An Introduction to Weather Normalization of Utility Bills for Alternative Energy Contractors

-- End Ad Box --->to the energy used for cooling a building, while
UTILITY BILL TRACKING: THE REPORT CARD FORHeating Degree Days, (HDD) are roughly proportional
ALTERNATIVE ENERGY CONTRACTORSto the energy used for heating a building. Degree
More and more, alternative energy contractors wantDays, although simply calculated, are quite useful in
to prove to customers the savings they expect.energy calculations. They are calculated for each day,
Customers often want to know that they haveand then are summed over some period of time
saved the energy and costs they were originally(months, a year, etc.).(8)
promised. From the customers’ viewpoint, theFigure 1.7: Determining the balance point using a kWh
simplest and most understandable proof of energyday vs. Outdoor Temperature graph (
savings comes from a simple comparison ofIn general, daily degree days are the difference
electricity bills. Did the system save on electricitybetween the building’s balance point and the
costs or not?(1) In theory, a simple comparison ofaverage outside temperature. To understand degree
pre-installation bills to post-installation bills, and you willdays, then, we first need to understand the concept
see if you have saved.of Balance Points.
But if it is so easy, why write a paper on this? Well,Buildings have their own set of Balance Points for
it isn’t so easy. Let’s find out why.heating and for cooling – and they may not be
Figure 1.1: Expected Pre and Post-Retrofit usage forthe same. The Heating Balance Point can be defined
chilled water system retrofit. (as the outdoor temperature at which the building
Suppose a solar energy contractor installed a newstarts to heat. In other words, when the outdoor
solar electric system for a building. One likely wouldtemperature drops below the Heating Balance Point,
expect to see energy and cost savings from thisthe building’s heating system kicks in.
retrofit. Figure 1.1 presents results our alternativeConversely, when the outdoor temperature rises
energy contractor might expect.above the Cooling Balance Point, the building starts to
But what if, instead, the bills presented the disastercool.(9) A building’s balance point is
shown in Figure 1.2?determined by nearly everything associated with it,
Figure 1.2: A disaster of a project? Comparison ofsince nearly every component associated with a
Pre-Retrofit and Post-Retrofit data (building has some effect on the heating of the
Imagine showing a customer these results after theybuilding: building envelope construction (insulation
have invested hundreds of thousands of dollars invalues, shading, windows, etc.), temperature set
your system. It is hard to inspire confidence in yourpoints, thermostat set back schedules if any, the
abilities with results like this.amount of heat producing equipment (and people) in
How should the solar energy contractor present thisthe building, lighting intensity, ventilation, HVAC
data to customer? Do you think the contractorsystem type, HVAC system schedule, lighting and
would be feeling confident about the job, and aboutmiscellaneous equipment schedules, among other
getting referrals for future solar projects? Probablyfactors.
not. The customer might simply look at the figuresIn the past, before energy professionals used
and, since figures don’t lie, conclude theycomputers and utility manager software in their
have hired the wrong contractor, and that the solareveryday tasks, degree day analysis was simplified
system doesn’t work very well!by assuming balance points of 65°F for both
There are many reasons the system may not haveheating and cooling. As a result, it was easy to publish
delivered the expected savings. A possibility is thatand distribute degree days, since everyone calculated
the project is delivering savings, but the summerthem using the same standard (that is, using 65°F
after the installation was much hotter than theas the balance point). It is more accurate, though, to
summer before the installation. Hotter summersrecognize that every building has its own balance
translate into higher air conditioning loads, which couldpoints, and to calculate degree days accordingly.
result in higher utility bills.Consequently, you are less likely to see degree days
Hotter Summer >> Higher Air Conditioning Load >>available, as more sophisticated analysis requires you
Higher Summer Utility Billsto calculate your own degree days based upon your
In our example, we are claiming that because theown building’s balance points.(10)
post-installation weather was hotter, the solar electricFigure 1.8: kWh /day vs Average Outdoor
project looked like it didn’t save any energy,Temperature (
even though it really did. Imagine explaining that toTo find the balance point temperature of a building,
customers!graph the Usage/Day against Average Outdoor
If the weather really was the cause of the higherTemperature (of the billing period) as shown in Figure
usage, then how could you ever use utility bills to1.7. Notice that Figure 1.7 presents two trends. One
measure savings from solar energy projects? Yourtrend is flat, and the other trend slopes up and to
savings numbers would be at the mercy of thethe right. We have drawn red lines signifying the two
weather. Savings numbers would be of no value at alltrends in Figure 1.8. (Ignore the vertical red line for
(unless the weather was the same year after year).now.) The flat trend represents Non-Temperature
Our example may appear a bit exaggerated, but itSensitive Consumption, which is electrical consumption
begs the question: Could weather really have such anthat is not related to weather. In Figure 1.7,
impact on savings numbers?Non-Temperature Sensitive Consumption is roughly
It can, but usually not to this extreme. The summerthe same every month, about 2450 kWh per day.
of 2005 was the hottest summer in a century ofExamples of Non-Temperature Sensitive Consumption
record-keeping in Detroit, Michigan. There were 18include lighting, computers, miscellaneous plug load,
days at 90°F or above, compared to the usual 12industrial equipment and well pumps. Any usage
days. In addition, the average temperature in Detroitabove the horizontal red line is called Temperature
was 74.8°F compared to the normal 71.4 °F. AtSensitive Consumption, which represents electrical
first glance, 3 degrees doesn’t appearusage associated with the building’s cooling
significant, however, if you convert the temperaturessystem. Notice that in Figure 1.8, the Temperature
to cooling degree days(2), as shown in Figure 1.3, theSensitive Consumption only occurs at temperatures
results look dramatic. Just comparing the Junegreater than 61°F. The intersection of the two
through August period, there were 909 coolingtrends is called the Balance Point, or Balance Point
degree days in 2005 as compared to 442 coolingTemperature, which is 61°F in this example.
degree days in 2004.Notice also that, in Figure 1.8, as the outdoor
That is more than double! Cooling Degree Days aretemperature increases, consumption increases. As it
roughly proportional to relative building coolinggets hotter outside, the building uses more energy,
requirements. For Detroit then, one can infer that anthus the meter is used for cooling, but not heating.
average building required (and possibly consumed)The Balance Point Temperature we found is the
more than twice the amount of energy for cooling inCooling Balance Point Temperature (not the Heating
the summer of 2005 than the summer of 2004. It isBalance Point Temperature).
likely that in the Upper Midwestern United StatesFigure 1.9: kWh/day vs Average Outdoor
there were several solar contractors who facedTemperature (
exactly this problem!We can view the same type of graph for heating
Figure 1.3: Cooling Degree Days in Detroit, Michiganusage in Figure 1.9. Notice that the major difference
for 2004 and 2005 (between the two graphs, is that the Temperature
How is a solar energy contractor going to showSensitive trend slopes up and to the left (rather than
savings from a solar electric system under theseup and the right). As the outdoor temperature drops,
circumstances? A simple comparison of utility bills willthe building use more electricity to heat the building.
not work, as the expected savings will get buriedNow that we have established our balance point
beneath the increased cooling load. The solutiontemperature, we have all the information required to
would be to somehow apply the same weather datacalculate Degree Days. If your graph resembles
to the pre- and post-installation bills. Then there wouldFigures 1.9, you will be using Heating Degree Days. If
be no penalty for extreme weather. This is exactlyyour graph resembles Figure 1.8, you will be using
what weather normalization does. To show savingsCooling Degree Days.
from a retrofit (or good alternative energy practice),Figure 1.10: Daily Usage Normalized to Production and
and to avoid our disastrous example, an alternativeWeather. The Baseline Equation is Shown at the
energy contractor should normalize the utility bills forBottom of the Figure (
weather, so that changes in weather conditions willNORMALIZING FOR OTHER VARIABLES
not compromise the savings numbers.More and more energy professionals are coming to
The practice of normalizing energy bills to weatherunderstand the value of normalizing utility data for
with energy software is catching on, with more andproduction in addition to (or instead of) weather. This
more energy managers, energy engineers, andworks if you have a simple variable that quantifies
contractors correcting their bills for weather becauseyour production. For example, a computer assembly
they want to be able to prove that they are actuallyplant can track the number of computers produced.
saving energy from their efforts. This process hasIf a factory manufactures several different products,
many names: weather correction, weatherfor example, disk drives, desktop computers, and
normalization, tuning to weather, tuning, or weatherprinters, it may be difficult to come up with a single
regression.variable that could be used to represent production
HOW WEATHER NORMALIZATION WORKSfor the entire plant (i.e. tons of product). However,
Rather than compare last year’s usage tosince analysis is performed on a meter level rather
this year’s usage, when we use weatherthan a plant level, if you have meters (or submeters)
normalization, we compare how much energy wethat serve just one production line, then you can
would have used this year to how much energy wenormalize usage from one meter with the product
did use this year. Many in our industry do not call theproduced from that production line.
result of this comparison, “Savings”,Figure 1.10 presents normalized daily usage versus
but rather “Usage Avoidance” orproduction for a widget factory. The baseline
“Cost Avoidance” (if comparing costs).equation for this normalization is shown at the
But, since we are trying to keep this chapter at anbottom of the figure. Notice that Units of Production
introductory level, we will simply use the word(UPr) as well as Cooling Degree Days (CDD) are
Savings.included in the equation, meaning that this
When we tried to compare last year’s usagenormalization included weather data and production
to this year’s usage, we saw Figure 1.2, anddata.
a disastrous project. We used the equation:School districts, colleges, and universities often
Savings = Last year’s usage – Thisnormalize for the school calendar. Real estate
year’s usageconcerns, hotels and prisons normalize for occupancy.
When we normalize for weather, the same dataEssentially any variable can be used for normalization,
results in Figure 1.4, and uses the equation:as long as it is an accurate, consistent predictor of
Savings = How much energy we would have usedenergy usage patterns. Again, these normalizations
this year – This year’s usagecan be performed by specialized utility bill tracking
Figure 1.4: Comparison of Baseline and Actualsoftware, or using spreadsheets.
(Post-Retrofit) data with Weather Correction (CONCLUSION
The next question is, how do we figure out howWeather varies from year to year. As a result, it
much energy we would have used this year? That isbecomes difficult to know whether the change in
where weather normalization comes in.your utility bills is due to fluctuations in weather, or
First, we select a year of utility bills(3) to which wedue to your alternative energy system, or both. If
want to compare future usage. This would typicallyyou wish to use utility bills to determine energy
be the year before you started your alternativesavings from your alternative energy system with
energy program, the year before you installed aany degree of accuracy, it is vital that you remove
retrofit, or the year before you, the new energythe variability of weather from your energy savings
contractor, were hired, or just some year in the pastequation. This is done using the weather normalization
that you want to compare current usage to. In thistechniques described in this paper. You may adjust
example, we would select the year of utility datayour usage for other variables as well, such as
before the installation of the solar electric system.occupancy or production.
We will call this year the Base Year(4).1) What are the alternatives? The most common
Figure 1.5: Cooling Degree Days (might involve determining savings for each of the
Then we calculate degree days for the Base Yearenergy conservation activities using a spreadsheet, or
billing periods. Because this example is only concernedperhaps even a building model. Both of these
with cooling, we need only gather Cooling Degreealternative strategies could require much additional
Days (not Heating Degree Days). A section onwork, as the alternative energy contractor likely has
calculating Degree Days follows later in the chapter.employed several strategies over his tenure. One
For now, recognize only that Cooling Degree Daysother drawback of spreadsheets is that energy
need to be gathered at this step.(5) Figure 1.5conservation strategies may interact with each other,
presents Cooling Degree Days over two years.so that total savings may not be the sum of the
Figure 1.6: Finding the relationship between usage anddifferent strategies, and finally, spreadsheets are
weather data. The blue dots represent the utility bills.often projections of energy savings, not
The red line is the best fit line. (measurements.
To establish the relationship between usage and2) Cooling degree days are defined in detail later in
weather, we find the line that comes closest to allthe chapter, however a rough meaning is given here.
the bills. This line, the Best Fit Line, is found usingCooling Degree Days are a rough measure of how
statistical regression techniques available in cannedmuch a period's weather should result in a
utility bill tracking software and in spreadsheets.building’s cooling requirements. A hotter day
The next step is to ensure that the Best Fit Line iswill result in more Cooling Degree Days, whereas a
good enough to use. The quality of the best fit line iscolder day may have no Cooling Degree Days. Double
represented by statistical indicators, the mostthe amount of Cooling Degree Days should result in
common of which, is the R2 value. The R2 valueroughly double the cooling requirements for a building.
represents the goodness of fit, and in energyCooling Degree Days are calculated individually for
engineering circles, an R2 > 0.75 is considered aneach day. Cooling Degree Days over a month or billing
acceptable fit. Some meters have little or noperiod, are merely a summation of the Cooling
sensitivity to weather or may have other unknownDegree Days of the individual days. The same is true
variables that have a greater influence on usage thanfor Heating Degree Days.
weather. These meters may have a low R2 value.3) Some energy professionals select 2 years of bills
You can generate R2 values for the fit line in Excel orrather than one. Good reasons can be argued both
other canned utility bill tracking software.(6)for choosing one year or two years. Do not choose
This Best Fit Line has an equation, which we call theperiods of time that are not in intervals of 12 months
Fit Line Equation, or in this case the Baseline(for example, 15 months, or 8 months could lead to
Equation.(7) The Fit Line Equation from Figure 1.6inaccuracy).
might be:4) Please do not confuse Base Year with Baseline.
Baseline kWh = (5 kWh/Day * #Days) + (417 kWhBase Year is a time period, from which bills were
CDD * #CDD)used to determine the building’s energy
Once we have this equation, we are done with thisusage patterns with respect to weather data,
regression process.whereas Baseline, as will be described later,
Let’s recap what we have done:represents how much energy we would have used
We normalized Base Year utility bills and weatherthis month, based upon Base Year energy usage
data for number of days in the bill.patterns, and current month conditions (i.e. weather
We graphed normalized Base Year utility data versusand number of days in the bill).
normalized weather data.5) Canned energy software does this automatically
We found a Best Fit Line through the data. The Bestfor you, while in spreadsheets, this step can be
Fit Line then represents the utility bills for the Basetedious.
Year.6) The statistical calculations behind the R2 value, and
The Best Fit Line Equation represents the Best Fita treatment of three other useful indicators,
Line, which in turn represents the Base Year of utilityT-Statistic, Mean Bias Error, and CVRMSE are not
data.treated in this chapter. For more information on these
Base Year bills ≈ Best Fit Line = Fit Linestatistical concepts, consult any college statistics
Equationtextbook. (For energy contractors, a combination of
The Fit Line Equation represents how your customerR2 values and T-Statistics is usually enough.)
used energy during the Base Year, and would7) Baseline Equation = Fit Line Equation +/- Baseline
continue to use energy in the future (in response toModifications. We cover Baseline Modifications later in
changing weather conditions) assuming no significantthis chapter.
changes occurred in building consumption patterns.8) You would not sum or average high or low
Once you have the Baseline Equation, you cantemperatures for a period of time, as the result
determine if you saved any energy.would not be useful. However, you can sum degree
How? You take a bill from some billing period afterdays, and the result remains useful, as it is
the Base Year. You (or your software) plug in theproportional to the heating or cooling requirements of
number of days from your bill and the number ofa building.
Cooling Degree Days from the billing period into your9) If you think about it, you don’t have to
Baseline Equation.treat this at the building level, but rather can view it
Suppose for a current month’s bill, thereat a meter level. (To simplify the presentation, we
were 30 days and 100 CDD associated with the billingare speaking in terms of a building, as it is less
period.abstract.) Some buildings have many meters, some
Baseline kWh = (5 kWh/Day * #Days) + (417 kWhof which may be associated with different central
CDD * #CDD)plants. In such a building, it is likely that the disparate
Baseline kWh = (5 kWh/Day * 30) + (417 kWh/CDDcentral plants would have different balance points, as
* 100)conditions associated with the different parts of the
Baseline kWh = 41,850 kWhbuilding may be different.
Remember, the Baseline Equation represents how10) If you calculate degree days by hand, or using a
your customer used energy in the Base Year. So,spreadsheet, you would use the following formulae
with the new inputs of number of days and numberfor your calculations. Of course, commercially available
of degree days, the Baseline Equation will tell youutility manager software that performs weather
how much energy the building would have used thisnomalization handles this automatically.
year based upon Base Year usage patterns and thisFor each day,
year’s conditions (weather and number ofHDDi = [ TBP – ( Thi + Tlo ) / 2 ] x 1 Day+
days). We call this usage that is determined by theCDDi = [ ( Thi + Tlo ) / 2 – TBP ] x 1 Day+
Baseline Equation, Baseline Usage.Where:
Now, to get a fair estimate of energy savings, weHDDi = Heating Degree Days for one day
compare:CDDi = Heating Degree Days for one day
Savings = How much energy we would have usedTBP = Balance Point Temperature,
this year – How much energy we did use thisThi = Daily High Temperature
yearor if we change the terminology a bit:Tlo = Daily Low Temperature
Savings = Baseline Energy Usage – Actual+ signifies that you can never have negative degree
Energy Usagewhere Baseline Energy Usage isdays. If the HDDi or CDDi calculation yields a negative
calculated by the Baseline Equation, using currentnumber, then the result is 0 degree days for that
month’s weather and number of days, andday.
Actual Energy Usage is the current month’sHeating and Cooling Degree Days can be summed,
bill. Both equations immediately preceding are therespectively, over several days, a month, a billing
same, as Baseline = “How much energy weperiod, a year, or any interval greater than a day. For
would have used this year”, and Actuala billing period (or any period greater than a day),
represents “How much energy we did useHDD = ΣHDDi
this year.”CDD = ΣCDDi
So, using our example, suppose this month’sTake a look back to Figure 1.3, where you may have
bill was for 30,000 kWh:noticed that there are more than twice as many
Savings = Baseline Energy Usage – ActualCooling Degree Days (CDD) in August 2005 than in
Energy UsageAugust 2004. Because Cooling Degree Days are
Savings = 41,850 kWh – 30,000 kWhroughly proportional to a building’s cooling
Savings = 11,850 kWhenergy usage, one could rightly assume that the
CALCULATING DEGREE DAYS AND FINDING THEcooling requirements of the building would be roughly
BALANCE POINTdouble as well.
Cooling Degree Days (CDD) are roughly proportional