Appendix B 341
above, the costs of extra meters for Options A or B may be shared with
other objectives.
When multiple ECMs are installed at one site, it may be less costly
to use the whole building methods of Options C or D than to isolate
and measure multiple ECMs with Options A or B.
Though development and calibration of an Option D simulation
model is often a time concerning process, it may have other uses such
as for designing the ECMs themselves or designing a new facility.
Where a contractor (ESCO) is responsible for only certain aspects
of project performance, other aspects may not have to be measured for
contractual purposes, though the owner may still wish to measure all
aspects for its own sake. In this situation, the costs of measurement may
be shared between owner and contractor.
4.11 BALANCING UNCERTAINTY AND COST
The acceptable level of uncertainty required in a savings calcula-
tion is a function of the level of savings and the cost-effectiveness of
decreasing uncertainty For example, suppose a project has an expected
savings of $100,000 per year and that a basic M&V approach had an
accuracy no better than ±25% with 90% confidence, or $25,000 per year.
To improve the accuracy to within $ 10,000 it may be seen as reasonable
to spend an extra $5,000 per year on M&V but not $30,000 per year.
The quantity of savings at stake therefore places limits on the target
expenditure for M&V
Further benefits of activities to reduce uncertainty may be the
availability of better feedback to operations, enabling an enhancement
of savings or other operational variables. The information may also be
useful in assessing equipment sizing for planning plant expansions or
replacement of equipment. It may also allow higher payments to be
made under an energy performance contract based on measured vs.
conservative stipulated values. Additional investments for improved
accuracy should not exceed the expected increase in value. This issue
is discussed in more detail by Goldberg (1996b).
Discussions and definitions of site-specific M&V plans should
include consideration of accuracy requirements for M&V activities and
the importance of relating M&V costs and accuracy to the value of ECM
savings. However it should be recognized that not all uncertainties can
be quantified (see Chapter 4.2). Therefore both quantitative and qualita-
tive uncertainty statements must be considered when considering M&V