edf’s investor confidence project (icp): building confidence in energy savings

EDF’s Investor Confidence Project (ICP):

Building Confidence in Energy Savings

The Investor Confidence Project

• Efficiency Lifecycle Framework

1. Baselining • Core Requirements • Rate Analysis, Demand, Load Profile, Interval Data

2. Savings Projections 3. Design, Construction, Commissioning4. Ongoing Commissioning5. Measurement and Verification (M&V)

– Enables a clear definition of the complete process necessary to ensure performance

– Can house multiple standards for different building types and business models

• Energy Efficiency Performance Protocol - Large Commercial (EEPP-LC)– Create an accepted best practice approach to Large Commercial building retrofitting

– Uses existing and accepted industry practices and standards

– Define “appraisal pack” of documentation for EE Performance

– A standardized approach to delivering investment ready project to market

Managing Project Risk Factors

Performance Risk

Credit Risk

Asset Risk

Market Actors

• Building Owners– Achieve acceptable ROI on their specific project

– Access financing

• Origination Partners – Be able to close business leveraging ESAs and other products

– Allow for distributed models

• Energy Service Companies– Deal flow with reasonable transaction costs through channels

– Manageable performance risk

Market Actors

• Financial Markets – Ensure performance risk is managed correctly (by someone)

– Correlate project performance with asset risk

– Create large pools of consistent projects

• Insurance Industry– Underwrite performance risk with a narrower band

• Utilities / Capacity Markets– Bet on demand reductions to meet capacity needs, and achieve regulatory mandates

– Manage EM&V risk

– Treat Energy Efficiency as resource procurement

– Access forward capacity markets

• Carbon Markets?– AB32 in California

Performance Risk Barriers

• Project Demand– Lack of standards puts engineering overhead on each firm– Channels are rendered ineffective– Lack of transparency has created market inefficiencies

• Savings Uncertainty– Lots of winners and losers (variance), creating uncertainty – Many approaches to savings estimation, installation, commissioning, etc.– Averages penalize performing projects, and incentivize low quality

• Actuarial Data– Lack of quality and quantity of data results in a high degree of uncertainty– Getting data from industry, finance, and the energy sector is challenging– Data does not describe all factors that impact performance

Energy Efficiency Performance Protocol

First Energy Efficiency Performance Protocol designed for Large Commercial projects (EEPP-LC):

• Large Buildings, where the cost of improvements and size of savings justifies greater time and effort in pre- and post- development energy analysis

• Whole Building Retrofits, projects that involve multiple measures with interactive effects rather than a single piece of equipment

• High Performing Projects, projects with sufficient depth necessary for pre- and post-retrofit meter data yields (i.e., savings can be anticipated to be of greater magnitude than noise)

Energy Efficiency Performance Protocol

• Required Elements• Required Procedures• Required Documentation

Energy Efficiency Performance Protocol

• Required Elements• Required Procedures• Required Documentation

Project Performance PackageEEPP standard documentation similar to an appraisal package:

• Prescribed methods

• Consistent taxonomy

• Accepted measurement

• Auditable results

• Standardized documentation

Adoption Strategy

• STEP 1: Engagement of market players – Finance Companies– Utilities – Energy Services Companies– Insurers– Asset Owners

• STEP 2: Outreach to project origination channels – Engineering Firms– Facility Management– Portfolio Managers,– Contractors,– Others?

Next Steps

• Become an ICP Partner– Specify EEPP-LC as your company’s standard for large commercial EE projects

• Participate in the Process– Refining the EEPP-LC– Developing new sector and business model specific protocols

• Hospitality, Multifamily, Residential , Health Care, Schools, etc.

• Help the ICP Reach Critical Mass– A rising tide floats all boats– Help identify and engage additional channel and market partners

Investor Confidence Project

For More Information:

Mary Barbermbarber@edf.org

Matt Goldenmatt@efficiency.org