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State and Local Climate and Energy Program

# Calculating Energy Savings

Evaluation, measurement, and verification (EM&V) encompass a wide range of analyses used to assess clean energy programs – one of which is calculating energy savings.

## Basic Approach to Calculating Energy Savings

Estimating the energy impacts from clean energy policies and programs is a critical evaluation step that enables calculation of other benefits, such as reductions in greenhouse gases, air pollutants, and electricity demand. How this is done depends on whether the effort being evaluated aims to increase clean energy supply or reduce energy demand (i.e., energy efficiency).

With renewable energy supply programs, a primary metric of interest is energy output, which can be directly measured using standardized industry equipment (e.g., electric meter). When this renewable energy output displaces electricity generated from utility fossil fuel generation or the direct combustion of fossil fuels, the kWh displacement can be used to estimate the resulting environmental benefits.

With energy efficiency programs, the key metric of interest is energy savings. This quantity cannot be directly measured. Instead, efficiency program impacts are estimated by taking the difference between:

a) Actual energy consumption after efficiency measures are installed
b) What energy consumption would have occurred during the same period had the efficiency measures not been installed (i.e., the baseline)

In addition, steps can be taken to adjust the baseline and/or the post-installation energy use to account for factors other than the energy efficient measure or system that affect energy consumption (e.g., weather, building occupancy, operating hours). Energy savings are therefore determined using the equation:

Energy savings = (b)(Baseline energy use) — (a)(Post-installation energy use) ± (c)(Adjustments)

In the graph below, energy savings are represented by the shaded area.

Source: National Action Plan for Energy Efficiency (2007). Model Energy Efficiency Program Impact Evaluation Guide (PDF) (152 pp, 1.4M).

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## Planning and Conducting an Evaluation

Impact evaluations estimate the key direct benefits of clean energy policies and programs. Conducting a clean energy impact evaluation involves the following steps:

1. Set the evaluation objectives in the context of the program and policy goals.
2. Select an evaluation approach (see below) and prepare a program evaluation plan that takes into account critical evaluation issues.
3. Implement the evaluation and determine program impacts, such as energy and demand savings.
4. Report the evaluation results and work with stakeholders to implement program improvements, as appropriate.
5. Incorporate results into future program and resource planning activities.

Adopting a formal evaluation planning process allows for participants to clearly and transparently communicate objectives and approaches, and increases the likelihood that the information will be applied in a timely manner to achieve overall program goals.

More information on planning for and conducting a program impact evaluation is provided in the National Action Plan for Energy Efficiency's Model Energy Efficiency Program Impact Evaluation Guide (PDF) (152 pp, 1.4M).

## Two Approaches to Calculating Energy Efficiency Savings

The two key options for estimating energy and demand savings are a deemed savings approach and a measured savings approach.

To evaluate programs that target simpler efficiency measures with well–known and consistent performance characteristics, a deemed savings approach may be appropriate. This method involves multiplying the number of installed measures by an estimated (or deemed) savings per measure, which is derived from historical evaluations. Deemed savings approaches may be complemented by on–site inspections.

To evaluate larger and more complex program strategies – including those expected to result in significant savings or those with a high degree of uncertainty – a measured savings approach that follows established protocols may be appropriate. Estimates of energy (and/or demand) savings are calculated using one or more of the following techniques.

Measured Savings Approaches
Engineering Methods Standard formulas and assumptions are used to calculate the energy use of the baseline and post-installation energy systems.
Statistical Analyses Statistical models are used to estimate “before” and “after” scenarios, while taking into consideration changes in weather, facility occupancy, factory operating hours, and other factors that affect energy use.
Computer Simulation of System Performance Computer models are used to predict the change in energy use after complex, system-wide improvements in energy efficiency are implemented. These models are typically calibrated with actual performance data.
Metering and Monitoring Baseline and post-installation energy use is directly metered and monitored, while accounting for the non-energy factors that affect energy consumption.
Integrative Methods Integrative methods combine some or all of the preceding approaches. For example, metering and engineering methods can calibrate computer simulations of baseline and post-installation buildings that receive efficiency retrofits.

States that apply measured savings approaches typically adopt an evaluation protocol to guide their efforts, increase transparency, and identify the appropriate level of rigor. For these reasons, such a protocol can be particularly important when impact evaluation results are used as the basis for decision making. The International Performance Measurement and Verification Protocol (IPMVP) (PDF) (93 pp, 2.5M) is one commonly-used example.

Regardless of the approach selected, a key goal for evaluation is to minimize uncertainty while balancing evaluation costs with the value of the information received.

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## Tools and Resources

### California Measurement Advisory Council (CALMAC)

The CALMAC website provides a comprehensive resource for program impact evaluation guidance. The site contains a searchable database of over 400 evaluation reports on a variety of general and program specific topics. Users can also review the California Energy Efficiency Evaluation Protocols: Technical, Methodological and Reporting Requirements for Evaluation Professionals (PDF) (292 pp, 1M).

### Evaluation, Measurement, and Verification (EM&V) Webinar Series

The Evaluation, Measurement, and Verification (EM&V) Webinar Series, sponsored by the National Action Plan for Energy Efficiency and EPA's State Climate and Energy Program, covers a range of issues and challenges currently faced by commissions, energy offices, and other entities working to advance evaluation, measurement, and verification (EM&V). The Webinars highlight key EM&V issues and challenges, and provide information on the resources available to help jurisdictions achieve their evaluation objectives. The Webinar series is intended primarily for staff from Public Utility Commissions and State Energy Offices who are getting started with EM&V or seeking to expand and improve their methods.

### Market Assessment and Program Evaluation Clearinghouse

The Consortium for Energy Efficiency (CEE) Market Assessment and Program Evaluation Clearinghouse provides a source of evaluation reports for programs throughout the country.

### Model Energy Efficiency Program Impact Evaluation Guide

The National Action Plan for Energy Efficiency (Action Plan) Model Energy Efficiency Program Impact Evaluation Guide (PDF) (152 pp, 1.4M) provides a framework that jurisdictions and organizations can use to define their “institution-specific” evaluation requirements. The Guide also includes standard evaluation planning and implementation process that can be used for calculating savings, as well as definitions, best practices on key evaluation issues, and a list of evaluation resources. The Action Plan offers direct technical assistance to state public utility commissions on evaluation planning, as well as an upcoming series of conference calls on key evaluation topics. Contact Niko Dietsch (dietsch.nikolaas@epa.gov) for more information.

### Regional Evaluation, Measurement and Verification Forum

The Regional Evaluation, Measurement and Verification Forum is facilitated by the Northeast Energy Efficiency Partnerships (NEEP) to develop consistent EM&V protocols for energy efficiency and other demand-side resources in the Northeast and mid-Atlantic regions, with the objective of supporting priority energy and environmental policies.

### State Technical Forum

EPA's State Technical Forum is a monthly webcast series that explores analytical questions and key issues surrounding state climate change and clean energy efforts. Each forum is a facilitated discussion among state energy, environmental, and public utility commission officials, featuring peer exchanges, expert presentations, and targeted background documents. Forum resources for evaluation, measurement, and verification (EM&V) include background information, stakeholder presentations, and links to additional information.

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