ISO New England Demand ResourceMeasurement & Verification Standards Manual Overview

April 11, 2007

NAESB Development of DSM/EE Business Practices Washington, DC

Henry YoshimuraISO New England

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Discussion Topics

• What is the Forward Capacity Market (FCM) and how does it work?

• Can Demand Resources participate in the FCM?• What are ISO New England’s Measurement and

Verification requirements for Demand Resources participating in the FCM?

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Forward Capacity Market Background

• The Forward Capacity Market (FCM) will be used to procure capacity to meet New England’s forecasted demand and reserve requirements three years into the future.– The design of the FCM resulted from a Settlement

Agreement signed on March 6, 2006.– The Settlement Agreement was approved by the

FERC on June 16, 2006.– Detailed FCM Rules were filed with the FERC on

February 15, 2007.

• Generation and Demand Resources may participate in the FCM.

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Demand Resources in the FCM

• Stakeholders recognized that the Installed Capacity Requirement can be met by increasing supply or reducing demand.

• An extensive stakeholder process was used to develop the rules for Demand Resource participation in the FCM and to develop Measurement and Verification requirements.

• Demand Resources are installed measures (i.e., products, equipment, systems, services, practices and/or strategies) that result in additional and verifiable reductions in end-use demand on the electricity network in the New England Control Area. – Such measures include Energy Efficiency, Load Management,

and Distributed Generation.

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Forward Capacity Auction Objectives

• The FCM uses a competitive Forward Capacity Auction (FCA) process to determine which resources to buy, how much to buy, and how much to pay.

• The FCA select a portfolio of Generation and Demand Resources to meet Installed Capacity Requirements.

• All resources that clear the auction are paid the market-clearing price ($/kW-month), subject to performance incentives and penalties.

• To encourage investment, new resources can receive a long-term commitment (up to 5 years).

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Demand Resource Performance

• Different technologies – i.e., Energy Efficiency, Load Management, and Distributed Generation – reduce load in different ways.– Passive versus active (i.e., dispatchable)– Weather sensitivity– Demand reduction versus energy output

• The FCM rules were developed to recognize the:– Differences among Demand Resource types, and– The needs of the system in meeting Installed Capacity

Requirements.

• Each Demand Resource type must reduce load so as to reduce the need for generation capacity.– Each of five Demand Resource types has a specific set of

performance hours across which load reductions would be measured and verified.

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Qualification Package

• To qualify for the Forward Capacity Auction, the resource must demonstrate that it is viable.

• Demand Resources must submit a Qualification Package including:– Project Description

• Minimum Project Size = 100 kW• Must be located in a single Load Zone

• Source of Funding• Customer Acquisition Plan and Critical Path Schedule• Capacity Commitment Period Election

• Maximum 5 Years for New Capacity

• Measurement & Verification Plan

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Measurement & Verification Plan

• Measurement & Verification Plan describes the methods, assumptions and measurements that will be used to determine actual demand reductions during the Commitment Period.

• Measurement & Verification Plan must comply with the requirements in ISO New England’s Manual for Measurement and Verification of Demand Reduction Value from Demand Resources (M-MVDR).

• The NEPOOL Markets Committee approved M-MVDR on February 22, 2007; the NEPOOL Participants Committee is scheduled to vote on M-MVDR on April 13, 2007.

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M&V Standards Manual - Overview

• The M&V Standards Manual consists of the following sections:1. Project Description Requirements2. M&V Methodologies3. Statistical Methods4. Measurement of Demand Resource Project Savings5. Data Collection, Validation and Management6. Reporting, Independence, Supplemental Information,

Project Organization7. Real-Time Demand Response and Real-Time

Emergency Generationa. Calculation methodology for demand response is the same as that

described in the present Load Response Program.

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Demand Reduction Value Calculation Methodology

• Description:– The Project Sponsor must describe in their M&V Plan how the

Demand Reduction Value during performance hours will be calculated, including calculations for the Baseline and post-

installation electricity consumption.

• Requirements:– Demand Reduction Value calculations must achieve at least

a 10% relative precision and an 80% confidence interval.

– Include aggregate electrical energy reduction (MWh) during performance hours on a Load Zone basis.

– Identify the Baseline(s) used in the calculation, and make adjustments to reflect operating conditions during performance hours.

– Include formulas for calculating the Demand Reduction Value.

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Option A: Spot or Short-Term Measurement with Stipulated Values

• Description:– The approach is intended for DR projects where either performance or

operational factors can be measured on a spot or short-term basis during pre- and post-installation periods.

– Demand Reduction Value is stipulated based on engineering assumptions, analysis of historical data, or manufacturer's data.

• Requirements:– Stipulated factor must not be subject to fluctuation over the performance

hours or Measure Life of the Demand Resource.– Requires baseline measurement calculations.– Project Sponsor must demonstrate a correlation between the metered

proxy variables and energy consumption (MWh) during performance hours.

• Example:– Measuring HVAC system temperatures and flow rates to calculate MWh

consumption using manufacturer’s equipment data.

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Option B: End-Use or System Interval Metering

• Description:– Demand Reduction Value is measured at the component or system level

using interval meters installed on the affected end-use.

• Requirements:– The Project Sponsor must measure factors continuously during the

performance period and Measure Life of the resource.

– Requires baseline measurement calculations.

– Consideration must be given to the possibility of interactive effects that may significantly alter loads on other end-use equipment.

• Examples:– Measuring the MWh output of a Distributed Generator during

performance hours.

– Measuring the MWh consumption of a large electric motor.

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Option C: Whole Facility Metering

and Analysis • Description:

– Demand Reduction Value is determined by studying overall energy use in a facility and identifying the impact of the implemented measure on total building or facility energy use patterns.

• Requirements:– Interval metering of facility MWh consumption during performance hours.

– Requires baseline measurement calculations .

– Approach may not be appropriate if the Demand Reduction Value is expected to be small relative to the total facility load, due to the small “signal-to-noise” ratio.

• Example:– Residential weatherization measures reducing air-conditioning load.

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Option D: Calibrated Simulation

• Description:– Demand Reduction Value is determined using calibrated computer

simulation models of either a system or whole building energy consumption to determine measure energy savings.

– Engineering simulation models (such as DOE-2) can model both residential buildings (homes, apartments and condominiums) as well as more complex commercial buildings.

• Requirements:– Simulation models must be calibrated to actual kW and kWh data from

the site or process being examined.

– Requires baseline measurement calculations or simulation.

• Example:– Installation of high efficiency HVAC and control systems in new

construction project.

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Baseline Conditions

• Description:– A DR Project’s Baseline is an estimate of the amount of

electricity that would have been consumed during performance hours had the DR Project not been implemented, all other conditions remaining the same.

• Requirements:– The Baseline methodology will be dependent on the proposed

DR Project and Demand Resource type. – The Baseline must be based on measurement, or applicable

codes or standards.– Baseline must be reflective of operating fluctuations as it

relates to the use of the equipment or practice over performance hours and may include such things as production, occupancy, weather dependant variables, equipment related variables (load and efficiency).

600

800

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1,200

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1,600

1,800

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Hour

kW

Baseline Adjusted Actual

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Measurement, Verification, Reporting of Savings

• Direct Measurement• Indirect Measurement• Statistical Sampling• Auditing• Testing• Independent Verification• Validation• Data Retention• Reporting

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Direct Measurement

• Description: Measurement of electrical demand (kW) that are used in the

calculation of equipment or facility electrical consumption.

• Requirements:– The measurement of demand (kW) must use a true RMS

measurement device with an accuracy of at least 2%. – Demand measurements for three-phase devices should be

conducted on all phases in order to account for any phase imbalance.

– Data recorders shall be synchronized in time with an accuracy of +/- 2 minutes per month.

– Distributed Generation must provide real-time metering for determination of Monthly Demand Reduction Value.

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Indirect Measurement

Description: Measurement of volts, amperes, temperature, flow rates or other

variables that are used in the calculation of equipment or facility electrical consumption.

Requirements:– If alternative methods of measuring demand are proposed (i.e.

proxy variables, voltage, current, etc.) the calculated demand (kW) values from the monitoring data should achieve an accuracy of 2% on the calculated demand (kW).

– If the proposed methods rely on the measured current (amps) and the nominal voltage, the power factor of the end-uses must be included in the demand (kW) calculations.

– Instruments or transducers for the analog or digital measurement shall conform to appropriate ANSI standards or equivalent.

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Monitoring Interval and Period• Description:

– The Project Sponsor shall, describe in their M&V Plan the monitoring frequency and duration for each monitoring parameter and variable.

• Requirements:– The duration and frequency of metering and monitoring must be

sufficient to ensure an accurate representation of the amount of energy used by the affected equipment both before and after project installation and during performance hours depending on the Demand Resource type.

– The measurements must be taken at typical system outputs within the time periods and frequency that shall demonstrate coincidence with performance hours depending on the Demand Resource type.

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Statistical Sampling

• Description:– The Demand Reduction Value from multiple installations of similar

Demand Resources may be developed by sampling from the total population.

• Requirements:– Specify the population to be sampled,– Samples must be sized and selected to achieve 80% Confidence ±

10% Precision, (t = 1.282)– Describe the planned sample size, plus contingencies for attrition due

to metering equipment failure and the like,– Show all calculations for determining the sample size,– Describe the method for selecting sample points, and– Describe the method for monitored the accuracy and precision of the

sample over the Measure Life.

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Evaluating the Sample Precision

• Description:– During the first year of a DR project, a default value for the

coefficient of variation (c.v.) may be used. However, after performance data has been collected, the Project Sponsor can estimate the c.v. of the population based on the data from a sample.

• Requirements:– The precision of sampling studies shall be calculated based on

the new estimated sample c.v. calculated from the sample mean and standard deviation.

– Minimum precision of 10% shall be met and sample numbers shall be adjusted to correct for lower precision from using the default c.v.

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Auditing• Description:

– Project Sponsors will have the right, pursuant to the Market Rules, to conduct an audit to demonstrate their Demand Resource’s capability.

– The ISO reserves the right to conduct unannounced audits or tests of a Demand Resource to verify its compliance with the technical requirements as set forth in the Manual.

• Requirements:– Audit must be conducted for a period of no less than two (2)

consecutive hours.– Audits must be conducted under operating conditions that the

Project Sponsor would reasonably expect during performance hours.

– The Project Sponsor must provide evidence that the audit was conducted under such operating conditions.

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Testing

• Description:– The ISO has the right to audit testing and calibration records, and

to order and witness the testing of metering and measurement equipment installed pursuant to the Demand Resource’s approved M&V Plan.

• Requirements:– The Project Sponsor shall describe in their M&V Plan the

equipment that will be used to measure the monitoring parameters and variables, including manufacturer’s specifications and equipment calibration and testing plans.

– The Project Sponsor will be responsible for the expenses of the meter testing.

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Independence

• Description:– The M&V implementation shall not be biased by any financial

interest in the results or efforts resulting from the implementation of evaluation recommendations.

• Requirements:– The Project Sponsor shall demonstrate independence of the

entity implementing the pre- and post-installation inspections of Demand Resource measures, such that the evaluation is independent of the Project Sponsors design, management and implementation.

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Data Validation• Description:

– Data validation checks are designed to identify problems with data collected from a measurement device and/or data recorder prior to submitting the data to ISO New England.

• Requirements:– Project Sponsors must perform, at a minimum, the following Data

Validation checks:• Time Check of the Meter and/or Date Recorder• Pulse Overflow Test• Sum Check• Spike Check• High/Low Usage Check• Meter Identification Check

– If data fails validation and/or is missing the Project Sponsor may substitute estimated data. The Project Sponsor must record the estimation algorithm used for each data element that is estimated.

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Data Retention• Description:

– For Projects involving facilities producing ≥ 10 kW of Demand Reduction Value, the Project Sponsor shall maintain records of each facility served including, at a minimum,

• The retail customer’s address, • The retail customer’s utility distribution company, • The utility distribution company account identifier, • Description of all measures installed, and • Monthly Demand Reduction Values.

– For Projects involving facilities producing < 10 kW of Demand Reduction Value, the Project Sponsor has the option of maintaining records of aggregated Demand Reduction Value and measures installed by Load Zone and meter domain.

– All Project Sponsors must maintain data until the end of the Measure Life, or until the Demand Resource is permanently De-Listed or retired from the Forward Capacity Market.

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Project Reporting

• Description:– The Project Sponsor shall describe in their M&V Plan how they

will prepare the reports required to comply with ISO New England’s monthly data reporting requirements.

• Requirements:– Monthly reporting shall consist of documents describing:

• Overall project status.

• Certification of measurement verification and compliance with statistical significance.

• Deviations from the M&V Plan and actions taken to correct deviations.

• Adjustments to Demand Reduction Value calculations (baseline, decommissioning, delisting).

– All data as described in the M&V Plan including raw and processed data.

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Questions and Discussion