The role of measurement and verification in Eskom Integrated Demand Management´s Performance Contracting initiative

Eskom Integrated Demand Management (IDM) has taken positive steps to amend the existing Energy Efficiency Demand Side Management (EEDSM) Programme with a Performance Contracting initiative that have been launched during the middle of 2011. The objectives of the performance contracting initiative are to leverage large blocks of sustainable savings whilst facilitating predictable and rapid delivery of savings. It would also stimulate local market development and include less administration. Energy efficiency projects are implemented to achieve reductions in energy consumption, and ultimately cost savings for the stakeholders. The performance contracting programme will have many similarities with the existing EEDSM programme, but will also have unique features and challenges. The project developer (PD) designs, installs, finances and operates the new technology or energy efficiency programme. The project developer is then paid by Eskom IDM according to the measured and verified electrical energy savings achieved i.e. the performance, over the contractual life of the performance contract. The basis of a successful performance contracting projects rests on the fact that impacts can be determined to a degree of accuracy, trust and cost that is acceptable to all stakeholders. This process is known as measurement and verification (M&V). M&V is a mechanism that protects the various stakeholders in the process. M&V therefore will make a critical and essential contribution towards the successful implementation of IDM´s proposed performance contracting programme in South Africa. This article will firstly explain the basics of the performance contracting initiative and then focus on the role that M&V will have to play within it.