Introduction to PEER: Operational effectiveness

Published on: 
24 Aug 2016
Author: 
Courtney Yan

In the United States, more than half of the energy that flows through our economy is wasted. In fact, based on analysis from Lawrence Livermore National Laboratory and the Department of Energy, only 39 percent of the raw energy that we consume ultimately results in energy services. For electricity specifically, only 33 percent of the raw energy consumed is converted to electricity and delivered for residential, commercial and industrial use (see full chart for a complete breakdown).

This waste can be broken down into categories such as conversion losses, emissions, and transmission and distribution losses. These system inefficiencies have clear impacts on the cost of energy throughout the supply chain.

PEER™ is the only rating system that includes a credit category for operational effectiveness. It encourages users to assess and improve project operational performance, track costs and value in order to identify inefficiencies, and develop effective solutions to drive out waste and improve overall operational effectiveness. PEER also outlines strategies for communicating value, measuring recoverable costs for management and customs and strengthening the business case for microgrid improvements.

Operational effectiveness

The Operational Effectiveness credit category outlines strategies to help stakeholders

  • Measure system energy efficiency.
  • Identify and quantify new and existing operational and financial value streams.
  • Identify solutions to eliminate waste.
  • Develop an improvement plan and estimate the value of proposed improvements.
  • Build the business case and justify investments for improvements. 

Value gap for projects

Acknowledging that the economic value provided by cost savings, cost avoidance and revenue is a key performance indicator for electricity systems, PEER uses a value-gap framework to measure project performance. The current value of the system is determined in terms of the difference between the existing system and a baseline. Baselines include past project performance, average U.S. electricity grid performance or the bulk electricity supplied to the site.

The potential future value is determined in terms of the delta, or gap, between the current system and an upper limit of performance defined by best in class industry benchmarks. By defining the upper limit, project teams can begin to develop a roadmap to improve operational efficiency, increase added-value services and further reduce waste.

Improve your business case and sign up your project for PEER certification.

About PEER

PEER, modeled after USGBC's LEED® for buildings, provides energy professionals with a comprehensive understanding of how to define, assess and specify sustainable power to buildings.

Learn more about the PEER credit categories: