By Knud Hermansen, P.E., CEM, M.SAME

Energy Savings Performance Contracts (ESPCs) are typically made up of a portfolio of projects designed to increase energy efficiency, sustainability, and resilience. These energy conversation measures (ECMs), however, often tend to be tracked and evaluated individually. While this measurement and verification technique has obvious benefits, when used alone, it has the potential to skip hard-to-quantify variables, miss interactive effects, and stunt learning.

Using billing data to create calibrated whole-building models (or even models of groups of buildings) allows for a more holistic view, better feedback, and faster learning. In this method, one takes a period of baseline data (typically a year) and creates a linear regression. The most common variables are temperature and relative humidity. Additional variables like occupancy or production may be needed as well. Baseline energy use would be forecasted then against post-construction energy use.


Focusing on individual ECMs also makes it easy to attribute savings to the measures, diagnose issues, and make adjustments to savings. If planning minor changes, it is easy to estimate magnitude by adjusting individual variables in the savings equations.

Most estimates of ECM savings assess some key parameters and make assumptions about others. While this technique has its strengths, it is not without challenges.

Specific Strengths. Focusing on the individual ECMs addresses the responsibility-versus-authority gap. While ESPCs are responsible for all savings, there are often variables completely beyond their control. For most ESPCs within Naval Facility Engineering Systems Command (NAVFAC), energy managers focus on what the Energy Service Company (ESCO) can control. For example, a lighting contractor can control providing a product that meets a certain wattage and which lasts a certain number of hours. The wattage can easily be measured and the contract can be written to hold the ESCO responsible for fixtures that pass a certain failure threshold. On the other hand, the ESCO has very little control over how long the tenant keeps the lights on.

Focusing on individual ECMs also makes it easy to attribute savings to the measures, diagnose issues, and make adjustments to savings. If planning minor changes, it is easy to estimate magnitude by adjusting individual variables in the savings equations.

Inherent Challenges. Sampling is often needed for common ECMs because an ESCO cannot measure and verify thousands of fixtures spread out across dozens or even hundreds of buildings. A major challenge with sampling is focusing on locations that are easier to access. For instance, in one ESPC that changed out water fixtures in residential spaces, the ESCO and NAVFAC Far East ended up sampling empty rooms in order to avoid coordinating access to occupied rooms and disturbing residents, and because the project had a short timeline. However, this approach could introduce bias and eliminates the possibility to collect information on the frequency of residents tampering with fixtures.

Sampling can miss outliers as well. Energy savings matters follow the Pareto Principle, in that 20 percent of the buildings often account for 80 percent of the problems. Sometimes sampling will catch these outliers, but costs escalate quickly as precision is tightened in a sample.

Additionally, current measurement and verification reports come out annually. In cases where the ECM is not continuously analyzed (like a chiller that is monitored by a SCADA controls system) this means having issues with both frequency and learning.

Using billing data to create calibrated whole-building models allows for a more holistic view of savings and impacts. NAVFAC FAR EAST IMAGE


Whole-building measurement and verification focuses on using billing data to create a model of the facility taken in total. A whole-building model that is particularly useful for ESPCs is the forecasting method.

Modeling Advantages. A billing analysis can give continuous and near real-time feedback. Models can be updated every month with billing data, meaning an installation energy manager does not have to wait for an annual report; they can experiment, measure, and adjust on a much shorter cycle. It also provides faster feedback for diagnosing issues. If the model starts showing higher than expected energy use, it should prompt the question of why, particularly if operations have not obviously changed.

Billing analysis measurement and verification is relatively cheap compared to direct ECM measurements, particularly if an ESCO can automate the data collection or entry. There are even some packaged services that will bring in billing data and detect issues.

Compounding Complications. Problems may arise when measures are layered on top of other ECMs and interactive effects begin to arise. Measuring the whole building energy use trades attribution for ease of measurement.

Additionally, billing data models need significant changes to see the signal through the noise. The effect of replacing a few lights is likely to be washed out in a whole-building model. Even on a well-calibrated model, it is hard to detect energy changes smaller than 4 to 5 percent of annual energy use.

Even for facilities with small expected savings, whole-building models can still provide valuable feedback on the effects of actions and help diagnose issues. Alternatively, it can allow installation energy managers to see the energy effects of teleworking as they navigate the COVID-19 pandemic.

Another challenge is achieving a reasonable calibration. In the vast majority of cases, weather data alone is sufficient, but there will be cases where additional variables are needed. Even then, some buildings may prove to have energy usage fluctuations due to variables that are hard to quantify or record. Additionally, buildings that are either remodeled or modified (as many on military installations are) will need to be re-baselined.


The evaluation approach does not need to be an either/or decision. A strong argument can be made that an ESPC should have both. An ECM-focused approach can be taken when granular data is needed. It is also valuable for holding an ESCO accountable. Conversely, a whole-building approach allows energy managers to communicate the bigger picture and directly measure the bottom line. If energy managers want learning organizations that see, understand, and adapt, this is another available tool.

By understanding which approach best suits the needs and desired outcomes, installation energy managers will be better positioned to make informed decisions.

Knud Hermansen, P.E., CEM, M.SAME, is Energy Savings Performance Contract Project Manager, NAVFAC Far East;

[This article first published in the March-April 2021 issue of The Military Engineer.]