Experience Myth

17 05 2011

Now that I’m an old man, defined as being over 40 years of age, career half over, graduated from college 20 years ago, kids of classmates are graduating from high school, kids born when I was partying in college are graduating from college, and other depressing facts, I can say experience in anything can be almost worthless and in some cases, it is worth less than nothing.

At Michaels, we have interfaced with engineers, particularly ones who were in sales and it was stunning how little they knew about buildings, control systems and how equipment and systems use energy.  It reminds me of when I was a kid; I would sit in wonderment about how automobiles were manufactured.  How do they make that dashboard, the top of which was a large as a kitchen table?  How do they make the thin auto body pieces parts?  It was like rocket science to me.  There must be some magic computer like Hal that made all this stuff happen.  I have to wonder whether this is the case with some “energy engineers”.

Likewise, these guys who had been in their industry for many years and were suddenly recruited into the energy efficiency business seem to think energy savings is some nebulous, random, stab in the dark.  In former lives they may have served as experts for their companies but anyone who could spout off the dimensions of a two square inch square would be viewed as Einstein.  For purposes of energy analyses, the savings equal the cost of what they were selling divided by the maximum acceptable payback for the customer.  (It takes somebody with 5 years of post k-12 education to do this?)

For one such real guy, the baseline, or the existing conditions are arbitrary.  That’s just the way it is.  When asked what the operating conditions were prior to implementation of the project, the response, “what do you think they should be?”  Head, meet brick wall.

In other cases, an engineer may seem to know an energy model (spreadsheet) is not meant to be used for the specific application of the technology, say a variable frequency drive, but they use it anyway because that’s all there is for variable frequency drives.  Everything is a nail as seen by the hammer.  Meanwhile, I’ve seen new graduates come in and almost immediately run circles around guys with three or more years of experience.

So what does it take to be a great energy efficiency engineer (or occupation x)?  First it takes commitment to excellence, which sounds like a bunch of crap, but what I mean is the engineer does not accept anything he/she doesn’t fully and deeply understand.  If results look weird, they have to find out exactly what is going on.  Is it an error or is it some unforeseen, non-intuitive characteristic that is driving the results to be different than expected.  This trait is absolutely essential.  And they know when enough is enough.  One can’t spend hours finding a half dozen “errors” that have negligible effect on a complex energy model.

A non-essential but very helpful aspect is having strong mentoring and being surrounded by knowledgeable engineers who know what they are doing and conform to the above themselves.

Recently while writing a proposal for a large EE program evaluation, the minimum experience requirement for key team members, constituting maybe three or four main actors directly responsible for the outcomes, was five years direct experience in evaluation.  Surprisingly, I would probably pick about the same number.  A new grad can learn a heck of a lot in a year or two and by year three or four be running some good size projects.  Not so ironically, this is about the time engineers become eligible for licensure.

Does this mean anyone over 40 should get their afghan and find a rocker and sit on the porch all day talking about AM radios, eight track tapes, VCRs, and never getting out of school for anything short of six feet of snow (almost true by the way)?  Some folks probably should but in other cases, the answer is, of course not.  Talented old people were once smart 20-somethings.  I’ve never come across anyone who didn’t have it in the 20s but later found it in their 30s or 40s.

Experience is not enough.  Firms need to demonstrate they know what they are doing with work examples, references for similar work, and lists of clients and how long they have been clients.  For many cases with big projects, one needs to describe the difficulties and challenges of the project and how they will be overcome.  That takes experience.

written by Jeffrey L. Ihnen, P.E., LEED AP





Taking on Parmenides

23 09 2010

We do a LOT of energy efficiency program evaluation and measurement and verification work all over the country; make that North America.  Program evaluation consists primarily of process evaluation (process) and impact evaluation (impact).  Our work is almost entirely in the impact side and I know just enough to talk dangerously about process.

Impact is the analysis of what energy savings are really attributable to the program.  This includes verifying the physical installation and determining the actual savings using some sort of engineering analysis.  This actual savings is known as gross savings in the business.  It also includes determining whether the program actually influenced the project to happen.  For example, some would do a project or buy an efficient piece of equipment regardless of the program and just take the money because they can – and hey, they are paying into the program so there is nothing wrong with this in my opinion.  These program-influence factors are applied to the gross savings to determine net savings – savings the program can take credit for.

Largely, evaluation teams consist of economists (impact and process) and engineers (impact) although there are many people with liberal arts degrees in the business as well.

Many times in determining the gross savings we get into spats with program implementers and sometimes utilities regarding what the actual savings really are.  Many times for large custom projects, the energy analysis we have to evaluate varies from pathetic to essentially non-existent.  “We installed a control system.  Savings = 15%.”  That’s it.  Analyze that!  Other times we will have an actual analysis and just plainly an incorrect application of engineering and physics or the operating conditions are much different than originally assumed.

Last week we were preparing to do impact for a huge low income weatherization program.  Past evaluations for that program have turned up results that are only a fraction of what the utilities think they ought to be.

Consider how to estimate heating savings in this case.  A house is heated by natural gas, which is also consumed by other appliances including possibly a stove and a water heater.  The analysis is easy.  You can see on the monthly billing data (gas consumption) how much gas is used to heat the place.  It’s everything above the June through July average.  Savings in this case are more or less proportional to the consumption for heating.  It is as plain as the nose on your face.  But the utilities think otherwise.  While I certainly don’t want to arm them with any arguments, they could use Parmenides, the 2500 year old and dead philosopher.

I took a four credit philosophy course as an undergrad.  The discussions in class seemed bizarre but definitely thought provoking.  If you haven’t studied or read philosophy, you would most likely think it bizarre.  But I am far, far, far (way far) from an expert on the topic.

One thing I remember discussing at length was, what does it mean for a being to be?  Is there really anything that exists other than your mind?

I had to do some “research” to find philosophical terms.   I’m talking about idealism.  Idealism is the argument that your mind is all that exists and that the world is mental itself or an illusion created by the mind.  Sound bizarre?  Not so much if you think about it.

You’ve probably seen the HDTV ads that have stuff jumping out of the screen – like the picture is so real viewers purportedly see footballs flying out of the TV, right at them.  Consider a person comes into my office and I ask him what he sees out the window.  After a looking around to make sure he’s not on candid camera, the answer is: Coney Island hot dog joint and Deaf Ear Records.  “Really?”, I respond.  How do you know?  I can see it.  How do you know it’s not just an illusion?  How do you know it’s not the world’s most expensive and lifelike television?  Good God!  I can go downstairs, cross the street and touch it.  What more do you want?  I can prove motion is an illusion and that you won’t really go anywhere, much less get out of this room, but that’s beside the point right now.  So go ahead and touch it.  What does that tell you?  Why do you call it Coney Island?  It says so.  Really?  How do you know?  I can read it.  Read what?  By touching it?  Why don’t you ask that guy who just got off the plane from Moscow what it says?  You can’t prove anything.  It’s all an illusion formulated in your mind.

The sky is blue.  OK.  But what if blue in your figment-of-imagination world would be green in my world?  Who is ever going to know?  We can both look at the same color and declare it to be the same thing – yeah sure, it’s blue.  But a color is a color only because somebody told you so way back when and you correlated it to what you saw and it has been as such ever since – in your fantasy world.  What is the definition of blue anyway?  My dictionary defines it in part as the color of a clear unclouded sky.  Great.  That doesn’t explain anything.  What color is a blue car under a clear unclouded sky… AT NIGHT?  Why don’t you ask that color-blind 100 lb rodent that is eating the seedling I just planted what color his snack is.

This brings me back to the illusionary energy savings.  Now that we know energy savings like everything else is all an illusion anyway, we can fool ourselves and put any number to it that we want.

Quite possibly, the program evaluation industry may be a gold mine for out-of-work philosophers and theologians!  Utilities could have a team of philosophers to take on the evaluation team’s philosophers.  Engineers and economists on the evaluation team would argue with their counterparts on the implementation team regarding the illusionary savings and the philosophers could duke it out over… something.  See what I’m sayin?  If so, it’s just a figment of your imagination.  These people only exist in your mind.

Epilogue

For more on Parmenides, see this article, and in particular the Achilles and Tortoise paradox.  Since learning that we still earn vacation while taking vacation (eons ago), you never need to return to work.

I earn roughly 3 hours of vacation every week.  So if I take a week off I’ve used 40 hours but earned another three.  I’ll take those three Monday morning, but I’ve earned 0.225 hour during those three hours.  While I take that 13.5 minutes of vacation, I earn another minute.  And it goes on forever, like eternity.  Now do you think this philosophy stuff is stupid?

Contest

Above I said I can prove motion is an illusion.  That was a lie, at the time.  Since I’m telling you it was a lie, it isn’t, is it?  On “The Big View” website, number 3 from Zeno attempts to prove motion is an illusion.  For $10, explain why his hypothesis is wrong.  The best answer wins, unless they are all horrible.  Prize money will be split in case of a tie.  If there are 10 or more correct answers, it wasn’t difficult enough so no prize.  Contest ends September 30, 2010 AD.  Send responses to kjk@michaelsengineering.com.  There is a 50 word limit.  Responses that are too long will be rejected.

written by Jeffrey L. Ihnen, P.E., LEED AP





Horse and Buggy EE Programs

8 06 2010

In many states, energy efficiency programs are meeting annual savings goals and their incentive cash is depleted in a fraction of the year.  States where energy efficiency programs are a new offering are especially quick to meet goals.  These states include Ohio, Michigan and Illinois.  These states rely heavily on lighting, which accounts for somewhere in the range of 90% of the total savings.  Even mature states like Wisconsin and California still get well over half their savings from lighting and other prescriptive measures (rebates).  Wisconsin surpassed goals and ran out of incentives last program year.

There are many ways to solve the “excess savings problem” from reducing or eliminating incentives on some things or eliminating program offerings.  In Wisconsin, they are sort of cutting incentives across the board and getting rid of comprehensive energy retrofit in existing commercial and industrial (C&I) facilities, where everyone knows the greatest potential exists.  Comprehensive energy retrofit in WI is dead because they killed feasibility studies.

Wisconsin must know something Minnesota, Iowa, Illinois, Michigan, New York, California, Johnson Controls, Honeywell, Siemens, and dozens of energy service companies (ESCOs) around the country are oblivious to.  These states’ programs rely substantially on comprehensive energy retrofit and it’s actually the holy grail of energy efficiency.  But not in Wisconsin.

Wisconsin instead relies on the discount model.  See Incentive or Discount, January 12, 2010.  The powers that are believe this is the most cost effective (only) way to deliver savings and that feasibility studies once paid for by the program just rot on the customer’s shelf.  But there are numerous ways to avoid this.  You just have to develop an integrated program that holds customers accountable for implementing measures.

When Wisconsin (Focus on Energy, Focus for short) took over the energy efficiency programs from the investor-owned utilities about 10 years ago, one of the goals was market transformation.  Market transformation simply means making energy efficient products and services the normal way of doing business such that ratepayer-funded programs are no longer needed, or their need is greatly reduced.  Market transformation has long since been cast aside.

Instead, Focus has been transformed into something that seems to be directly at odds with its market transformation charter.  Service providers in the market, ones with expertise and no bias (don’t sell stuff) are locked out by an apparatus that cannot work for them.  Eliminating feasibility studies was the equivalent of adding a mote full of alligators around the fiefdom with razor wire atop the castle wall to keep the serfs out.

The idea that feasibility studies are a waste of money is just plainly incorrect.  Nearly all of our feasibility studies are acted on.  Last year we kicked off a retrocommissioning program with three pilot studies – no commitment from the owners whatsoever.  We just wanted to demonstrate potential.  Two of three have already been implemented.  One has almost a year’s savings accumulated with 25-30% electric and gas savings, on their bills.  The third project is close to implementation, which will probably be completed by year’s end.

In another study, we projected 30% savings for a high school. Actual results were 40% savings, indicated by energy bills.  One college campus: 20% gas and electric savings projected, 20% savings realized.  Another campus 15% and 22% electric and gas savings projected, respectively.  Actual savings from bills: 25% and 20%.  A medical clinic with about 25% savings projected:  actual savings in the first 3 months of post-implementation operation total a full half year of projected savings.  Every one of these projects needed measure identification, cost and savings estimates, and return on investment analysis.  We started with a blank slate.

We have a study underway for a huge food processor and are projecting 3.5 million kWh savings, from only a portion of their air handling systems (68 units).  We are looking forward to moving on to the ammonia refrigeration and compressed air systems. This customer has been very progressive with energy projects over the past 7-8 years and is willing to get everything that meets their financial criteria.  In fact, when we delivered the proposal they agreed to move forward with the study on the air handlers but said, “but I don’t think you’ll find anything”.

The bottom line is, a comprehensive program that includes front-end screening, study, Implementation design, implementation, functional performance testing of measures, and customer training will be acted on by customers.  Of the 10 or so projects, including dozens of campus buildings, where we have used this process, savings have been 20% or more in every case, up to 40%, and actual savings from pre and post implementation bill comparisons have always come in above study projections.  Projects include everything from retrocommissioning to major equipment/system retrofits to new controls systems.

Ironically, we completed a “no risk” study with Focus last year including controls, refrigeration and HVAC.  The customer went forward with all recommended measures.  Again, all we started with was a customer that wanted to cost-effectively save energy, a blank sheet of paper.  No “pre-packaged” projects.  I.e., no free rider.

From a program perspective, this is very cost effective because savings are huge and concentrated and studies do not get stranded.  The problem with some (as in, not all) program administrators whether they be third parties or utilities is they are steadfastly wedded to the status quo with a divorce rate Vatican City would cheer.  The typical disjointed process with reams of paperwork and delays at the outset, no assistance between study and implementation, no hook or commitment from customers to do anything with the study, and no functional testing at the conclusion of implementation is doomed to fail.

The solutions to the “waste of money” issue are simple and they work very well, but some administrators and in some cases regulators need to open their minds and ditch their horse and buggy program paradigms.

And by the way, the attribution rate, which is the savings that occur as a result of an integrated program including feasibility studies, is near 100%.  See the food processor guy’s quote above.  He didn’t think we would find anything.  Tell me.  Would these 3.5 million kWh savings have occurred in the absence of a thorough investigation?  How does a customer who buys an efficient boiler have any idea what the incremental cost and energy savings of his new equipment are?  Does that constitute decision making based on energy efficiency?  Perhaps some programs could improve their attribution rates on C&I programs if they would actually lead customers to implement energy efficiency measures rather than chasing contractors, like lawyers chasing ambulances, to capture savings that are going to happen in the marketplace anyway.

written by Jeffrey L. Ihnen, P.E., LEED AP





IPO Return, Treasury Risk

13 04 2010

If there’s one thing that most people painfully realized over the past couple years, it’s that there is risk in putting your money in anything in hopes of earning a return on investment.  Riding a company into bankruptcy is an obvious one.  I’ve done that several times by investing in fast-growing start-ups, initial public offerings (IPO) and stock options.  Invest $3,000 for 100 shares of common stock and a few years later the company emerges from bankruptcy (isn’t that a cute phrase – it sounds like a daffodil blooming in spring but it’s more like rummaging for your charred silverware after your house burned to the ground) … anyway that investment may “emerge” at 10 shares worth $6 apiece, or if they liquidate you get a check for 36 cents.

If you avoid Bernie Madoff funds, you can greatly reduce your risk by buying mutual funds, which more or less track the entire stock market.  Corporate bonds might be next.  In the case of bankruptcy, provided the government doesn’t take over the company, you are first in line to get your money back.  Next might be U.S. government bonds but I wouldn’t go near them now as their value moves in the opposite direction of interest rates.  Just take a look where interest rates are now compared to historic numbers and do the math.  You CAN lose a lot of money in bonds.  Then there are money market funds that invest in super safe short term treasuries, but right now you earn about nickel a month per $1,000 invested.  Finally, there’s cash in the bank, which earns even less or zero but at least the first $100,000 is insured by the feds (the minimum was increased to something but I don’t care).

Commercial and industrial facility owners can invest in energy efficiency.  Lighting would be the bonds of energy efficiency, with the exception that you’re virtually guaranteed a return on investment as long as you can do 5th grade math to ensure you aren’t being ripped off.  Beyond that, the vast majority of energy efficiency projects carry the full gamut of risk from guaranteed savings (which isn’t free) and just buying a new piece of expensive equipment or system that may not save you a dime or could even increase your energy costs.

The big money is in custom measures and the risk varies depending who is identifying the opportunities and who, if anyone, is calculating savings.  If you browse our website you will find we identify measures and quantify savings all the time.  For many large projects we take a two phase approach to the analysis.  Phase 1 is to identify opportunities and guesstimate cost and savings to within plus or minus 40%, which means a project guesstimated to have a 2 year payback may actually have a payback from less than a year to more than 4.5 years, with the most likely being 2 years.

Phase 2 is a detailed analysis, sometimes with quotes from contractors, and energy analysis based on specific equipment performance characteristics, construction documents, and metered data.  After Phase 2, the guesstimates are sharpened to within plus or minus 10%, perhaps.  Now that 2 year payback would range from 1.6 years to 2.4 years, with the most likely being 2 years.

So energy analysis can take your project from a completely unknown return on investment to something that is close to guaranteed, and if you want, that can be added too.  The cost of hiring a firm that knows what they’re doing, delivering both quantity and accuracy of cost and savings estimates, is considered by end-users to be anything from reasonable to outrageously expensive.  Owners with smaller facilities and especially government ones tend to be at the latter portion of that range.  Large industrials may be closer to the front.

But the kicker is, utilities that run efficiency programs often pay for a good share or all of the energy analysis, sometimes even both phases of analysis described above.  But yet, end users may baulk.  We recently completed phase 2 analyses that largely demonstrated our phase 1 estimates were pretty good and some representatives of customers were scoffing that phase 2 was a waste of money.  Well look at the “uncertainty analysis” above and tell me, would you use “free money” from the utility to shore up your investment certainty before you invest a dime to implement anything, OR NOT?

As my colleague says, “It’s a no BRAINER!  Gee willikers!”

As an investment, an energy efficiency project may pay for itself four or five times or even more over its lifetime.  Peter Lynch who ran the Fidelity Magellan fund during the 80s would call doubling your investment a one bagger; tripling, a two bagger and so on.  This makes energy efficiency a likely two bagger and in many cases a four bagger.  It’s a home run with the risk of a money market fund.

Why doesn’t everyone get on this ride?  There are many reasons; some good ones and some utterly stupid ones.

written by Jeffrey L. Ihnen, P.E., LEED AP