The Financial Side of Energy Efficiency: How to Develop an Energy Management Plan for Your Hospital or Medical Center

Transcription

1 The Financial Side of Energy Efficiency: How to Develop an Energy Management Plan for Your Hospital or Medical Center June 25, 2015 Presented by Dan Doyle, P.E., LEED AP Chairman, Grumman/Butkus Associates Moderated by Practice Greenhealth Practice Greenhealth 2015

2 This webinar is sponsored through an education grant from Thanks for supporting this webinar

3 Copyright Materials This presentation is protected by US and International Copyright laws. Reproduction, distribution, display and use of the presentation without written permission of the speaker is prohibited. Practice Greenhealth 2015

4 Presenter Dan Doyle is the Chairman of Grumman/Butkus Associates, a firm of energy efficiency consultants and sustainable design engineers. For the past 35 years, Dan's career has focused on energy conservation and efficiency improvements in new and existing buildings, especially energyintensive and mission critical facilities, such as laboratories, hospitals, data centers, and specialized manufacturing facilities. Dan is a frequent public speaker on sustainability topics and is active in multiple professional associations. Practice Greenhealth 2015

5 Learning Objectives Review 13 steps of a comprehensive energy management plan for a healthcare facility. Understand the high potential return on investment related to reducing healthcare facility energy costs. Learn about benchmarking options and appropriate responses to findings, including retro-commissioning and retrofits. Analyze financing options and local grant/rebate opportunities to pay for studies and upgrades. Practice Greenhealth 2015

6 Why Should We Care About Conserving Energy and Water in Hospitals?

7 Why Should We Care About Conserving Energy and Water in Hospitals?

8 Hospitals Are Energy-Intensive Facilities Challenge: Hospitals use two to three times more energy (per sq. ft.) than office buildings 24/7/365 occupancy Demands for high airflow, filtration Lots of energy-consuming equipment (MRIs, PET scans, etc.)

9 Hospitals Are Energy-Intensive Facilities EPA estimates that the U.S. healthcare sector s current annual electricity use of 73 trillion kilowatt-hours (kwh) contributes $600 million per year to healthcare costs via increased asthma and other respiratory illness. Reducing energy usage reduces a hospital s operational costs and reduces a hospital s carbon footprint

10 ASHE Benchmarking Data: Cost Breakdown of Facility Budgets Energy represents more than half of the healthcare facility budget, according to current benchmarking data from the American Society for Healthcare Engineering. That s more than staffing, materials, and service contracts combined.

11 Hospitals Are Energy-Intensive Facilities Opportunity: $100,000 reduction in energy costs is equivalent to $2 million in new revenues (assumes 5% ROS) Research by the EPA shows that hospitals that implement energy conservation measures (ECMs) outperform competing hospitals by as much as 10% in net operating income EPA Study, Boosting Your Bottom Line Through Improved Energy Use, June 2005

12 So What Constitutes the Master Plan? Comprehensive Approach: Utility tracking Benchmarking Energy purchases/ supply-side management Operations and maintenance Retro-commissioning (RCx) Retrofit of existing building systems/equipment Building infrastructure planning New buildings, major additions & renovations Commissioning and monitoring-based commissioning (Cx, MBCx) Equipment purchasing policies Grants and rebate opportunities Recognition opportunities Financing options

13 Utility Tracking To set goals for improvement and later verify/track results, establishing a tracking system is essential. Reports should have sufficient detail to reveal usage patterns or deviations without being overly long. Graphical data is best.

14 Utility Tracking Reports should employ statistical tools, such as regression analyses, to allow more direct comparison of different time periods. If gas, electricity or water is saved between two periods, a $ cost avoidance should be calculated.

15 Utility Tracking A running comparison of budgeted and actual usage and cost should be provided in tabular and graphical formats. Gas and electricity consumption data can be converted to CO 2 emissions, which can also be tracked.

16 Utility Tracking The energy reporting system can be used to set savings goals and then track progress

17 Utility Tracking: Don t Forget the Water! Water and energy are inextricably linked Reducing water consumption reduces energy use: The extraction, treatment and delivery of water accounts for as much as 15% of energy consumption in some parts of the country Energy comprises 80% of a typical water bill Reducing electricity and gas consumption saves water usage: Power plants use lots of fresh water (45% of nationwide total), and nearly half of that evaporates (per latest U.S. Geological Survey water use report, 2010) The production of natural gas by hydraulic fracturing uses large quantities of water By increasing efficiency through water conservation and recycling practices, your hospital can further cut its energy consumption and thus its carbon footprint

18 Benchmarking Participate in benchmarking to the fullest extent possible. For energy, there are three good options: EPA s Energy Star G/BA s Annual Energy & Water Benchmarking Survey Practice Greenhealth s new Benchmarking Survey (released 2015)

19 ENERGY STAR What Is It? EPA s nationally-recognized energyefficiency benchmarking tool for most building types Buildings receive a percentile rank (0 to 100) Uses a database of 191 hospitals developed in conjunction with ASHE Results are partly normalized for weather Heating degree days are not normalized

20 ENERGY STAR What Is It? Scores of 75 or above are eligible for ENERGY STAR label Must meet additional IEQ criteria (ventilation, lights) Certain facility characteristics (>50% acute care beds) Score of 69 or above eligible for LEED EB Does not include energy costs or water for peer comparisons single-site tracking only

21 Practice Greenhealth Sustainability Benchmarking Report Compilation of metrics from 233 hospitals that submitted entries to 2014 Partner for Change awards program Provides best practice metrics for energy, water, waste from the top performers Good data for goal setting Member benefit PGHBenchmarkingReport

22 G/BA s Hospital Energy & Water Benchmarking Survey G/BA 2014 Survey vs. ENERGY STAR Note: ENERGY STAR released new site-to-source conversion factors in their Portfolio Manager Technical Reference in July 2013 that lowered the source conversion factor for electricity from 3.34 to Using the prior value of 3.34, the G/BA source energy would have been 486 kbtu/ft 2 /year.

23 G/BA s Hospital Energy & Water Benchmarking Survey

24 G/BA s Hospital Energy & Water Benchmarking Survey

25 G/BA s Hospital Energy & Water Benchmarking Survey

26 G/BA s Hospital Energy & Water Benchmarking Survey

27 G/BA s Hospital Energy & Water Benchmarking Survey

28 G/BA s Hospital Energy & Water Benchmarking Survey

29 G/BA s Hospital Energy & Water Benchmarking Survey 2014 Survey Summary (Data for CY2013) STATISTICS GAS/STEAM ELECTRIC TOTAL* Sample Mean Btu/ft 2 $/ft 2 Btu/ft 2 $/ft 2 Btu/ft 2 $/ft 2 Overall (102) 145,480 $ ,975 $ ,456 $3.27 Illinois (54) 148,905 $ ,944 $ ,850 $3.01 Wisconsin (29) 133,316 $ ,604 $ ,920 $3.29 Michigan (7) 167,133 $ ,543 $ ,676 $3.59

30 G/BA s Hospital Energy & Water Benchmarking Survey Energy Usage and Costs Gas and Electricity Prices

31 Energy Purchasing / Supply-Side Management Use RFP process to obtain apples-to-apples pricing Gas and electricity are commodities Suppliers will try to structure proposals to avoid direct comparisons based on commodity pricing Get pricing for both short and long term Consider a combination of locked-in or fixed pricing along with some portion of index-based pricing Utilize G/BA s benchmark data to assess how well you re doing

32 Energy Purchasing / Supply-Side Management

33 Operations & Maintenance Adjustments to procedural practices to reduce energy and water consumption Usually no-cost or low-cost measures: Demand response / load shedding Steam traps Water treatment Training

34 Retro-Commissioning (RCx) During the past five years, G/BA has successfully completed 25 retro-commissioning projects in Chicagoarea hospitals. The savings breakdown is shown below. $2,633,719 The average payback is five months 19,000,000 kwh equivalent to the annual electricity use of 1,400 homes 1,000,000 therms equivalent to the annual natural gas use of 2,100 homes

35 Retro-Commissioning (RCx)

36 Retro-Commissioning (RCx) Distribution of Total RCx Natural Gas Savings

37 Retrofit of Existing Building Systems and Equipment It s likely that 75 to 85% of the hospital buildings that will exist in 20 years already exist. Bringing the older, less-efficient buildings up to par should be a key aspect of the program. Many utilities have programs that help fund detailed energy studies as well as the implementation of any efficiency measures identified in the studies. Your benchmarking data may suggest that there are good opportunities for efficiency improvements.

38 Retrofit of Existing Building Systems and Equipment Sample excerpt from a recent hospital energy study, with ECMs Energy Conservation Measure Annual Savings Individual Capital Cost Simple Payback (yrs) Annual Savings Capital Cost Cumulative Simple Payback (yrs) Reduction in Total Energy Costs Incandescent Lighting Retrofits $1,650 $1, $1,650 $1, % Pump Modifications $2,200 $8, $3,850 $10, % Fluorescent Lighting Retrofits $51,100 $223, $54,950 $233, % AHU Variable Frequency Drives $8,490 $40, $63,440 $274, % High Efficiency Motors $11,400 $61, $74,840 $336, % Variable Air Volume Conversion - Pneumatic Controls $28,200 $161, $103,040 $497, % Conversion to DDC Controls $67,600 $403, $170,640 $900, % Oxygen Trim Control $9,240 $56, $179,880 $956, % Air-to-Air Heat Recovery $29,100 $199, $208,980 $1,155, % Variable Air Volume Conversion - DDC Controls $28,200 $264, $237,180 $1,419, %

39 Retrofit of Existing Building Systems and Equipment Sample utility-company incentives from recent hospital system boiler burner retrofit project (project included six sites owned by same system). Funding Agency Agency Type Incentive ($) Nicor Gas Suburban gas company $555,300 Peoples Gas City of Chicago gas company $202,000 North Shore Gas Suburban gas company $53,400 ComEd Electricity for all locations $20,000

40 Retrofit of Existing Building Systems and Equipment Distribution of Total Electricity Savings (summary results of 25 hospitals)

41 Retrofit of Existing Building Systems and Equipment Distribution of Total Natural Gas Savings (summary results of 25 hospitals)

42 Building Infrastructure Planning Buildings are like complex machines over time, parts break down or wear out and need to be replaced. Whenever an energy-using system or piece of equipment is replaced or upgraded, this should be treated as an opportunity to exercise creative problem solving. Replace failing equipment, improve energy efficiency and reduce operating costs. In some cases, the cost to operate a piece of equipment over its service life is several times the initial cost of the equipment. These are also opportunities to make system changes to achieve efficiency improvements

43 Building Infrastructure Planning A building infrastructure master plan can help integrate the ongoing design and construction process with the campus energy management and sustainability programs. Air handlers Boilers Chillers, cooling towers Plumbing Electrical Fire protection Medical gases, compressed air

44 Building Infrastructure Planning Estimates of Service Lives of Various System Components Equipment Item Median Years Equipment Item Median Years Equipment Item Median Years Air conditioners Air terminals Air-cooled condensers 20 Window unit 10 Diffusers, grilles, and registers 27 Evaporative condensers 20 Residential single or split package 15 Induction and fan-coil units 20 Insulation Commercial through-the-wall 15 VAV and double-duct boxes 20 Molded 20 Water-cooled package 15 Air washers 17 Blanket 24 Heat pumps Ductwork 30 Pumps Residential air-to-air 15 b Dampers 20 Base-mounted 20 Commercial air-to-air 15 Fans Pipe-mounted 10 Commercial water-to-air 19 Centrifugal 25 Sump and well 10 Roof-top air conditioners Axial 20 Condensate 15 Single-zone 15 Propeller 15 Reciprocating engines 20 Multizone 15 Ventilating roof-mounted 20 Steam turbines 30 Boilers, hot water (steam) Coils Electric motors 18 Steel water-tube 24 (30) DX, water, or steam 20 Motor starters 17 Steel fire-tube 25 (25) Electric 15 Electric transformers 30 Cast iron 35 (30) Heat exchangers Controls Electric 15 Shell-and-tube 24 Pneumatic 20 Burners 21 Reciprocating compressors 20 Electric 16 Furnaces Package chillers Electronic 15 Gas- or oil-fired 18 Reciprocating 20 Valve actuators Unit heaters Centrifugal 23 Hydraulic 15 Gas or electric 13 Absorption 23 Pneumatic 20 Hot water or steam 20 Cooling towers Self-contained 10 Radiant heaters Galvanized metal 20 Electric 10 Wood 20 Hot water or steam 25 Ceramic 34

45 Building Infrastructure Planning Overall Rating (A F) Equip Tag # Age (yrs) Expected Service Life (yrs) Capacity (cfm) A S-8B ,000 B S ,500 B S ,000 B S ,000 C S ,620 C S ,375 A S ,020 C S ,000 C S ,375 C S ,160 D S ,360 Location Service Areas System Type South Bldg, 2nd Flr Roof East West Bldg, Rm 446W East West Bldg, Rm 646W East West Bldg, Rm 946W South Bldg, Rm 001S South Bldg, Rm 001S South Bldg, Rm 001S South Bldg, Rm 001S South Bldg, Penthouse South Bldg, Penthouse South Bldg, Penthouse 2 South, Labor & Delivery 4 East West, Patient Flr 6 East West, Patient Flr 9 East West, Patient Flr South Bldg, Ground Flr Criticality (1 to 5) Energy Efficiency (A to F) Overall Condition VAV/Rht/Recirc 5 A Good, none None CV w/room Fan Coil CV w/room Fan Coil CV w/room Fan Coil 4 D Good, none None 4 D Good, none None 4 D Good, none None DD/Recirc 3 D Fair (13) None South Bldg, 1st Flr DD/Recirc 2 D Fair (7) (13) None South Bldg, 1st Flr, Lab Area South Bldg, Ground Flr South Bldg, 2nd - 4th Flr Core South Bldg, 5th - 9th Flr Core & Bridges South Bldg, 2nd - 9th Flr Patient Rms Induction Units DD/100%OA 4 B Good-New None DD/Recirc 2 D Fair (7) (13) None DD/Recirc 4 D Fair (6) (7) None DD/Recirc 4 D Fair (6) (7) (13) None IU/100%OA 4 F Fair (6) None Code Issues

46 Building Infrastructure Planning Equipment Type Overall Rating (A F) Equip Tag # Expected Age Service (yrs) Life (yrs) Capacit y (tons) Peak Plant Load (tons) Redundanc y (Y or N) Energy Refrig Efficienc Type y (A to F) Overall Condition Code Issues Centrifugal Chiller D CH ,050 D R-12 Good: (1) (4) None Centrifugal Chiller D CH ,050 D R-12 Good: (1) (4) None 3020 Y Centrifugal Chiller D CH C R-12 Good: (1) None Centrifugal Chiller A CH ,254 A R-134a Good None Reciprocating Chiller D N Booster D R-22 Fair None <140 N Reciprocating Chiller D S Booster D R-22 Fair None Reciprocating Chiller C Spec Proc <15 N F R-22 Fair None Cooling Tower A CT ,050 A -- Good: (17) None Cooling Tower A CT ,050 A -- Good: (17) None Y Cooling Tower A CT A -- Good: (17) None NA Cooling Tower C CT ,250 A -- Good: (17) None Cooling Tower D N/S Booster N C -- Fair: (9) (10) (11) (19) None

47 Building Infrastructure Planning System Equipment Total Green/ Good Yellow/Fair Red/Poor Air Handling Systems Boilers/Steam Systems Chillers/Cooling Systems Electrical Systems Fire Protection Systems Medical Air/Vacuum Plumbing Systems Total

48 EXAMPLE BUDGET SUMMARY OF RECOMMENDED PROJECTS (over $500,000) Running Running Fiscal Year Ranked Project Total Total Commitment Score Projects Total s 2001 Cash 675 Sprinkler remaining areas 2,500 2,500 2,500 2, Upgrade domestic water service ,250 3, New 1,200 kw generator; add fire pump to emergency power 1,300 1,300 4,550 4, Upgrade air handling units 550** ,550 6,100 6,100 VS-1,ACS-4,VS-102/103/ New boiler plant 75* 5,000 5,075 11,175 6, Deferred maintenance: Upgrade/replace piping ,925 6, Air handling unit replacement AHU - f,g,emi,mammoth #1 60* 1,150 1,210 13,135 6, Chilled water distribution upgrade 460** 600 1,060 14,195 8, Add chiller capacity/replace cooling towers 60* 1,000 1,000 2,060 16,255 8, Add 1,000 tons chiller capacity 550** 600 1,150 17,405 9, Building Infrastructure Planning Deferred maintenance: Replace elevator controls Deferred maintenance Repair & replace lintels ,000 19,405 9,755 1,300 1,000 1,000 1,000 1,000 5,300 24,705 11,055

49 Major New Buildings, Additions, and Renovations Create Design Standards covering: Building envelope Lighting / electrical systems HVAC Plumbing Temperature controls / EMS Medical air / vacuum

50 Major New Buildings, Additions, and Renovations Set goals for new construction, such as: Renovations: Must be 20% below IECC New construction: Must be 30% below IECC LEED Gold Certification

51 New Projects: Cx and MBCx Commissioning (Cx): The Commissioning Process is a quality-oriented process for achieving, verifying, and documenting that the performance of facilities, systems, and assemblies meets defined objectives and criteria. -- ASHRAE Guideline 0 The process is performed specifically to ensure that the finished facility operates in accordance with the owner s documented project requirements and the construction documents. Commissioning begins in pre-design and continues through design, construction, and occupancy of the facility.

52 Monitoring-Based Commissioning (MBCx) Ongoing feedback and opportunities for continuous improvement Initial Investigation and Utility MBCx Application Data Collection Acquisition Monitoring Data Analysis Connectivity Configuration Reports and Support

53 Equipment Purchasing Policies Purchase only ENERGY STARrated equipment for equipment such as small refrigerators and desktop electronics.

54 Equipment Purchasing Policies There are big differences in energy/water consumption of various pieces of process equipment examples: Chillers Cooling towers Autoclaves / sterilizers Low-temperature freezers Ice makers Medical air / vacuum Employ a total cost of ownership evaluation for medical products or laboratory equipment. Include energy, maintenance, end of life (or use) costs, waste disposal These may not be included in supply chain considerations

55 Purchasing Policies: HVAC Pre-purchase major HVAC equipment based on lowest LCC

56 Grant and Rebate Opportunities Many utilities and state governmental agencies have rebate and incentive programs that can help fund your program: Energy audits Retro-commissioning Prescriptive efficiency measures, like: Lighting, variable frequency drives, high-efficiency air conditioning equipment Custom efficiency measure: Usually system changes Convert air or water systems to variable flow Green features in new construction Combined heat+power (CHP) systems Renewables Wind, solar, geothermal

57 Recognition Opportunities Practice Greenhealth s Environmental Excellence Award USGBC: LEED for new and existing buildings ASHRAE awards ASHE E2C / Energy to Care program EPA s ENERGY STAR label for facilities

58 Financing Options Traditional path: Fund with operating income or capital budgeting process (do-it-yourself) 3 rd party financing with ESCO Energy Services Agreement (ESA) PACE financing, Power Purchase agreements (PPAs), leases Green revolving fund utilizing capital from hospital s endowment fund

59 Do-it-Yourself (DIY) Projects are identified, designed, financed, and implemented by the owner Advantages Highest return Highest degree of control Disadvantages Requires available capital Risk of failure borne 100% by owner

60 Energy Services Company (ESCO) Projects are identified, designed, and implemented by a thirdparty ESCO ESCO generally arranges financing through a thirdparty financial institution ESCO typically guarantees savings will meet the financing payments

61 Energy Services Company (ESCO) Advantages Packaged solution Performance guarantee Predictable monthly payment Disadvantages Higher financing costs, lower returns Long contracts often required Need to be diligent to avoid fox guarding the henhouse syndrome Often cherry pick the lowhanging fruit

62 Energy Services Agreement (ESA) Financial instruments established by investment banks to invest in energy savings projects Projects are identified, designed, implemented, and financed by a third-party entity Payments are based on historical energy usage adjusted for weather and occupancy

63 Advantages Packaged solution Performance risk borne by third party Typically shorter contracts than ESCO arrangements Disadvantages Usually lower cost projects than ESCO approach Need to be diligent to avoid fox guarding the henhouse syndrome

64 Green Revolving Fund (GRF) Owner-established fund expressly for investing in energy efficiency projects (and other sustainable initiatives) Cost savings are used to replenish the fund and make it self-sustaining Shifts institutional mindset from viewing energy projects as expenses to viewing energy projects as low-risk / high-yield investment opportunities

65 Green Revolving Fund (GRF) Typical endowment fund returns around 10% Established GRFs report 28% annual ROI (2012 Sustainable Endowments Institute report) As of 2012, around 76 institutions had established GRFs half of which were established in 2011/2012 Green Revolving Funds By Capitalization, 2012 Source: Sustainable Endowments Institute

66 Green Revolving Fund (GRF) Advantages Highest return Highest degree of control Demonstrates commitment to sustainability with financial accountability Disadvantages Requires seed capital Requires in-house resources to monitor, evaluate, and implement projects

67 Green Revolving Fund (GRF) GRF example $750,000 air handling unit replacement / variable air volume conversion $125,000 annual savings 25-year project life Six-year simple payback 16.7% annual ROI 417% lifetime ROI (will be higher with rising energy costs)

68 Green Revolving Fund (GRF) Example (continued) To replenish GRF, require 50% of savings to be returned to the GRF until the project is paid off $62,500 annual repayments for 12 years

69 Green Revolving Fund (GRF) Sample Institutions with GRFs (2012 data from Sustainable Endowments Institute)

70 In Summary: The Energy Management Plan Utility tracking Benchmarking Energy purchases / supply-side management Operations and maintenance Retrocommissioning (RCx) Retrofit of existing building systems / equipment Building infrastructure planning New buildings, major additions & renovations Commissioning and monitoring-based commissioning (Cx, MBCx) Equipment purchasing policies Grants and rebate opportunities Recognition opportunities Financing options

71 Thank You Questions? Daniel L. Doyle, P.E., LEED AP O+M