As funds from President Biden’s Inflation Reduction Act (IRA) become available in states we serve, you’ll be hearing a lot about modeled versus measured savings. Both terms will determine how much a homeowner can receive in rebates designed to promote energy efficiency and decarbonization.
For IRA programs and most utility-run energy efficiency programs, measured and modeled savings are used to evaluate how much savings can be expected from the installation of various energy efficiency measures from low-flow shower heads to smart power strips to new heaters to heat pumps.
But, what’s the difference between modeled and measured savings? Here’s a brief primer.
Deemed Savings
Before we can talk about either modeled or measured savings, we need to discuss deemed savings, which are typically included in a state’s Technical Reference Manual (TRM). Or, the Program Savings Document (PSD) in Connecticut. Deemed savings estimate energy and demand savings, usually used with programs targeting simpler efficiency measures with well-known and consistent performance characteristics. This method involves multiplying the number of installed measures by an estimated (or deemed) savings per measure, which is derived from historical evaluations. That figure helps CMC demonstrate the cost-effectiveness of our various programs. 
Modeled Savings
A logical extension of deemed savings is the creation of modeled savings, which enhances the static numbers from a TRM by using energy modeling software and/or computer simulations to create a model of the expected performance. These models provide an enhanced estimate of potential energy savings based on factors like the type of improvement, the building’s characteristics and local climate conditions.
The benefit of this approach is that savings estimates can be calculated quickly and cost-effectively, especially for large-scale projects. Modeled savings are also helpful for planning and forecasting purposes.
This approach does have some limitations, however. For example, savings predictions can be less precise, especially for larger buildings, such as multifamily units or large commercial facilities. Modeled savings also rely on assumptions that may not accurately reflect actual performance.
Measured Savings
In contrast, to determine measured savings utility companies compare the actual energy usage before and after the implementation of energy-saving measures. This is often done by analyzing utility bills or installing metering equipment. This approach provides a more accurate and reliable assessment of energy savings and can help identify factors that influence actual performance. 
On the other hand, it can be expensive to collect the necessary data to perform the calculations and may require the installation of additional equipment, such as a monitoring system. Generally, for measured savings, you need 12 months of usage before and after the installation of the energy efficient measures and have to take into account weather differences.
So what does this mean?
The IRA’s Home Energy Performance-Based Whole-House (HOMES) program offers rebates for retrofits that reduce home energy use that require modeled or measured performance estimates. The rebates are based on the percentage of energy savings achieved, and the amount varies by income level.
For example, homeowners who use a modeled savings approach must achieve energy savings of 20–34 percent to possibly be eligible for $2,000 or 50 percent of the project cost for a single-family home. For measured savings, the same project would only need to achieve a 15 percent energy savings to possibly be eligible for the same rebate. The rebate estimates may be impacted when Donald Trump becomes president in 2025.
Now, you’ll know the basic differences between modeled and measured savings if it comes up at a staff meeting or when you’re talking with neighbors.