This article originally appeared in in the magazine Inside ASHE, a publication of the American Society For Healthcare Engineering, in the Summer 2013 issue.
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Cape Cod Healthcare (CCHC) is the major healthcare provider on Cape Cod. With two hospitals, one skilled nursing facility, one assisted living center, five major outpatient centers, and numerous satellite facilities totaling more than 1.2 million square feet of space, our yearly electric bills cost millions of dollars. While Cape Cod Healthcare had already implemented many cost saving measures, the increasing demands of technology and patient care made stabilizing costs a major goal.
Like most health care facilities, Cape Cod Healthcare faces both rising energy use and rising bills, and is searching for a way to stabilize costs.
NSTAR Electric and Gas, the leading energy provider in Massachusetts, is facing mandates to increase its alternative energy portfolio. A partnership project between our hospitals and NSTAR resulted in a 6-megawatt solar farm that should help both our health care system and the energy provider meet goals.
Cost effective energy with a corporate commitment to the environment
We were seeking a cost-effective energy solution while furthering our corporate commitment to environmental stewardship. We needed to find a green solution that gave us a win-win for containing costs while not losing site of our primary mission – excellent patient care. Green is good, but not at the expense of patient care.
We considered many solutions, including building our own solar or wind power facilities. I hired an outside consultant to evaluate alternatives. EarlyBird Power provides energy management and sustainability expertise and brokerage.
“We sat down and did an exhaustive review specific to CCHC with the goals of limiting development risk but realizing the cost savings benefits,” said Shaun Pandit from EarlyBird Power in Milton, Mass. “We wanted to help the environment, but needed costs to be aligned with the overall mission of health care.”
Cape Cod Healthcare faced a long list of geographic and weather considerations
All CCHC facilities are on Cape Cod, a peninsula that juts into the Atlantic Ocean, so putting solar panels on any CCHC roofs was ruled out due to concerns about extreme weather, winds, and hurricanes.
Next, we searched for sites near one of the campuses that could be used to create a local solar or wind farm. However, Cape Cod is largely developed, and much of the open space on the Cape falls under environmental protections, so it was determined that a suitable local site was not available.
After ruling out a local build, we widened our search to off-Cape solutions. That’s where NSTAR enters the story.
Finding a partner in NSTAR
Since the 1980s, Massachusetts net metering regulations allows anyone who generates more power than they use to “export” their power back to the power grid and receive a credit. Homeowners with a couple of photo-voltaic panels on their roofs or municipalities who erect huge wind turbines both benefit from this regulation.
Equipment can be expensive and maintenance may require specialized skills, limiting the number and scope of installations.
To encourage green energy projects, the Massachusetts Green Communities Act of 2008 includes a mandate that 15 percent of electricity be supplied by renewable power resources by 2020. This means that the large energy producing companies—including NSTAR, the energy provider for CCHC–have incentives to facilitate green energy projects. This is done by creating energy credits, which are valuable to the energy market.
Net Metering Contract Solution
Typically, a green energy developer will negotiate a long-term net metering contract (lasting 5-20 years) with a large-scale user to purchase a fixed amount of the expected output of a wind or solar energy array.
In the best situations, the energy user gets a favorable, fixed price for a set amount of energy, resulting in long-term savings. The energy user’s green energy credits get used, and they get the benefit of lower energy costs without actually installing or maintaining equipment.
With a contract for energy credits, the green energy company builds the energy array and then and maintains the wind or solar equipment. As they are producing far more power than they are using, net metering allows them to sell their excess energy back to the power grid. The more favorable a contract they negotiated with the energy user, the bigger the profit the green energy producer can make.
A typical net metering contract specifies sharing per-kilowatt hour credits between the energy user and the green energy developer.
Under Massachusetts laws, the solar energy credits are generous—worth almost the entire supply price plus transmission and distribution charges. If an energy user does not understand the contract and its implications, solar developers can lock energy customers into contracts where the developers are reaping windfall profits—as much as 90 percent of the credit, according to PowerOptions, an energy power buying consortium created in 1996 by Massachusetts Health and Education Facilities Authority (HEFA).
Project Gets Underway
In June 2011, CCHC issued a request for proposals to seek “qualified bidders wishing to use CCHC’s NSTAR electric accounts for the purposes of allocating net metering credits produced by a project…outside of CCHC property.” The RFP was structured to protect CCHC from any financial risk and provide the highest possible value for the credits.
Several developers expressed interest, but were eliminated in the vetting process due to lack of experience, insufficient or non-existent current properties, and/or less-favorable contract payments.
The bids were assessed on a variety of factors including completion dates, capacity, net revenue to CCHC, experience with other large-scale projects, permitting and approval status, and references from other project partners.
While there were many similarities in the final bids, Southern Sky Renewable Energy from Boston stood out for both having its permitting in place and offering the most attractive financial terms for CCHC. It also had a project underway at the Canton Landfill Solar Facility in Canton, Mass., that was similar in size to the project CCHC was seeking.
The fact that the Canton project would be nearly complete before Southern Sky began our project was attractive because they would have a local workforce in place and have a recent project with NSTAR as a reference point for our project. They also offered specific, attractive financial terms to CCHC.
Off-Site: The best solution for CCHC and its partners
For its project with CCHC, Southern Sky proposed building the Ravenbrook Farms Landfill Solar (RFLS) Facility, a 6-megawatt solar farm in Carver, Mass. The landfill had previously been used to dispose of demolition debris, but had remained unused for more than a decade. Southern Sky proposed turning the landfill into a solar farm, which was supported by the town of Carver.
After being awarded the bid, Southern Sky began site prep in early fall 2012.
All engineering, site layout, and technical reviews were completed and construction began in November 2012. The project is slated to begin producing power by mid-summer 2013. We continue to meet regularly on the project with representatives from Southern Sky.
Keeping the core mission in mind: Healthcare
CCHC is a medical facility, not an energy producer. Our cost savings through this project will exceed $300,000 annually.
If we can reap the cost-savings benefits of solar technology without having to maintain or install equipment, we achieve two goals: we support green energy, which is an important corporate objective, and we control our long-term energy costs, which leaves more dollars for our core mission—patient care.