Appendix B 301
that is capable of operating at a stated level of efficiency (“rating of
performance”).
There are many types of financing in use with performance con-
tracts. This Protocol does not recommend any particular approach,
because the choice depends on many considerations beyond the scope
of M&V disciplines. The availability of third-party financing in general,
however, and the variety of applicable financial instruments, is growing.
Those seeking financing of projects with measurable and verifiable sav-
ings should have no difficulty obtaining expert advice from more than
one specialist, at least in the U.S.
Energy savings are commonly defined as reductions in energy use.
Energy cost savings are reductions in the cost of energy and related
O&M expenses, from a base cost established through a methodology
set forth in an energy performance contract. (Energy saving activities
may also reduce other costs such as pollution/health care costs through
lowering of atmospheric emissions from boilers.) “Energy savings” and
“energy cost savings” when defined in a performance contract are typi-
cally contractual terms.
Performance of equipment, both before and after a retrofit, can be
measured with varying degrees of accuracy. Savings are often computed
as energy cost avoidance and are the calculated difference between i)
the measured performance and/or load of energy-using systems and ii)
the amount of energy that the systems would have used in the absence
of the ECM, such difference being multiplied by current unit prices for
energy supplied. The baseyear^1 energy usage is defined using measured
equipment performance data prior to the ECM coupled with assump-
tions about how that equipment would have operated in the post-retrofit
period. Often, baseyear assumptions must incorporate expected and/or
unforeseen changes that may alter the energy savings calculation. In
these cases, the contract defines which party is responsible for the ele-
ments of the ECM that lead to energy savings and cost avoidance.
Broadly speaking, energy efficiency projects have two elements,
performance and operation:
- performance of the project is related to its efficiency, defined with a
metric such as improvements in lumens/watt or in tons of cooling
per kW of demand.
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- The terms in italics are defined in Chapter 6.1