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You Say It Saves 20%. How Do We Know?

Steve Becchio
Aug 15
6 min read

“We can reduce your HVAC energy consumption by 20%.”


Wonderful.


If you own or manage restaurants, retail stores or commercial facilities, you've probably heard some version of that before. The percentage might be 15%, 20% or 30%, usually accompanied by an impressive looking graph.



And perhaps it's true.


But imagine you're the facilities manager who recommended the project. Six months later you're sitting across from the CFO and the obvious question comes:


“So, what did it actually save?”

“Should we roll this out across another 5 locations?”


Suddenly the percentage in the original proposal isn't much help. This is the problem Measurement & Verification (M&V) is designed to solve.


HVAC measurement and verification - measuring something that didn't happen


There's an odd thing about energy savings: you can't directly measure them.


We can measure how much electricity a building consumed. What we can't measure is how much electricity the same building would have consumed, at exactly the same time and under exactly the same conditions, if the energy efficiency project hadn't happened.



Fig 1 : Measuring energy consumption that might have been


We don't get to run February twice.

Once with the HVAC optimisation and once without it.


Instead, we have to determine what the building would reasonably have consumed without the change. This is sometimes described as the counterfactual.


At its simplest, the idea looks like this:


Fig 2 : The counterfactual formula


Simple enough on paper.

The interesting part is working out that first number.


A commercial site example makes the problem obvious


Consider a busy commercial site on a hot Sydney afternoon.


People are coming and going, equipment is operating, internal heat loads are changing, and the HVAC system is working hard to maintain comfortable conditions while it’s 37°C outside.


Now compare that with a mild Tuesday in May.

Same building. Very different energy conditions.


Suppose we install an HVAC optimisation system and energy consumption subsequently falls by 18%. We'd obviously be pleased.


But how much of that reduction was caused by the optimisation?


Perhaps the weather was cooler. Perhaps operating hours or occupancy changed. Maybe equipment was replaced during the same period. Or perhaps the HVAC optimisation really did produce an excellent result.


Looking at two electricity bills doesn't necessarily tell us how much energy was actually saved due to our efforts.


And that's where M&V becomes useful.


Agree on the rules before the improvements begin


Rather than waiting until the end of a project and arguing about whose savings calculation is correct, M&V provides a framework for agreeing upfront on how savings will be determined.


The International Performance Measurement and Verification Protocol (IPMVP) provides an internationally recognised framework for doing this.


Despite the impressive name, the basic idea is quite practical.


We agree on the baseline period and reporting period. We decide what energy data will be used and which conditions materially affect consumption. We document how changes in those conditions will be treated and how the final savings calculation will be performed.


We also agree how significant changes outside normal operating conditions, known as non-routine events (NREs), will be identified and treated if they occur.


Those decisions form part of an M&V Plan.


So when we eventually talk about a saving of 10%, 20% or 30%, both sides understand what that number represents and how it was determined.


That's very different from deciding how to calculate the savings after seeing the result. Agreeing on the methodology upfront also helps avoid disagreements later.


A baseline isn't just “last year's energy”


This is another important distinction.

Imagine our site consumed 300,000 kWh last year.


That's useful information, but by itself it doesn't tell us how the facility behaves. A good baseline attempts to understand the relationship between energy consumption and the conditions that influence it.


For an HVAC-related project, weather is an obvious factor. Operating hours may matter too, along with other variables that materially affect the site's energy consumption or HVAC load.


So the question gradually changes from:


“How much energy did this building use?”

to:

“What drives this building's energy consumption?”


Once we understand that relationship, we can make a fairer comparison during the reporting period, the period where we measure the actual energy usage with the efficiency measures in place.


If the reporting period happens to contain a much hotter summer, for example, we don't simply penalise the project because the HVAC system had more work to do and used more energy.


We account for the change in conditions according to the M&V methodology we agreed at the beginning.


How this works with HVAC optimisation


For some of the HVAC optimisation projects we're developing, our starting methodology is called IPMVP Option C - Whole Facility.


This approach places the measurement boundary around the facility. Historical facility-level energy data and relevant independent variables are used to establish a baseline relationship.


The agreed baseline model is then used to calculate what energy consumption would have been under the conditions experienced during the reporting period.


We're essentially asking: What would this site reasonably have consumed under these conditions if the optimisation hadn't happened?


We compare that with what the site actually consumed.


The difference is the avoided energy consumption determined under the agreed methodology.


From one building to a whole portfolio


Now imagine the business operates 100 sites.


We don't necessarily want to invent an entirely new approach 100 times.


They may be retail stores, hospitality venues, offices or other commercial facilities. They won't be identical, but they often share common operating patterns and HVAC characteristics.


That allows us to develop a repeatable M&V framework across the portfolio while adjusting the analysis to reflect each individual site.


A location in the eastern suburbs may trade longer hours. A building at Penrith may have different HVAC equipment. Another site might experience very different cooling loads.


The framework provides consistency. The site provides the detail.


That becomes particularly useful when the eventual objective isn't simply proving one project worked, but understanding energy performance across an entire portfolio.


Fig 3 : A conceptual view rolling up aggregated M&V results, based on our internal reporting system

The story doesn't stop on installation day


Once the optimisation is installed, the reporting period begins, and the Option C methodology continues to provide the reference for determining savings.


HVAC performance changes with weather and operating conditions, so a few mild weeks after commissioning won't tell the whole story. As the reporting period develops and the system experiences a wider range of conditions, the evidence becomes stronger.


The methodology stays the same. The evidence builds over time.


We also continue monitoring the HVAC system itself. Sub-metering and operational data can help us see how the equipment is behaving, whether the optimisation is continuing to perform as expected and whether something has changed that warrants investigation.


The distinction is simple:


Option C helps us determine the savings. Ongoing monitoring helps us understand the performance behind them.


From measurement to ongoing energy management


This becomes particularly useful across a portfolio.


Better interval data, sub-metering and analytics make it increasingly practical to move beyond asking:


“Did this site save energy?”


and start asking:


“How are our sites performing, where has something changed, and where should we look next?”


This is part of the direction often described as Advanced M&V or M&V 2.0.


The fundamentals remain the same: establish a credible baseline, account for relevant conditions and determine savings using an agreed methodology.


What changes is our ability to apply those principles more frequently and across more sites, turning M&V from a way of verifying a project into a tool for understanding energy performance across a portfolio.


So, about that 20%...


Let's return to where we started.


“We can reduce your energy consumption by 20%.”


Perhaps.


But before the project begins, there are some more useful questions to ask.

  • What's our baseline?

  • What affects energy consumption at this site?

  • What are we going to measure?

  • How will we account for changing conditions?

  • And how, exactly, are we going to determine the savings?


If the client and supplier can agree on those things before the project starts, we've addressed one of the biggest problems with energy-efficiency claims.


We're no longer asking the client to simply believe the number.


We've agreed on how we're going to determine it.




References and further reading


This article is part of an ongoing look at practical Measurement & Verification for commercial HVAC and multi-site businesses.


Efficiency Valuation Organization (EVO). International Performance Measurement and Verification Protocol (IPMVP). https://evo-world.org/en/products-services-mainmenu-en/protocols/ipmvp



EVO. Non-Routine Events and Non-Routine Adjustments. https://evo-world.org/en/about-en/organization/ipmvp-committee/nra-nre




AI assistance disclosure: AI tools were used to assist with drafting, editing and technical cross-checking. The final content, interpretation and conclusions were reviewed and approved by the author.



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