Cost Avoidance Limitations
Over 25 years of experience has shown that EnergyCAP’s level of functionality is sufficient for 95% of corporate and institutional users who need a tool to estimate/approximate Cost Avoidance but who lack the time, expertise or inclination to delve deeper into the complexities of energy savings measurement & verification (M&V).
Those who desire more exacting engineering computations are typically either:
- Energy services companies that need more precise Cost Avoidance calculations
- Facility/mechanical engineers in complex facilities (hospitals, industrial plants, research buildings) and a need to adjust for independent variables other than the weather.
If you require these advanced features, you should consider a different M&V methodology:
- Automatically adjust for production (and other time-series ‘channel data’ such as occupancy, sales volume, etc.). Adjusting for multiple independent variables (weather plus production, for example) can be problematic because many more data points are needed for statistically acceptable regression analysis, so monthly utility bills are seldom sufficient. This means that daily consumption and production data are needed, and most organizations don’t have a good handle on historic baseline data of this type.
- Calculate Cost Avoidance using rate schedules rather than average unit price or marginal unit price. Admittedly, the average and marginal unit price methods available in EnergyCAP are limited when the rate is complex (such as time-of-use) or when the demand reduction is very different in magnitude than the consumption reduction. The problems with using a rate schedule to calculate Cost Avoidance include: (1) most users balk at the tasks of creating and maintaining unique and complex rate schedules, (2) complex rates often involve cost determinants that require special treatment outside the scope of EnergyCAP (such as power factor, time-of-use, hourly pricing, demand reduction incentives/penalties and reactive demand.)
