In the most recent years, we have witnessed tremendous amounts of HVAC and lighting equipment upgraded in both the private and public sector. Those projects are always accompanied by financial and savings proposals. In the government sector, these projects are highly regulated and require periodic reporting to track savings. My question is how many of these projects over-reported savings, based on generalized surveys/proposals and a lack of rate expertise in more complex markets?
If I were guessing on the error ratio, I might say 20+% and the figure goes way up in markets like Georgia. It's a good question and one that you should be asking if you invested in such a project.
This topic arose as I received not one ... but two calls within a month. The calls were from vendors that had installed equipment, represented a certain amount of savings and then had their customer questioning them (rightfully so). When they researched the matter, the issues at hand were varied. It's less than pleasant when you are a vendor or client in this situation. In one case, the property owner had done a lighting project, while expecting savings and increased value in his building. Unfortunately, he got neither.
The Potential Issues
1) INOPERABLE EQUIPMENT - Not accounting for inoperable equipment (e.g. lighting) that existed before the efficiency project, which actually brings on new electrical load once repaired during the efficiency upgrade. This may sound insignificant but can really have an affect on savings and the client/vendor relationship when not properly documented.
2) NOT DOING THE MATH - Wing-it calculations using average $/Unit of Use can either bite you as a vendor or client manager seeking to justify his project. Also depending our usage profile (high or low number of hours of use in the month) and the utility rates in your market, the estimated savings may artificially high. That's never good if you are paying based on performance (shared-savings). The calculations should always be shown with the utility's rate broken down. Additionally, the benchmark use calculations should be available, along with the ratios utilized in calculating them.
3) LACKING KNOWLEDGEABLE RATE REPRESENTATION - Some markets (e.g. Georgia real-time pricing) are just like going to court and trying to serve as your own lawyer against the opposition's hired counsel. More than likely, you will fall on the short end of that stick. You would be advised to gain representation from a knowledgeable local rate consultant in any of your complex markets including and especially Georgia.
As a customer embarking on major efficiency or building management systems work (regardless of it being shared savings or not), I would build in a project allocation in the efficiency project (1.5% of annual expenses for the tracked meter...generally over 3 years) to have a knowledgeable local expert for measurement, verification and representation (in Georgia) ... but one that utilizes sound technology and reporting. Not doing so can effectively reduce your savings in the form of overpayment to performance vendors or overpayment to the utilities themselves in not having maximized savings potential through rate strategy and optimization.
Alex Tomas brings over 28 years experience consulting on all aspects of utility data and expense management, along with extensive rate consulting in Georgia, Florida ad Alabama markets. UtilityTRX delivers full service technology and consulting solutions that effectively apply checks and balances (accounting controls and visibility) over utility billed charges, associated consumption and building automation controls. UtilityTRX technologies and managed services reduce costs and increase the life of equipment.