California paves way for meter-based energy efficiency

New energy efficiency guidelines mean you can ditch your deemed savings spreadsheets and actually get paid for your LED retrofits.

The California Public Utilities Commission (CPUC) recently released its NMEC Rulebook version 2.0 which covers the guidelines for meter-based energy efficiency projects and sets the stage for a sea change in the way that building operators are rewarded for their investments in energy efficiency.

Out with the old

Previous generations of energy efficiency incentives were largely based on the “deemed savings” model. Under this model, building operators demonstrated savings by plugging project parameters into a complicated spreadsheet model. Savings from a lighting upgrade might be based on the number and type of fixtures replaced, etc.

The burden of gathering data for the deemed-savings models typically fell on building engineers. And once the data was collected, it was subject to a haircut by the utility based on hypothetical factors such as equipment upgrade cycles.

Worse, deemed savings could be taken away entirely based on changes to building codes. Code is often used as the assumed baseline for measuring deemed savings, rather than the actual baseline energy use in a building. This may have made sense when building codes tended to follow the market, but today code for new construction often leads the market. 

The result: a lot of stranded energy efficiency in existing buildings.

In with the new

Wouldn’t it be nice if, instead of arguing with utilities about a spreadsheet model that has little to do with the way your building operates, you could collect efficiency incentives based on real energy savings measured at the meter? If instead of trying to tease apart savings on a measure-by-measure basis, you could treat your building as an integrated system with all savings rewarded equally, whether from capital upgrades or operational improvements? 

The new rulebook makes this simple, sensible approach possible. Using Normalized Metered Energy Consumption (NMEC), you establish a true energy baseline for your building based on the data from your smart meter – the exact same data that drives your energy bills.

Then, after implementing efficiency measures, you once again collect energy data from the smart meter. The difference between post-project energy use and the pre-project baseline forms the basis for incentive payments.

Not only is this a simpler approach to energy efficiency incentives, it’s now the only approach available for large categories of measures. LED retrofits, for example, have been effectively shut out of deemed savings models by changes to the deemed baseline. To be rewarded for these measures, you now need to measure your actual building baseline, which is only possible using NMEC.

The best meter on the market

NMEC may be conceptually simple, but it rests on a foundation of sophisticated statistical analysis. Energy use at the whole building level is driven by a variety of factors, such as weather and occupancy, that need to be taken into account when determining savings. Otherwise a hot summer, for example, could obscure substantial efficiency improvements.

For the past decade, Gridium has led the market for high-quality whole-building energy modeling based on smart meter data. This isn’t just an academic exercise for us: hundreds of commercial real estate customers use Gridium analytics to manage their day-to-day operations. 

Our energy models and data management infrastructure have to keep up with a complex and dynamic energy landscape, including battery storage, solar arrays, and real-time metering. Over time, we have developed the tools and processes to manage data acquisition and analysis automatically, so that building operators can focus on the energy insights.

This real-world experience explains why our analytics consistently come out on top in independent analyses. Accuracy matters when incentive payments are on the line.

The path forward

As California goes, so goes the market. The CPUC has released the new rulebook just ahead of a five-year program cycle, guaranteeing that meter-based efficiency projects will play an increasingly important role in California’s energy mix. 

Meanwhile, other states are moving ahead with similarly ambitious plans. This summer, Seattle City Light put out a call for projects under Energy Efficiency as a Service, an innovative financing mechanism that treats energy savings as a true grid resource compensated at full retail rates. 

It is still early days for the meter-based efficiency market, but the California rulebook and initiatives in other states are laying the groundwork for a bright future.