292 Energy Project Financing: Resources and Strategies for Success
a) Increase energy savings
Accurate determination of savings gives facility owners and man-
agers valuable feedback on the operation of their facility, allowing them
to adjust facility management to deliver higher levels of energy savings,
greater persistence of savings and reduced variability of savings. A
growing body of data shows that better measurement and verification
results in significantly higher levels of savings, greater persistence of
savings over time and lower variability of savings (Kats et al. 1997 and
1999, Haberl et al. 1996). Logically this makes sense, since real time
measurement at multiple measurement points provides a strong diag-
nostic tool for building managers that allows them to better understand,
monitor and adjust energy systems to increase and maintain savings.
This finding is consistent with the experience of the US Federal Energy
Management Programs and reflects the very extensive long term meter-
ing^1 work done at the Texas A&M University Loan Star program (Clar-
idge et al. 1996). Greater persistence and lower variability, in turn, can
form the technical basis for rewarding energy efficiency projects which
employ superior M&V techniques for determining energy savings.
b) Reduce cost of financing of projects
In early 1994, our financial advisors expressed concern that exist-
ing protocols (and those under development) created a patchwork of
inconsistent and sometimes unreliable efficiency installation and mea-
surement practices. This situation reduced reliability and performance
of efficiency investments, increased project transaction costs, and pre-
vented the development of new forms of lower cost financing. IPMVP
is a response to this situation, providing guidance on risk management
information helpful in structuring project financing contracts.
By providing greater and more reliable savings and a common
approach to determining savings, widespread adoption of this Protocol
has already made efficiency investments more reliable and profitable,
and has fostered the development of new types of lower cost financing.
By more clearly defining project M&V and defining generally accepted
M&V methods, this Protocol provides lending institutions confidence in
the credible assessment of savings and measurement of performance.
This assessment and measurement then becomes the security which
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- The terms in italics are defined in Chapter 6.1