Commissioning Shortfall in a Chiller-Plant ESPC
A hospital signed a 10-year energy savings performance contract for a chiller plant retrofit. The baseline was a 1,000-ton plant with two 500-ton constant-speed centrifugal chillers at 0.68 kW/ton, plus constant-speed condenser pumps and a two-cell cooling tower. The project installed one new 500-ton magnetic-bearing VFD chiller, new condenser-water VFDs, and a BAS optimization package. Guaranteed savings are $310,000 in Year 1, with weather normalization based on 4,200 cooling degree days (CDD). Year 1 actual savings, measured at the plant boundary, are $185,000. Year 1 CDD were 3,900. The utility rate rose from $0.080 to $0.085/kWh. The commissioning report notes that a new condenser-water bypass valve was found stuck open, and BAS trend data show both the new chiller and one old chiller ran for six weeks from 6 a.m. to 10 p.m. daily, including weekends, because a schedule was left in test mode. The hospital's central plant serves critical areas and cannot accept a full shutdown for re-testing. The contract uses IPMVP Option C at the whole-building level, but the plant has a dedicated meter.
1. Calculate the weather-normalized guaranteed savings for Year 1 and separate the shortfall into weather, rate, and performance components. Show your assumptions.
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Assume savings scale with CDD and the rate change applies proportionally to the saved kWh.
- Weather-normalized savings at the old rate: $310,000 x (3,900 / 4,200) = $287,857.
- Rate-adjusted expected savings: $287,857 x (0.085 / 0.080) = $305,848.
- Actual savings: $185,000.
- Shortfall against the rate-adjusted expectation: $305,848 - $185,000 = $120,848.
Decomposition:
- Weather effect: $310,000 - $287,857 = $22,143.
- Rate effect: $305,848 - $287,857 = $17,991.
- Unexplained performance or measurement gap: $287,857 - $185,000 = $102,857 if the contract does not pass through the rate increase; $120,848 if it does.
The weather effect is real but modest. The rate increase helps savings, not hurts them. The large remaining gap means weather and rates cannot explain the shortfall. Audit the baseline model, the savings calculation, and actual plant operation. A $100,000-plus gap is too large to attribute to a single stuck valve without measured evidence.
2. Based on the symptoms, diagnose the most likely causes of the savings shortfall and specify the functional performance tests and corrective actions you would require before accepting the savings.
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The stuck-open condenser-water bypass valve is a direct efficiency defect. It allows warmer water to bypass the cooling tower and raises condenser-water supply temperature to the chillers. Chiller efficiency typically degrades about 1.5% to 2% per degree F of condenser-water temperature rise, so a persistent 5 F rise can cost roughly 7% to 10% of chiller energy. It can also confuse condenser-pump VFD control and increase pump speed.
The six-week test-mode schedule is a second defect. Running both the new and an old chiller from 6 a.m. to 10 p.m., including weekends, causes poor part-load staging and unnecessary operating hours. However, this alone is unlikely to explain the entire shortfall, so the baseline and savings model must also be checked.
Require these functional performance tests:
- Valve actuator stroke, close-off, and leakage test; trend condenser-water supply and return temperatures across the tower and bypass.
- Chiller kW/ton at 50%, 75%, and 100% load, compared with the new chiller performance curve.
- Staging sequence test to confirm the new chiller base-loads and the old chiller trims, with no simultaneous unnecessary operation.
- BAS schedule and override audit, including weekend and holiday schedules.
- Calibration of temperature, flow, and kW sensors used in M&V.
- Condenser-pump VFD control verification and minimum-flow bypass check.
Corrective actions: repair the valve, restore the schedule, re-commission the plant, and trend for at least 30 days. Because the plant serves critical areas, use temporary cooling or off-hours testing rather than a full shutdown. The ESCO should correct installation and commissioning defects at its own cost and demonstrate restored savings before acceptance.
3. Who should bear the cost of the lost savings, and how should the M&V plan be revised to prevent recurrence? Consider baseline adjustment, commissioning authority, and persistence.
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Under an ESPC, the ESCO guarantees savings. If the shortfall is caused by installation or commissioning defects such as the stuck valve and the test-mode schedule, the ESCO should bear the lost-savings cost, not the hospital. The hospital should withhold acceptance or require compensation until the defects are corrected and savings are demonstrated. If hospital staff controlled the schedule, responsibility may be shared; the investigation should establish who had control.
The baseline should not be adjusted downward to hide defects. Adjust only for contractually allowed weather and rate changes. A rate change may require a change order, but it should be applied consistently to both baseline and actual.
Revise M&V as follows:
- Use IPMVP Option B at the plant boundary with the dedicated meter and continuous measurements of chiller kW, flow, temperatures, and run hours; use Option C only as a cross-check.
- Require independent commissioning verification before savings acceptance, including seasonal functional performance tests.
- Add BAS alarms for schedule overrides, valve position, and simultaneous chiller operation.
- Regress savings on CDD and occupancy, and report uncertainty.
- Require persistence checks at 6 and 12 months, with a holdback or escrow tied to verified performance.