Improving the energy efficiency of buildings is considered the fastest and least expensive way to cut energy use and, thus, carbon emissions. Although many states have programs in place to promote energy efficiency, mostly through rebates, the market has largely stalled because of high up-front costs, heavy regulation, limited funding mechanisms, and uncertainties surrounding the actual savings provided.

A small group of technology providers is trying to change that with Open EE Meter, an open-source software platform designed to standardize the calculation of efficiency benefits across groups of buildings. The goal is to make energy efficiency a measurable grid resource, just like a power plant, that can help customers reduce their energy use and allow utilities to avoid spending large sums on new generation and distribution capacity.

If it works, it would shift the market from heavily regulated programs that pay for projected energy savings to a pay-for-performance model that quantifies the actual savings and pays providers according to those results. Pacific Gas and Electric, one of California’s major utilities, is set to launch a pilot program that will use Open EE Meter.

“For the last decade we’ve lacked standard weights and measures for energy efficiency,” says Matt Golden, one of Open EE Meter’s lead developers. “Energy efficiency providers haven’t agreed on what the product is yet. You literally can’t have a market without that.”

Many companies offer software tools to measure energy performance and project savings. Utility bills specify how many kilowatt-hours a home or business consumes in a month, and you can compare last month’s usage with previous months. But there are dozens of small choices that must be made to calculate energy savings on a building-by-building basis: how to account for weather fluctuations, how to interpolate missing data, how to come up with a baseline for past consumption, etc. That means it’s hard to agree on how to calculate the benefits of specific measures, such as better insulation or improved lighting.

The traditional way of projecting energy savings is “some sort of engineering or physics model where you build the house from the ground up and estimate it,” says Andy Frank, CEO of Sealed, a New York City-based company that retrofits homes with energy efficiency measures. “It’s almost never right; the only question is how wrong you are.” That leads to over-regulated government programs that provide incentives to spend money on upgrades, not to actually save energy.

“In any other market you get paid for what you do, not what you predicted,” says Golden.

Open EE Meter, by contrast, collects data at the electricity meter and provides a universal and transparent method of calculating energy savings for a given set of projects. Golden developed it with Michael Blasnik, now the senior building scientist at Nest, and Matt Gee, a senior research fellow at the University of Chicago, as part of the CalTRACK initiative for advanced home-upgrade software.

Designed to run on real-time data from smart meters, it can also use monthly data from conventional electricity meters—although using monthly data limits the ability to calculate how electricity demand fluctuates over the course of the day, which is important for time-of-use pricing and other smart-grid innovations. Because Open EE Meter calculates savings across many homes, rather than from individual dwellings, it eliminates the “noise” of the inherent variance between buildings. 

If energy savings can be valued as a resource on a performance basis in a competitive market, says Golden, billions of dollars and millions of kilowatt-hours in energy savings will be unleashed. “What we’re really trying to figure out,” he adds, “is how to bring market forces to energy efficiency.”