Hospitals are looking for ways to reduce their costs wherever they can, and some are adopting a “two-sided green” strategy, which entails pursuing long-term cost-saving renewable energy projects. At least some of these hospitals have already saved millions of dollars.
The global healthcare sector is the fifth-largest emitter of greenhouse gases in the world, if it were a nation.
Laws like the Inflation Reduction Act, passed in 2022, have emerged to financially incentivize large companies like health systems for relying more on renewable energy sources like solar and wind. This is a result of the fact that legislators and other relevant parties are still debating the grave effects of climate change. As a result, health systems are launching sustainability programs to reduce their carbon footprint and eventually save money.
The announcement made recently that Texas-based Steward Health Care has declared bankruptcy and is selling all 31 of its hospitals is additional proof of the unstable financial state that many health systems are in. It should come as no surprise that many hospitals are still searching desperately for any way to reduce their expenses; experts in healthcare sustainability think that renewable energy projects are a key way to achieve this objective.
Here’s how renewable energy initiatives are helping four health systems nationwide save millions of dollars.
Oakland-based Kaiser Permanente According to Rame Hemstreet, chief energy officer of the health system, Kaiser Permanente got serious about solar energy about six years ago when it installed a green microgrid at its hospital in Richmond, California, in collaboration with the California Energy Commission.
In the event that the centralized power grid fails, a microgrid is a system that collects, stores, and releases energy on demand. To generate electricity, green microgrids typically rely on renewable energy sources such as wind turbines, biomass generators, solar panels, and other devices.
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A 250-kilowatt solar panel installation called the Richmond hospital’s microgrid is situated atop its five-story parking garage. With the capacity to store one megawatt-hour of energy in batteries until it is needed, it generates clean energy while the sun is shining. The microgrid has the capacity to supply emergency power for a maximum of three hours in the event that the hospital’s power goes out.
Hemstreet stated, “We see the green microgrid as an opportunity to scale the amount of on-site renewable energy production that is possible— as well as to improve the reliability and business continuity of our facilities.”
Additionally, he stated that Kaiser is nearing completion on the construction of a “much larger system” at its Ontario, California, hospital. When finished, this new green microgrid will have the capacity to store nine megawatt-hours of energy in batteries and generate two megawatts of solar energy—eight times as much as the one in Richmond.
According to Hemstreet, Kaiser has increased the number of medical office buildings in which it uses green microgrids to over 100 in recent years.
“Having a green microgrid has financial benefits. It enables you to store energy during periods of low cost and use it during periods of higher grid energy costs. Additional advantages include the cleaner power supply and resilience of those nearby office buildings, which would not be possible otherwise. It is the Triple Crown of energy supply, he said, bringing resilience, cost savings, and a decrease in carbon emissions.
Going green has reached all the way to Hawaii. According to Hemstreet, the health system finished construction of a new medical office building in West Oahu in 2021, which receives 75% of its electricity from a green microgrid.
According to him, the facility is making a 25% savings over what it would pay to purchase the same quantity of electricity from a nonrenewable grid. In total, the project has cut annual electricity costs by almost $100,000 while also reducing greenhouse gas emissions by roughly 400 tons.
The highest electricity prices in the nation are found in Hawaii. We would probably be spending about $325,000 a year at that specific facility, but right now we are only spending about $200,000,” Hemstreet said.
According to Jose Lozano, the company’s chief growth officer, Hackensack Meridian Health, located in New Jersey, started implementing programs to lessen its carbon footprint roughly ten years ago.
“We have launched programs to increase the use of LED lighting and improve plumbing water flushing because we recognize that the healthcare industry is one of the biggest users of electricity and utility infrastructure. Lozano said, “We are aware that we strain the grids.”
Last month, Hackensack Meridian Health and infrastructure company Bernhard signed a 30-year renewable energy partnership, demonstrating the health system’s continued dedication to climate-conscious power. The goal of the project is to equip Hackensack with the biggest battery and solar energy storage system of any nonprofit healthcare organization in the country.
Across its 18 hospitals, Hackensack is currently installing 50,000 solar panels that are manufactured in the United States. Although 50,000 panels can be difficult to see, according to Lozano, this quantity is “equivalent to filling up 27 football stadium fields.”
After the project is finished, Hackensack hopes to reduce carbon emissions by 10%, purchased electricity by 25%, and additional energy savings of 33%.
The project, which will require two to three years to finish, is receiving $134 million from the health system. He continued, “Inflation Reduction Act tax credits will end up covering about $50 million of that cost.”
According to Lozano, “we knew we needed to spend money in order to save money in the long run.”
AdventHealth
Central Florida-based AdventHealth also revealed a significant solar project last month. At its corporate campus, it installed 7,500 solar panels on top of four buildings and two garages in collaboration with the local solar development company ESA.
The solar microgrid is anticipated to produce 4,200 megawatt hours of electricity per year once it is up and running. By doing this, the campus’s reliance on electricity from the utility would be cut in half.
The health system’s director of sustainability, John Culver, stated that the project is expected to be finished by the end of the year.
We will physically supply about a third of our own power so we will not need to buy that, he said, adding that we expect to save about $20 million over the next 20 years through just the cost reduction on site. Additionally, our local utility offers various financial mechanisms that enable us to return a portion of our electricity to the grid at a value to us. Additionally, we anticipate receiving tax credits equal to roughly 30% of the project’s total cost from the IRA.
Culver mentioned that AdventHealth just revealed yet another agreement pertaining to renewable energy. The health system signed a contract with Texas-based renewable energy developer Scout Clean Energy in February, and it is currently starting to receive power from Scout’s 14,000-acre wind farm.
According to Culver, both the off-site wind energy program and the on-site solar program will supply all of AdventHealth’s electricity needs once they go live in 2026.
“The combined energy output of our two projects will be slightly more than one terawatt hour, or 1,000 gigawatt hours, or one million megawatt hours, or one billion kilowatt hours, or roughly the amount of energy used by an average home. So it’s massive,” he said.
Gundersen Health System
However, large health systems are not the only ones participating in the sustainability game. Gundersen Health System has been in the business for more than ten years. It consists of seven hospitals and sixty-five clinics, the most of which are situated in rural parts of Wisconsin, Minnesota, and Iowa.
When it came to the environment’s role in the health system, our CEO realized back in 2008 that a healthy environment is a prerequisite for having healthy patients. Project manager at Gundersen Envision Ariel Brophy said, “He brought in a few of our engineers and formed a group called Envision, which is an LLC of Gunderson.
She said that when Envision employees first started working for the organization, they looked for every way to save energy, like rearranging HVAC systems or changing out light fixtures. However, the focus of the work soon shifted to renewable energy.
Since launching Envision, Gundersen has executed almost a dozen renewable energy projects. The health system produced more energy than it consumed in 2014, making it the first in the nation to achieve energy independence.
A range of renewable energy sources, such as wood, wind, solar, and cow dung, are used in Envision’s projects.
It actually lowers our energy costs, which benefits our patients as well. Together, our energy projects from last year—which included both efficiency and renewable energy—saved $5.3 million. Brophy noted, “That money gets to go right back into our patient care.”
Everything at Envision is based on the concept of “two-sided green,” which, as she explained, means that initiatives must be advantageous for the health system’s budget as well as the environment.
Brophy stated, “We do not want to bill our patients for services they will not receive.”
