News Article
January 29, 2013

Measurement & Verification: Project Tax or Performance Tool

By Clay Nesler


There continue to be significant differences of opinion within our industry about the value and best approach for measuring and verifying energy savings in energy efficiency retrofit projects. These opinions range from the perspective that measurement and verification (M&V) is a tax (i.e., additional cost) on projects and should be minimized to an opposing viewpoint that M&V is a tool to improve building performance whose value should be maximized. I believe that advanced metering and analytics technology can satisfy both perspectives by reducing the cost of whole building M&V while also providing tools for building operators to track and improve building performance over time.


Shortly after energy savings performance contracting became popular in the late 1980’s, there was a need to standardize and streamline the process for Measurement and Verification (M&V) of energy savings.  In performance contracting, building efficiency improvements are paid for over time from utility and operational cost savings that arise from projects designed and installed by an Energy Service Company (ESCO).  The ESCO measures, verifies and guarantees the reduction in energy consumption and often helps the owner secure third party financing for the improvements. Rigorous measurement and verification not only assures the owner that the ESCO has achieved the guaranteed savings but also provides additional security to the financial institution providing the funding.


In 1995, an industry coalition, led by the U.S. Department of Energy developed a standard M&V methodology called the International Performance Measurement and Verification Protocol (IPMVP).  The IPMVP protocol, now managed by the Efficiency Valuation Organization, is the basis for measuring and verifying energy savings performance in almost all ESCO performance contracts.  Executing an M&V plan is time consuming and requires specialized knowledge.  Because of this, there has been a trend in recent years to rely on the simpler retrofit isolation verification options instead of the more complex whole building verification option using historical and post-retrofit utility bill data.


Whole building M&V is especially applicable for projects with multiple, interacting improvement measures and projects with a significant retro-commissioning or operational improvement component.  In this case, pre-retrofit utility bill, weather and occupancy data is used to create a regression model of building performance.  After the retrofit, utility bill data is analyzed against the predicted baseline energy performance to determine actual savings.  This analysis is usually completed annually by a specially trained engineer that also verifies that the building is being operated and maintained as expected and identifies the root cause of any deviation in performance.  Luckily, recent advances in metering and analytics software can reduce the cost, and improve the effectiveness of whole building measurement and verification.


Rather than performing the analysis once a year, a better idea is to use analytics software applications to continuously monitor building performance against the baseline using monthly or shorter term interval meter data.  This software is essentially a virtual “nega-watt” meter that tracks and accumulates energy savings in a way analogous to an energy consumption meter.  By reviewing this “nega-watt” meter, savings performance is continuously monitored, providing early indication of performance problems or savings short-falls.  The software can even automatically detect shifts in the baseline caused by changes in building operation or occupancy.  This is one of challenges of whole building M&V, particularly when monitoring performance over a longer period of time in commercial buildings.  This capability not only provides a cost effective way to verify energy savings against contractual guarantees, it provides building operators and engineers with valuable tools to monitor and tune building performance over time.


The figure below shows historical energy use at a Midwestern community college that underwent an energy efficiency retrofit in early 2005.  The first two years of energy use was used to create the baseline model and the fourth year shows a 21% energy reduction in the first year after the retrofit. 


historical energy use at a Midwestern community college that underwent an energy efficiency retrofit in early 2005

Persistence of savings is a common problem with building retrofit projects, leading to lost savings and the need to re-commissioning buildings every five to seven years.  With the advanced metering and analytical tools available today, not only can M&V costs be significantly reduced, but a building’s performance can be continuously monitored, tuned and optimized.


In the community college example above, additional savings of one to two percent were generated for each of the six years following the retrofit.  These savings were achieved through operational improvements that were identified by the M&V engineer tracking the energy savings.  This is the kind of chart that any building operator or energy engineer would be proud to display in their office.   The example also demonstrates that the same analytics capabilities that can help reduce the cost and complexity of energy savings measurement and verification can be leveraged to improve the performance of buildings over time.  Perhaps it’s time to change the name of M&V to MV&I (Measurement, Verification and Improvement) to be more reflective of the additional benefits that energy analytics it can bring.


This article was originally posted as a blog at:

January 2013



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