Application of Risk Analysis to Evaluating M&V Requirement for Energy Efficiency Program

Abstract

Since 2005, CIPP of New York Energy Smart has waived the monitoring requirement for lighting projects with small projected savings that are 600,000 kWh/yr or less. There is potential to further increase the threshold savings with additional administrative efficiencies, but also with increased risk that the estimated savings may not be realized. This paper presented a risk analysis of the threshold for small lighting projects by running a Monte Carlo simulation. The preliminary result of this study shows that increasing the size of lighting project savings for which M&V is waived to 1,400,000 kWh per year would introduce an error of only ±5% to the sum of all lighting savings. The error introduced at the program level would be approximately ±2%. The lessons from this experiment may be used to conduct large-scale risk analysis to optimize evaluation cost allocations for more complex energy efficiency program portfolio.