Let's say you buy a car that is promoted as having a fuel efficiency of 25 miles per gallon. One day you take it through town and it seems to be using as much gas as advertised; another weekend, you drive it through some mountain passes in the Rockies and it seems to be less efficient than your dad's gas-guzzling muscle car. And maybe every time your seventeen-year-old takes it down to the store around the corner, it comes back with an empty tank.

Obviously, you’re getting different performance depending on weather, road conditions, driver behavior and many other factors. This is real world performance that you're actually paying for (at the pump). In contrast, the advertised MPG is a standardized value based on an average person driving in average conditions. The listed MPG is useful; it helps you compare how different cars perform under similar conditions. In reality, it doesn’t necessarily reflect actual performance.

This analogy isn't perfect, but it‘s close enough to help us understand the distinction between a couple of different ways of measuring energy efficiency savings. Understanding these differences and best use-cases for different approaches helps to ensure that parties are using the best metric for a particular goal.

Metered Payable and Normal Year savings represent two related but slightly different approaches that each have important uses.

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Metered Payable Savings: What Actually Happened

In the context of pay-for-performance efficiency programs, metered payable savings represent the total measured energy reduction associated with an energy efficiency project or set of projects. This is like the MPG that actually gets reflected in how much you spend on gas for your car. That’s why it’s used as the performance metric in pay-for-performance settings and non-wires alternatives procurements. In these applications, the actual impact on the grid is what matters, rather than an idealized estimate.

Metered Payable savings are calculated by first analyzing the relationship between energy consumption and outdoor temperature from the 12 months prior to the intervention to determine what consumption would have been if the intervention had never happened. That figure is then subtracted from the actual energy used over a set period of time after the project was completed (the “reporting” period) to yield metered payable savings.

This is the approach used for CalTRACK, a set of open methods that are now being used to calculate payments for PG&E’s pay-for-performance efficiency program as well as for pay-for-performance pilots now being launched around the country. Using metered payable savings is important because the main purpose of CalTRACK is to facilitate the transition of energy efficiency into a true grid resource.

Normal Year Savings: What Would Happen in a “Typical” Year

Where metered payable savings represents actual savings observed since project completion, “normal year savings” represents savings that would be observed in a typical meteorological year.

This “normal” weather year is a composite of recent actual weather years, which is typically updated every five to ten years. This approach allows for apples-to-apples comparisons--savings are measured for the same amount of time, and there is less worry about unusual weather.

This makes normal year savings more similar to the standard advertised MPG on your car, and is, therefore, a reasonable approach for retrospective program review and for long term demand forecasting, including efficiency initiatives.

Normal year savings are appropriate for forecasting, however, they do not determine the real grid impact and planning.

To get an idea of how backcasting efficiency works, check out our free OpenEEmeter web tool.