Hospitals and Healthcare Facilities Turn to District Energy
Why District Energy Has Become the Optimal Energy Choice
Hospital administrators have one key concern that drives all decision-making: how to provide the highest quality care to their patients cost effectively and efficiently. Each and every business decision a hospital makes reflects this objective and a bad one can truly mean life or death – especially in today’s challenging COVID-19 environment when cash is tight, and margins are thin. Hospital leadership is feeling the pressure to think creatively of ways to reduce costs, while also maintaining high standards of patient care and safety.
So why is this leading more hospitals to turn to district energy? In short, hospitals need to look for trustworthy partners, vendors and service providers so they can outsource non-core functions and focus on what they do best – caring for our communities. By relying on district energy experts to manage energy infrastructure and ensure an uninterrupted thermal energy supply, healthcare providers can focus on their core priorities and trust that their energy needs are being met. There are many more reasons why district energy has become the preferred energy solution for healthcare facilities.
How District Energy Frees up Cash and Operating Budgets
First, with rising costs and shrinking margins, especially during this unprecedented global pandemic, hospitals need to look for each and every potential opportunity to save money without compromising care. Cash flow is a top priority for healthcare executives and there is a growing and perceptible urgency for cost control. Not to mention, making the wrong energy choice can be expensive, especially when your area of expertise is running a hospital and not a power plant. Hospitals are the second most energy-intensive commercial building type in the US according to the US Energy Information Administration (EIA), so without proper management from a reliable partner, energy can be a big line item expense and a major drag on budgets.
One of the primary financial benefits of district energy is the avoidance of operating and maintenance (O&M) costs associated with onsite mechanical rooms, boilers and chillers. This can save hospitals up to 30 percent per year in their operating budgets. In addition to operating expenses, investing in energy infrastructure can cost millions in upfront capital. If hospitals have cash on hand, they have to make tough decisions, weighing opportunity costs and choosing between patient care equipment or other infrastructure investments related to energy or otherwise. Without cash on hand, healthcare facilities are faced with borrowing costs that put pressure on the returns of their investments. With district energy, not only do hospitals save on operating expenses, but many district energy companies are also willing to invest alongside their customers, reducing or eliminating any upfront costs of connecting to the system.
With 99.99% Reliability, District Energy Supports Optimal Patient Care
Second, hospitals have unique energy needs. Not only do they operate 24 hours a day, 365 days a year, but they also require thermal energy for heating, cooling, and, importantly, sterilization to ensure patient safety. This means they need ultra-reliable energy they can count on. While service interruptions are a disturbance to any business, any disruption to energy delivery to a hospital can have dire consequences. Here is what Bob Biggio, the Boston Medical Center’s Vice President of Facilities and Support Services, had to say about the importance of reliability:
“As a medical campus treating a diverse range of healthcare needs, it is absolutely vital for Boston Medical Center to maintain continuous and consistent heating, sterilization and comfort levels. After careful analysis of all of our potential options, it became clear that district energy would not only best support our operations, but will also help us to achieve our aggressive sustainability goals.”
District energy is 99.99% reliable, better than any other alternative, particularly during unexpected grid outages due to extreme weather events. With onsite fuel storage, the ability to integrate various fuel types, and multiple generating assets, district energy systems have redundancies built in to support 24/7 energy delivery, even in the event of a black-out. This flexibility and redundancy contributes to the energy security of hospitals and in turn, the communities served by district energy. In addition, most operators of district systems have the ability to isolate sections of their network to perform maintenance or protect the broader system in the event of an emergency. This is reliability that hospitals require.
How District Energy Is Supporting Sustainability Goals
And finally, district energy has the added benefit of being efficient, low carbon, and sustainable. While most hospitals today are hyper focused on patient care and costs, many, like the Boston Medical Center, are also staying committed to their sustainability targets. District energy is fuel agnostic and leverages many different and diverse sources to generate the thermal energy that serve hospitals’ heating, cooling and sterilization needs. For example, many district energy systems leverage combined heat and power (CHP) plants, which not only generate electricity, but the by-product (steam) is then utilized for thermal energy. This recycled “green steam” is a cost-efficient, reliable way for hospitals to stay true to their carbon reduction objectives without compromise.
For these reasons, hospitals are more and more frequently turning away from natural gas and on-site mechanical rooms and relying on resilient district energy to supply their thermal energy needs, save millions in upfront capital costs and direct their operational focus to patient care.