Unlocking the Energy Transition: The Critical Role of Measurement & Verification

Humanity is on the brink of a precipice. Scientists say we have but a small window to halt the impact of climate change, but our current efforts are falling significantly short of the necessary targets. As McGee Young, CEO of WattCarbon, mentioned earlier this year, our current struggle with decarbonizing the buildings sector is twofold:

First, the current $100 trillion price tag must be reduced to a more manageable number. Second, the 300 year current pace of decarbonization must be dramatically accelerated. Scientists tell us that 30 years is about the timeframe required to decarbonize to keep global warming to within 2 degrees and we can probably afford to spend around $10 trillion.

Measurement and Verification (M&V), the process used to quantify the effectiveness of energy-saving measures, will be one of the key solutions in our effort to reduce decarbonization time and cost by 90%. Serving as a critical bridge between projected energy savings and actual performance, M&V can help with:

1. Identifying the energy efficiency projects with highest impact across different types of buildings. There’s a range of solutions that can get the buildings sector to net zero, but there is not enough time, and certainly not enough money, to implement all of them. We need to be able to prioritize the highest impact projects. AI-powered M&V solutions can feed on the millions of data points generated every day within buildings and help identify those projects. This directly reduces the decarbonization price tag.

2. Providing the empirical evidence needed to secure and justify investments in energy efficiency. Investors and financiers are seeking concrete, verifiable savings to justify the initial expenditure in efficiency projects and minimize their risk. AI-powered M&V solutions have the power of providing the verifications necessary to unlock billions in investments in energy efficiency and greatly accelerate the pace of decarbonization.

Estimating Energy Efficiency

“You can’t improve what you don’t measure” is a frequently cited expression which emphasizes the importance of tracking and measuring performance or progress in order to identify areas for improvement. The slogan also applies when analyzing the energy performance of buildings. Just with a slight difference: for energy efficiency just simple measuring won’t allow to draw any conclusions on the improvements achieved.

One of the fundamental challenges in energy efficiency is the paradox that the absence of energy consumption cannot be directly measured. How do you quantify something that didn't happen? This is where Measurement & Verification steps in, utilizing counterfactual models to estimate what energy consumption would have been without the implementation of specific efficiency measures. These models account for various influencing factors, such as weather conditions, building occupancy, and operational changes, to isolate and measure the actual savings achieved.

The technical calculations involved in the M&V process are easy to understand, once the main actors at play are defined:

1. Installation Period: This is the time frame during which energy efficiency measures are being implemented in the building. It marks the transition from the existing state of energy use to the improved state, aiming to reduce consumption. It's important to document the specific start and end dates of this period, as it helps in understanding the timeline of project implementation and its subsequent analysis.

2. Baseline Period: The baseline period is a historical reference point used to represent the building's energy consumption before the implementation of energy efficiency measures. It involves collecting data on energy usage over a specified period, ideally under conditions that will be comparable to those after the efficiency measures are in place. The selection of a representative baseline period is crucial for making accurate comparisons and determining the effectiveness of the implemented measures. This period should account for typical operational conditions, weather patterns, and occupancy rates to ensure it accurately reflects the building's energy profile.

3. Reporting Period: This refers to the time frame after the energy efficiency measures have been implemented, during which the actual energy consumption of the building is monitored and recorded. The data collected during the reporting period is compared against the adjusted baseline to quantify the energy savings achieved. This period allows for the evaluation of the efficiency measures' performance and their impact on the building's energy consumption. The reporting period should be long enough to capture variations in energy usage due to seasonal changes, occupancy, and operational practices to ensure a comprehensive analysis.

4. Adjusted Baseline Consumption: The adjusted baseline consumption provides a counterfactual scenario — estimating what the energy consumption would have been during the reporting period if the efficiency measures had not been implemented. This is accomplished using statistical or machine learning models that consider various influencing factors to isolate the savings attributable solely to the efficiency measures.

Once these four key concepts are clear, the process of M&V is straightforward, and essentially composed of five consecutive steps:

1. The relevant consumption data for the building is collected

2. The installation period, baseline period, and reporting period are identified

3. A counterfactual model is trained on the baseline period data

4. The counterfactual model is used to predict the adjusted baseline consumption (or counterfactual consumption) for the reporting period

5. The savings are estimated as the difference between the adjusted baseline consumption and the measured reporting period consumption

This same process can be used for many different data sources: electricity, gas, district heating, oil, water, etc. independently. The figure below, taken from the International Performance Measurement and Verification Protocol (IPMVP), illustrates this process. The IPMVP is one of the main internationally recognized protocols for M&V and its analysis will be one of the topics of the next issue of this series.

EVO, International Performance Measurement and Verification Protocol, 2022

Conclusion

The implementation of measurement and verification (M&V) in energy efficiency projects for buildings is vital for determining the real-world savings of implemented measures. As we move forward, the role of AI and machine learning in enhancing M&V processes appears clear, offering new frontiers for accuracy, efficiency, and scalability.

This was the first of a series of posts in which we’ll tackle the theory and practice of using AI for Measurement & Verification. In this first post we defined the M&V framework and the basic concepts which will allow us to dig deeper within future publications.

In the next issue, we'll present the main international protocols recognized for M&V, before diving into the business models enabled by savings verification practices. We will explore how this crucial process not only validates savings but also unlocks innovative financing mechanisms and partnerships that can scale energy efficiency solutions across the globe. Stay tuned for an insightful journey into the economic engines driving the energy transition forward.