It’s Finally Winter And M&V 2.0 Is Snowballing Across the States

Over the last year we’ve seen a lot of developments around M&V 2.0. Utilities like PSEG Long Island proved that M&V 2.0 software can provide accurate, early, and indicative information on program savings. What’s most exciting is the progress that’s been made on the regulatory front. Ever since the emergence of M&V 2.0, evaluation veterans have repeated the same mantra, “if the regulators care, the industry will follow.” Slowly but steadily, that has proven true in states across the country. As regulators have learned about the benefits of M&V 2.0 and the emerging technologies that can be used to enhance how energy efficiency is quantified, measured, and valued, they have begun to drive policies that encourage it. While California and New York are leading the charge, other states are now taking M&V 2.0 seriously too, making 2016 an exciting year for the growth of continuous measurement.

Missouri and New Mexico

One state that has taken an early interest in M&V 2.0 is Missouri. The state of Missouri is in the midst of developing a statewide technical resource manual (TRM) to support the evaluation, measurement and verification (EM&V) of the state’s utility energy efficiency programs and has recognized that updates could be made simpler with the use of M&V 2.0 tools. M&V 2.0 can provide a thorough billing analysis of single measure or multi-measure projects that can be used to develop savings values for the new TRM. It can also be used to calibrate existing savings estimates to ensure the values are accurately reflecting the experience of customers installing energy conservation measures. Most importantly, the stakeholders that will be responsible for the new TRM can know that the analysis from M&V 2.0 tools are being generated from in-state projects. Because of these benefits, the state is exploring how M&V 2.0 tools can be used to support the new TRM and will kick off that process in the near future.

Another state that recently signaled an interest in M&V 2.0 is New Mexico. In New Mexico, the state’s regulators oversee the procurement of M&V services on behalf of the utilities. That empowers the state’s Public Regulation Commission (PRC) to determine what M&V tools will best fit the state’s programs and budget requirements. This year, the state determined that M&V 2.0 could provide value for utility energy efficiency programs. The request for proposals released by the PRC stated that responses may include “modern measurement software for the purpose of reducing the costs associated with M&V and providing utilities with a faster performance feedback for the purpose of improving certain programs.”

California

Followers of energy regulation often point to CA as a leading state that is pushing policies to drive innovation and technology. In the field of M&V 2.0, this same cliché holds true. In California, the public utilities commission (CPUC) recently finalized a series of orders and approvals that pave the way for M&V 2.0 to support energy efficiency programs. Untangling all of these documents is complicated, but here are the highlights:

August 2015: The CPUC released an order outlining a process for “rolling portfolios,” to reduce the inconsistency of the three year planning process and provide for a smoother delivery of energy efficiency to Californians. As part of this new process, improving the pace of EM&V reports is necessary; without three year plans, the rolling portfolio will need regular EM&V updates. The CPUC recognized how M&V 2.0 can support this new model in the order by calling for “evaluation preparedness,” that includes “data collection strategies embedded in the design of the program…to ensure…near term feedback and internal performance analysis during deployment.”

August 2016: The CPUC followed up this decision with another order that established the use of “normalized metered energy consumption” for measuring energy savings for many California energy efficiency programs. Because M&V 2.0 tools measure energy savings at the meter, this new policy opens the door for an increased use of M&V 2.0 tools to estimate savings.

Coming in 2017: The CPUC put policy into action with the approval of a proposed PG&E pay-for-performance pilot program that will depend on a standardized M&V 2.0 approach to estimate savings for payments. The program, which is expected to launch in 2017, will use an M&V 2.0 tool to analyze and display savings data on a dashboard for the utility and market actors involved in the pilot. The analysis performed by the M&V 2.0 is still subject to final sign-off by the CPUC, but the initial approval to use an M&V 2.0 tool to calculate savings and make payments based on those savings estimates is a significant step for regulatory approval of M&V 2.0. The approval of PG&E’s pilot signals trust from regulators that M&V 2.0 tools can provide thorough and rigorous analysis.

New York

Like California, New York’s Public Service Commission has released a series of documents calling for the use of technology and innovation to modernize EM&V. In NY, this has all been in the Reforming the Energy Vision (REV) proceeding that is remaking the energy utility landscape in the state. As part of these efforts, the Commission is also modernizing how energy efficiency is quantified.

The Commission released the first policy order for REV in February 2015. Buried towards the end of hundreds of pages was an important sentence, “As REV recognizes the pace of technology and its ability to redefine our electric system, so too can advances in technology be used to challenge and enhance our traditional approach to EM&V.” This was a clear message for the industry and was built upon in May of 2016 when the Commission released an order on financial incentives for utilities under REV. This order established energy efficiency as an “earnings adjustment mechanism, or something that a financial incentive would based upon. In the order, the Commission made clear that “additional [energy efficiency] earnings opportunities may be tied to program specific savings tied…to efficiency achievements that exceed minimum program targets….,” and that “Any earning adjustments related to net savings should be tied to advances in Evaluation, Measurement and Verification (EM&V) that utilize direct customer information.” This clearly signaled that the Commission was encouraging M&V 2.0 as a critical tool for estimating and valuing energy savings and a foundational tool for the future of energy efficiency.

The NY Commission followed the order with more detailed instructions. Last month, the Commission released a document outlining EM&V Guidance with a section dedicated to encouraging and defining “Advanced M&V.” It also explained how the costs of M&V 2.0 tools that support program optimization and measurement can be shared across budgets for implementation and evaluation. Most importantly, it makes clear how NY can reduce evaluation costs by using trusted M&V 2.0 tools to estimate savings that can be reported to the Commission in between formal evaluation cycles.

Connecticut

Last, but certainly not least, the nutmeg state is diving head first into the field of M&V 2.0. Connecticut is not just working on M&V 2.0, it is seeking to lead the nation in the field and plans to launch pilots that will serve as public demonstrations of the technology. In August, the CT Department of Energy and Environmental Protection announced the receipt of a grant from the U.S. Department of Energy to pilot M&V 2.0 in partnership with Lawrence Berkeley National Lab and the Northeast Energy Efficiency Partnerships (NEEP). The grant will explore M&V 2.0 for both the commercial and residential sectors. The goal of the grant is to test how M&V 2.0 compares to traditional M&V, methods to scale M&V 2.0., application of standardized methods and reporting for M&V 2.0, and working with other states, including Rhode Island, New Hampshire, Vermont, Delaware and Washington D.C., how to increase the “use of M&V 2.0 to support EM&V”.

To prepare for the pilots, NEEP held two planning workshops throughout 2016 with regulators, utilities, stakeholders and experts. Those workshops outlined how best to proceed with the pilots so that valuable and actionable information could serve the policy makers and the industry. The project kicks off in 2017 and is poised to provide valuable information for Connecticut and other states to follow.

M&V 2.0’s next state…

It’s clear that state regulators are taking M&V 2.0 seriously. In addition to the policy changed highlighted above, Virginia, Washington and Oregon held day-long workshops in 2016 that focused on M&V 2.0 or pay-for-performance programs that will require M&V 2.0. Demonstrating that the policy is moving the industry forward, and at the same time, the industry is moving the policy forward.

With the strong momentum that gathered over the last year, we can expect more states to make 2017 the year for M&V 2.0.