Step 5 - Project Performance

In the last step, the ESP will monitor energy savings, deliver annual reports, and repair or reimburse you for any shortfalls in the guaranteed energy savings.

Monitor Project Performance

Following the successful installation of the agreed-upon improvements, the ESP will perform ongoing project monitoring for a minimum of three years per Montana’s statute. During this initial monitoring period, you and your organization will absorb all measurement and verification (M&V) costs associated with this monitoring. However, if it is ever shown that there is a shortfall in savings for any year within this period, the ESP must then pay for any additional M&V for the years following the initial period until:

  • Guaranteed savings are met for consecutive years equal to the initial monitoring period, or
  • You and the ESP can negotiate a settlement regarding the shortfall for all future years of the contract term.

During the initial period, it is required that the ESP complies in full with all requirements of the EPC as originally negotiated. These requirements should include (but not necessarily be limited to):

  • Measurement and verification reporting and services
  • Guarantee of performance and cost savings
  • Maintenance and/or repair of equipment
  • Training for facility personnel on maintenance and systems operations
  • Training for occupants

Additionally, the ESP is required to supply both you and DEQ with a minimum of three annual M&V reports providing detailed information on the project and project performance.

Measurement & Verification (M&V) Protocols on Agreed-Upon Frequency and Basis

M&V needs to follow the guidelines established in the International Performance Measurement and Verification Protocol (IPMVP). For more complete information on how to apply the IPMVP, Department of Energy has developed the Federal Energy Managment Program (FEMP) M&V Guidelines. See Measurement and Verification (M&V) Guidelines for more information on the M&V process and requirements for Montana. The ESP determines the units of energy and water saved by the cost-saving measures as well as any O&M cost savings due to the CSMs. These measured savings are then compared to the guaranteed savings to determine whether or not the savings guarantee has been met. If the measured savings are less than guaranteed, then the difference is multiplied by the baseline unit costs and any escalation rates included in the EPC, regardless of any guarantee of escalation rates.

For each year of the guarantee period, the ESP will submit the annual M&V report to you and send an electronic copy to DEQ. The format of the report is provided in the Annual M&V Report Outline. You and our office will review and provide comments to the ESP. The ESP addresses the comments, finalizes the report, and sends an electronic copy to you and our office. If the guaranteed savings are not met during any year of the guarantee period, the ESP shall pay your entity the difference between the actual (measured) savings and the guaranteed savings. If the guaranteed savings are not met for any year in the initial monitoring period, then the ESP is responsible for the M&V costs until guaranteed cost savings are achieved for a term of consecutive years equal to the initial monitoring period.

If the actual (measured) savings exceed the guaranteed savings in any year of the guarantee period, the excess savings shall remain with your entity. Excess savings may not be used to offset any shortfall in previous or subsequent years of the guarantee period.

Modifications to the M&V process during the guarantee period are limited to those mutually agreed to by you and the ESP. In the event of a shortfall, you and the ESP may negotiate the terms of M&V and the shortfall payment for the remainder of the EPC finance term.

You will need to inform the ESP of any significant changes in operation that could affect the savings calculations. The EPC contract should include a section that describes how potential changes will be handled during the guarantee period. Changes that may affect the savings calculations include:

  • Operating hours
  • Facility use
  • Equipment (new, removed, or additional)
  • Building addition, renovation, or demolition
  • Occupancy

At the end of the guarantee period, the ESP will provide a summary report to DEQ that includes basic project information – cost, financed cost, savings, etc. – using a form provided by DEQ. The ESP may also work with you to develop a complete marketing overview of the project, including photos and quotes, for sharing as part of DEQ marketing efforts. The case story may be posted on the DEQ website for EPC and post project results.