M&V 2.0 is Enabling a Negawatt Market

by Woodson Powell

California’s Senate Bill 350 (SB-350), passed in 2015, sets state targets of a 50% increase in building energy efficiency and 50% of electricity generated by renewables, both by 2030 [http://www.efficiency.org/negawatt-blog/new-california-laws-are-a-needed-paradigm-shift-for-energy-efficiency]. Most interestingly though, SB-350 proposes tracking efficiency by meter-based savings and authorizing pay-for-performance programs that are coupled with incentives for those savings. These changes are known as Measurement and Verification (M&V) 2.0, as first noted in 2014 [http://www.elp.com/Electric-Light-Power-Newsletter/articles/2014/02/em-v-2-0-new-tools-for-measuring-energy-efficiency-program-savings.html]. Using interval data, project savings determined from measured performance provide the ability to accurately value the benefits of energy efficiency, as opposed to the previous practice of using monthly utility data, which make it less clear to do a cause and effect analysis. For example, hour-to-hour measurements are much more informative, because it is easier to deduce what factors impacted energy savings during that interval. This change has created what is called a “Negawatt” market.

Negawatt power refers to the amount of watts saved as a result of increased energy efficiency or conservation. This negawatt market is analogous to a secondary market, where they are traded as a commodity between consumers. Due to the 2011 ruling of the Federal Energy Regulatory Commission (FERC), consumers can sell back excess megawatts at market price to utility providers [https://www.ferc.gov/media/news-releases/2011/2011-1/03-15-11.asp]. The M&V 2.0 process is allowing people to better understand at what parts of the day they have excess energy, and precisely what is causing these negawatts, improving the effectiveness of energy grids.

Due to SB-350 and the emergence of the negawatt market, more and more organizations are investing in research about M&V 2.0 tools. For example, the Lawrence Berkeley National Laboratory (LBNL) is currently tracking the accuracy of 10 M&V 2.0 tools, so far showing that they can predict energy use usually at the level of precision required to meet industry standards [http://blog.rmi.org/blog_2016_01_29_next_generation_utility_programs]. Going forward, innovations such as these will likely reduce the amount of wasted energy in the state of California, and possibly cause other states to pass similar legislation.


Eckman, Tom. “EM&V 2.0 – New Tools for Measuring Energy Efficiency Program Savings.” Electric Light & Power. PennWell Corporation, 12 Feb. 2014. Web. 01 Feb. 2016.


“FERC: News Release: FERC Approves Market-based Demand Response Compensation Rule.” FERC: News Release. Federal Energy Regulatory Commission, 15 Mar. 2011. Web. 31 Jan. 2016.


Franconi, Ellen. “Next-Generation Utility Programs: How M&V 2.0 Is Enabling a “Negawatt” Market.” RMIOutlet. Rocky Mountain Institute, 29 Jan. 2016. Web. 31 Jan. 2016.


Golden, Matt. “New California Laws Are a Needed Paradigm Shift for Energy Efficiency.” Efficiency.org. Efficiency, 17 Sept. 2015. Web. 01 Feb. 2016.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s