For the past 20+ years most energy efficiency programs have relied on “measures-based” approaches to reduce energy consumption and peak demand on the grid. These approaches originated from the lighting side, where light bulb changeouts provided measurable reduction in energy use.

On the HVAC side, the results have not been so good. Power reduction goals have not been met, and worse, peak demand is not dropping. Many cities still experience rolling brownouts and other grid disruptions.

Perhaps utilities could purchase  ‘energy credits’ — similar to carbon credits —from the providers.

In the name of expediency and “scale” to get large numbers, regulators applied a “deemed” approach to HVAC that incentivizes things like equipment replacement, add-ons, and maintenance. This deemed approach originated in California, and has been in use in many states over the past two decades. The approach is based on assumptions and computer modeling, and doesn’t directly measure how HVAC systems in homes and buildings impact the grid. California for example, funded the development of a database called DEER (Database for Energy Efficiency Resources), and uses deemed savings calculations as the measuring stick for energy reduction. Many other states have followed suit using the DEER database or similar computer-modeled programs.

Some state legislators and utility commissions seem to be finally catching on that energy reduction from HVAC has been disappointing. The Measurement and Verification (M&V) consultants who are hired to determine if savings are really occurring, continue to discount the allowable savings in these programs. Their assessment is likely true, as most programs are still based on just swapping out old equipment or performing other measures with little accountability or measurement of delivered performance.

In September, 2015, California  introduced Assembly Bill 802, which could represent a sea change in how energy efficiency is measured. In a nutshell, the bill will push regulators towards verification of energy reduction at the meter. At the legislative level, California is starting to recognize that unless reductions are verified at the meter and end-use customers get real-time reporting about their energy consumption, the state will continue to experience outages and require more power generation and transfer of power across the grid.

In this new environment, if utilities continue to use traditional deemed methods in their energy programs, they will see disappointing results at the meter.

In this new environment, if utilities continue to use traditional deemed methods in their energy programs, they will see disappointing results at the meter. Unless the HVAC contractors in these programs actually measure and deliver real performance improvements, they will miss the mark again. In the real world, the industry must be able to see the value of delivering a better product to customers. The results are increased revenue and better profit margins. Without this vision, most will continue to do the bare minimum to comply with whatever measures are dictated by the programs — if they participate at all.

A Market-based Solution
So is there a better way? Absolutely! States must allow open competition for energy savings. This way smaller, nimbler, and highly skilled third parties can work with the HVAC industry to deliver real performance verified through technology-based software – not checklists. These parties could be compensated with performance incentives from those savings, and share them with the contractors who directly impact the energy consumption in each home or building.

Perhaps utilities could purchase “Energy Credits” (similar to Carbon Credits) from the third-party providers. The providers could earn and share these credits from the results of work performed by each HVAC service company as measured at the meter. By opening the market to multiple players, you get higher value from competition.

Once a system operates within manufacturer’s specs, and delivers balanced comfort throughout the space, occupants will more likely set thermostats to use even less energy.

Consumer behavior is also key to getting long-term energy savings at the meter. When systems work well, consumers stop compensating for comfort issues. Once a system operates within manufacturer’s specs, and delivers balanced comfort throughout the space, occupants will more likely set thermostats to use even less energy.

The most comfortable system is one that goes unnoticed, and there’s no need to play with thermostats or use other methods to stay comfortable. If performance and comfort become the focus of programs, this behavioral aspect could result in even higher savings than initially anticipated.

Regulators, utility companies, and program implementers should listen more closely to the HVAC industry. They’ve done it the deemed way for more than two decades, maybe it’s time they tried an industry-driven approach.

Dominick Guarino is CEO of National Comfort Institute (NCI), (www.nationalcomfortinstitute.com), one of the nation’s premier Performance-Based™ training, certification, and membership organizations, focused on helping contractors grow and become more profitable. His e-mail is domg@ncihvac.com. For more info on Performance-Based Contracting™, go to WhyPBC.com or call NCI at 800/633-7058.