and optimized based on what’s actually happening at the meter?
I ask this question because I believe this industry has reached an inflection point, and I was asked to speak today and very quickly hit three key areas related to this critical juncture:
First – What trends are driving towards energy savings at the customer meter – with a focus on the residential space?
Second – what does the evaluation field, specifically, need to do to accommodate this shift?
Finally – What are the implications of making all of this a reality?
The trends in the business include:
- Increasing penetration of smart meters in customer homes;
- Increased focus on temporal and locational-based load reductions due to grid constraints and/or to avoid costly T&D upgrades;
- The prevalence of cost-effective distributed energy resources;
- A shift away from widget-based measures, the infamous “lighting cliff,” and the emergence of complex controls and devices that are impossible to deem;
- Emerging program models that rely on achieving savings at the meter, including, but not limited to, pay-for-performance;
- Interest and need to finance energy efficiency improvements with private investments;
- Changing utility business models and new regulatory policies and goals.
On this note of regulatory trends, people often point to California as an example of changing policies, as they have gone the furthest in terms of putting legislation and policies in place that direct utilities to account for savings at the meter (e.g., they coined the term NMEC – Normalized Metered Energy Consumption), CA is far from the only place this is happening. As shown on the map, there is a tremendous amount of regulatory activity around meter-based energy efficiency throughout the country.
The key theme here is that all these trends point towards a future of meter-based energy efficiency. So, if it’s utilities procuring EE as a resource, they need to know what the impacts are at the meter. If it’s EE financed by private investment, all that matters is what happens at the meter, and the banks/investors need to sign off on the measurement methods.
So that leads to the second question – what does the field of evaluation need to do to accommodate this shift?
There’s a seemingly simple answer – and that is to just do whatever it takes to ensure that the evaluators can cost-effectively measure the impacts at the meter.
But the evaluators would laugh at that and say “we’ve been doing this for 30 years” – “we invented billing analysis, we wrote the book on this – we have all the capabilities necessary to measure the impacts of any program or initiative aimed at generating meter-based EE savings. Therefore we don’t need to do anything.”
So the real question becomes: What challenges or deficiencies exist today in the EE industry in general – and the evaluation field specifically – that can be addressed by this huge shift away from widgets and deemed savings and towards targeting and measuring savings at the meter?
To help answer that, I go back to the old saying that “you can’t know where you’re going if you don’t know where you’ve been,” so let’s briefly look back through history.
When I first joined EnergySavvy in early 2015 we were on a mission – the world of EE programs and especially evaluation, measurement & verification (EM&V) seemed ripe for innovation and disruption. In the halls of utilities throughout the country we heard the same thing – this process of finding out how we performed is too slow, too manual, we don’t get results soon enough to help optimize our programs, we’d love to reduce costs…
And this sentiment was backed by major initiatives such as SEE Action – who said, way back in 2011, “EM&V is sometimes seen as expensive, not credible, not timely, not transparent, and as a burden, not a benefit.”
Then in 2014 legends of energy efficiency like Tom Eckman and Mark Sylvia published articles showing the promise of “EM&V 2.0.” So we felt like we had the wind at our backs. Modern software, data science, automation and visualization to the rescue. The classic “silicon valley” play.
We believed we could bring to this industry “Advanced M&V” or “M&V 2.0,” which in general introduces elements of automation, machine learning, big data analytics, and continuous analysis of energy consumption data to measure savings at the customer meter (or as I like to say – billing analyses on steroids).
For all the evaluators in the room, I want to point out that, contrary to popular belief, we did not tell regulators that all their evaluation could be replaced by automated tools.
So please go back to your companies and repeat this, because this is one of the most stubbornly-held ideas in this space – and I encounter it all the time.
We’ve very clearly espoused the idea that M&V 2.0 does not replace evaluation – it can and should be a powerful tool in the evaluation toolbox to help make the work of evaluators adapt to these changing trends, to be more relevant and valuable to the programs they serve, and to address these very sticky and constant complaints and deficiencies about not providing enough timely and detailed feedback to actually improve operations. It’s an opportunity!
And at least to me, and I think to many others, the benefits to EM&V of using continuous measurement tools seem rather obvious and logical:
- Evaluators can use the tools to generate early and ongoing insights into the programs they are evaluating;
- To provide red flag warnings on savings values that are not aligned;
- Inform evaluation research and design – allocate the budget and effort to where it’s needed most;
- Inform updates to TRM’s, prioritize and allocate time and spending accordingly;
- And maybe, just maybe save some costs by reducing the amount of time spent on manual impact analysis and data cleaning, where applicable.
But the reality we’ve encountered has been different. Unfortunately, with most programs using deemed savings and such a small portion of the portfolio currently relying on meter-based savings, much time has been wasted talking about how these measurement tools don’t provide the exact answer the evaluators are seeking today. And you know what, we’re done debating this.
So to get back to the original question: what does the evaluation field need to do to accommodate this shift? I guess I would say start adapting and bring your best game or get out of the way, because the train is leaving without you.
If the subject matter experts on energy efficiency measurement believe that the deemed savings paradigm is here to stay for good, and that you can continue with current manual processes for analyzing billions of data points of customer usage data, and that static, one-time analyses and 100-page reports are successful ingredients of a long term business strategy, I’m not going to argue against that.
But if you think all these trends lead towards a future where EE must be measured and monitored as a resource on the grid, then my advice to the evaluators is: Advocate internally to your firms, partner with software companies that are doing this work, enhance your own tools, differentiate from the competition, learn how this fits in your organization and with your clients, but otherwise, the world is moving on and you’ll either have to catch up or be left behind. Because the benefits are real, and if evaluators don’t bring this value to their work, then the utilities and implementers will, and your role will inevitably be reduced to its bare minimum – the dirty word that no evaluator wants to use – auditor.
I say all this because the benefits of timely and granular feedback from Advanced M&V tools extend through all phases of EE programs – from planning to design to implementation and evaluation.
And that’s where we tie all these trends together with the new tools and capabilities and we can address the third question: What are the implications of making all of this a reality?
Well, implementers and utility strategy, planning and program management staff all will have to take part in designing programs that are aimed strictly at obtaining savings at the meter. That’s a big ask, and it has numerous implications. The certainty of setting goals based on deemed savings and numbers of widgets evolves into one where actual savings performance matters more – so there’s new risks. Where the EE work depends on contractors, the quality of those installations and the persistence of those savings now matter a great deal.
But the trade-offs are worth it. As soon as the programs are designed to get savings at the meter, the benefits of these measurement and monitoring tools immediately become more relevant.
So when I think of a future where energy efficiency is a dispatchable resource, on par with supply side options and integrated with DER’s, I believe the only way to get there is to continuously monitor, measure and optimize based on what’s actually happening at the meter.