Evaluation, measurement and verification (EM&V) is a set of practices and protocols to test the impact of energy efficiency measures, projects and programs. EM&V helps regulators ensure that energy efficiency program administrators are meeting their targets, ratepayer funds are being spent judiciously and that EE programs are cost-effective. Non-regulated efficiency providers conduct EM&V to ensure that their customers are receiving the intended benefits from energy efficiency projects.
Program administrators rely on three major categories of EM&V: quasi-experimental methods (such as randomized controlled trials), project-based measurement and verification and deemed savings. The use of deemed savings, or stipulated metrics associated with well-understood energy efficiency measures, is particularly prevalent. Where deemed savings are used, they are often documented in a Technical Reference Manual (TRM).
New data analytics technologies allow for measurement of savings at the meter, called EM&V 2.0 and can be deployed with or without advanced metering.
Net Savings v. Gross Savings
When evaluating the savings attributed to ratepayer-funded efficiency programs, policymakers must decide whether to consider net or gross energy savings. Gross savings are the change in energy demand attributed to an energy efficiency program for actions taken by customers, regardless of whether the program influenced the customer to take the action or not. Net savings are the subset of the gross savings that are directly attributable to an energy efficiency program. For a discussion of the pertinent issues concerning each approach to accounting for savings, see MEEA’s report on the subject.
Summary of Net vs. Gross in the Midwest
|State||Net or Gross Reported|
|Nebraska||Varies by utility|
|North Dakota||No program reporting has been identified|
|South Dakota||Varies by utility|
Cost Effectiveness Tests
EM&V feed into utility and regulator assessments of energy efficiency program cost-effectiveness, also known as benefit-cost analysis (BCA). The tests that are traditionally used in evaluating the cost-effectiveness of energy efficiency programs, originated in the California Public Utility Commission’s Standard Practice Manual (CaSPM), last updated in 2001. These tests – known as PAC, TRC, SCT, PCT and RIM – are listed below. The PAC, TRC and SCT are typically used for primary screening of energy efficiency programs, while the other tests may be used for secondary considerations. The CaSPM is in common use around the country, but it is outdated and many experts consider it insufficient for current cost-effectiveness testing needs.
The 2020 National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources (NSPM for DERs) provides a comprehensive framework for cost-effectiveness assessment of DERs. The manual provides a set of policy-neutral, non-biased, and economically-sound principles, concepts, and methodologies to support single- and multi-DER benefit-cost analysis for: energy efficiency (EE), demand response (DR), distributed generation (DG), distributed storage (DS), and (building and vehicle) electrification. The manual is intended for use by jurisdictions to help inform which resources to acquire to meet the jurisdiction’s specific policy goals and objectives.
The NSPM for DERs incorporates and expands upon the 2017 National Standard Practice Manual for Assessing Cost-Effectiveness of Energy Efficiency Resources (NSPM for EE). Jurisdictions and interested stakeholders are encouraged to refer to the NSPM for DERs to guide BCA efforts in their jurisdiction, whether for a single DER type (including EE) or multiple DER types.
Comparison of Cost-Effectiveness Tests
Jurisdiction-Specific Test (JST)
- Perspective: Regulator / decision-makers
- Key Question Answered: Will utility system costs be reduced, while achieving applicable policy goals?
- Categories of Costs and Benefits Included: The utility system costs and benefits, plus those costs and benefits associated with achieving relevant applicable policy goals
- Developed for a jurisdiction using the framework in the NSPM for DERs.
- Originally known as the RVT (Resource Value Test) in the 2017 NSPM for EE
Program Administrator Cost Test (PAC)
- Perspective: The utility system
- Key Question Answered: Will utility system costs be reduced?
- Categories of Costs and Benefits Included: The costs and benefits experienced by the utility system
- Originally knows as the UCT (Utility Cost Test), changed in the California Manual in 2001.
Total Resource Cost Test (TRC)
- Perspective: The utility system plus participating customers
- Key Question Answered: Will utility system costs plus program participants’ costs be reduced?
- Categories of Costs and Benefits Included: The costs and benefits experienced by the utility system, plus costs and benefits to program participants
Societal Cost Test (SCT)
- Perspective: Society as a whole
- Key Question Answered: Will total costs to society be reduced?
- Categories of Costs and Benefits Included: The costs and benefits experienced by society as a whole
Participant Cost Test (PCT)
- Perspective: Customers who participate in the energy efficiency program
- Key Question Answered: Will the participant’s costs be reduced?
- Categories of Costs and Benefits Included: Costs and benefits to program participants
Ratepayer Impact Measure (RIM)
- Perspective: All utility customers, including participants and non-participants
- Key Question Answered: What will happen to customer rates due to the efficiency program?
- Categories of Costs and Benefits Included: Compares utility revenues and operating costs from the efficiency program, including utility incentives
Summary of Cost-Effectiveness Testing in the Midwest
The table below provides a simple overview of which tests are used in each Midwest state. This listing does not include the full detail on the legislative and regulatory requirements for those tests, which impacts are included in each state's testing, or other details on how cost-effectiveness testing is actually performed. That information is available, however, in the NESP's Database of State Efficiency Screening Practices (DSESP). The DSESP provides information regarding state cost-effectiveness screening practices for utility customer-funded electric efficiency programs for 52 states and jurisdictions. States can use the DSESP to learn about other states’ practices, and readily access and better understand policies, processes, and studies that support assumptions used by states in their benefit-cost analyses.
|State||Primary Test||Other Tests Used|
|Indiana||TRC||PAC, PCT, RIM|
|Iowa||TRC||SCT, UCT, PCT, RIM|
|Kansas||TRC||PAC, PCT, SCT, RIM|
|Kentucky||TRC||PAC, PCT, RIM|
|Michigan||PAC||TRC, PCT, SCT, RIM|
|Minnesota||SCT||PAC, PCT, RIM|
|Missouri||TRC||PCT, SCT, RIM|
|South Dakota||Varies||TRC, RIM, PAC, SCT, PCT|
|Wisconsin||TRC||PAC, SCT, RIM|
EM&V at the Regional and National Level
A number of regional and national efforts are attempting to create a more standardized approach to EM&V. In the Northeast and Mid-Atlantic, the Northeast Energy Efficiency Partnerships (NEEP) convened a regional EM&V Forum. NEEP is bringing together stakeholders "to support the development and use of consistent protocols to evaluate, measure, verify and report the savings, costs and emission impacts of energy efficiency and other demand-side resources." Building on the efforts in the Northeast, the U.S. Department of Energy (U.S. DOE) has launched the Uniform Methods Project to "establish easy-to-follow protocols based on commonly accepted engineering and statistical methods for determining gross savings for a core set of commonly deployed energy efficiency measures." In addition, U.S. DOE is also addressing EM&V protocols through the State and Local Energy Efficiency Action Network (SEEAction) Evaluation, Measurement and Verification Working Group.