Last week I attended an EDF-sponsored workshop discussing the firm's new Investor Confidence Project (ICP). The ICP is focused on encouraging more lenders to finance the building energy efficiency market.

Just as mortgage-backed lenders need evidence that underlying mortgages are being paid, lenders for comprehensive energy efficiency projects need data to show that these loans will “perform.” So the ICP asks market participants to voluntarily provide their current energy project performance data using their newly developed Energy Efficiency Performance Protocol (EEPP). The EEPP gives everyone a standard way to present their energy savings performance, which allows this anonymous, pooled data to be reported to the investor community.

With a focus on comprehensive building energy savings, the EEPP defines deep retrofits as “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).”

A few years ago, the term "deep retrofit" came into vogue amongst politicians, energy efficiency vendors and even homeowners. The residential visual was a strong one, with new energy-efficient stuff like windows, insulation, and a shiny boiler in the basement. For the commercial/industrial market, the image was a smart building -- with upgraded HVAC and LED lighting, all managed by an intelligent, weather-sensitive computerized energy management system which made energy efficiency decisions automagically.

But beyond the visual, many building owners have been left asking the question, "What's deep for my building?”

Technicians say "deep" is a retrofit driving a reduction in a building’s energy use by 50 percent to 75 percent.

However, the practical challenge with deep retrofits is that they’re really complex to model -- which makes them harder for customers to believe.

Deep retrofits involve multiple energy conservation measures (ECMs), each of which has a relative impact on the other measures. They involve lots of assumptions about how the building will operate versus how it operates currently. Depending on which engineer develops your building energy model, the same measures can yield very different savings and returns.

In traditional ESCO contracts, the project developers list out all of the individual ECMs, then work with the customer to get approval for as many as possible (which increases the size of the overall ESCO deal). But as these projects are funded by tax-exempt bonds, the main delimiter is only the term of the bond that can be issued. A 20-year bond allows more ECMs with a longer payback -- a “deeper” retrofit. A 15-year bond cuts a bunch of ECMs out of the retrofit, so it is less deep.

In these ESCO projects, the most vague ECM is always the building management system (BMS) from a firm like Johnson Controls/Metasys or Schneider/TAC, which magically add controls with configured software to generate additional energy savings. Needless to say, the whole building energy model which calculates the impact from this optimized BMS makes a lot of assumptions.

Even with less deep retrofits, the energy modeling involves a lot of subjective decisions.

Recently we installed new internet-based thermostats, rooftop unit (RTU) optimizers, demand control ventilation (DCV), and dual enthalpy economizers at a customer’s retail facility. The overall financial return was fast, but each ECM looked even better on a standalone basis than when we modeled them all together.

If smart thermostats prevent the HVAC from unnecessarily running on the weekend, the other ECMs save energy for just five, not seven days per week. Likewise, if we model the RTU optimizer’s impact first and then added thermostats, the thermostats impact only the now-reduced load of an optimized RTU. Keep adding DCV and economizers and each successive ECM has a lower impact depending on what you modeled before it.

Do this for all twenty-four combinations of the ECMs and each blended return will be different. Oh, and don’t forget that some utilities pay higher rebates for low payback measures, or issue custom rebates for packages of ECMs.

So when going “deep,” building owners need to be knowledgeable enough to understand the basic interdependencies involved in the building energy modeling process -- or run the risk that, in the end, they have to sign up for “just trust me” from their energy efficiency salesman.


Jon Guerster is the CEO of Groom Energy Solutions. This piece was first published on Groom's blog.