Ever hear the saying, “The easiest solution is always the best solution”? Right now, that approach is being used by many utilities to transition custom projects into prescriptive programs. One measure that is often converted is Energy Management Systems (EMS). This transition seems to be the best/easiest solution; projects can be completed for less cost with less “interference” from the utility, and with less uncertainty of incentive for the customer and the utility. But, is that really the case?
Processing EMS projects as prescriptive does have advantages. For example, it’s true that when treated as a prescriptive measure, there is more participation from EMS projects versus when they are treated as custom projects. This is due to several reasons: vendors or trade allies use the program to promote the technology, there is increased visibility for the technology in the marketplace in general, and customers have confidence in the incentive levels they will receive.
Prescriptive programs also generally have less cost, either per project, kWh, or therm of savings, for the utility. A custom program requires a thorough understanding of the effects an EMS installation will have on the specific building energy performance. Prescriptive programs remove that element so the utility does not need to burden the customer with multiple data requests or delays to verify savings levels.
Ignorance = Bliss
However, these advantages also come with a cost. For example, since the utility is not active in the project and working with the customer to understand and optimize the EMS, the opportunity to to achieve real, lasting impacts is lost. This is especially significant because many customers do not understand these systems or how they can save energy. The incentive, roughly equal to first year savings, occurs one time, but the building consumes energy year after year.
Even more important, the assumption that the same strategies for savings would be deployed in either program type, custom or prescriptive, is rarely true. Michaels has evaluated hundreds of EMS projects over the years and consistently found projects completed under custom programs have much more diverse and aggressive control strategies being implemented. These aggressive strategies result in greater savings, often as much as twice the savings for prescriptive EMS projects.
There are risks associated with either program delivery method for both the customer and the utility. For prescriptive EMS projects, the customer and utility have assurances of the incentive, but the actual deployed strategies and performance can vary tremendously. The customer risks poor cash flow for their operation, and the utility risks severe savings adjustments, especially when bidding program impacts into the forward capacity markets, as is the trend today.
For custom EMS projects, there is incentive for trade allies to perform. Come evaluation time, the utility is subject to comparatively minimal surprises. However, custom analyses must move quickly to maintain schedule, budget, and program participation rates. Great relationships with customers are the key to achieving this.