Title: Stipulations in Performance Contracting M&V: the Good, the Bad, and the Ugly
Abstract: Performance contractors (PC) often use stipulations for part or all of their measurement & verification (M& V) efforts. The value of stipulations are low cost and easy implementation (good). Disadvantages include uncertain savings estimates (bad) and potential for disputes and lawsuits (ugly). PCs and customers sometimes misuse or abuse stipulations either by stipulating the savings directly or stipulating parameters based on limited or unreliable information. Since the purpose of MV private-sector PCs are presumed similar. Recognized MV it is not just sell ing and install ing energy-efficient equipment. Performance contracts are structured using a variety of contractual approachesshared savings, guaranteed savings, chauffage, lease purchase, etc. [n a shared savings contract, the energy service company (ESCO) is paid a share of the verified energy and cost savings during the contract term with the customer retaining the balance. In a guaranteed savings contract, the ESCO is paid a fixed amount so long as the savings exceed a specific threshold. The customer retains savings in excess of this amount. Measurement & verification (MV MV rigorous M&V costs more money. In an effort to reduce M& V (and therefore project) costs and to shed risk, ESCOs often resort to stipulating many of the parameters upon which the savings are based. Stipulation is the practice of holding a parameter constant during the contract term regardless of actual conditions. In some cases, it also implies that the parameter is estimated or assumed instead of measured. Jf all parameters are stipulated then the savings are effectively stipulated as well. Consider a lighting retrofit that reduces energy use. The key parameters upon which energy savings depend are demand reduction (kW) and operating time (hours). Fixture power use (k W) can be measured before and after a retrofit to determine demand savings, or fixture powers can be obtained from a standard table (as is done in many utility sponsored demand-side management programs). Likewise, operating hours can be measured with data loggers or estimated based on known schedules. For the greatest accuracy, both parameters wou Id be measured, but at a greater cost. To simplify M& V and reduce costs, either the fixture powers or the operating hours could be stipulated while the other ESL-IC-01-07-05 Proceedings of the First International Conference for Enhanced Building Operations, Austin, Texas, July 16-19, 2001 parameter is measured. The ultimate simplification is to stipulate both parameters, which takes the M out
Publication Year: 2001
Publication Date: 2001-01-01
Language: en
Type: article
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