Navigant Research Blog

Seeking Reliable Power, Hospitals Go Local

— April 21, 2015

A few weeks ago, Hitachi in India announced that it is working on a pilot at the All India Institute of Medical Sciences (AIIMS) hospital in New Delhi that focuses on energy efficiency. The project has three major goals: to upgrade the facilities of AIIMS, install a highly efficiency data center, and incorporate the data from the energy management system (EMS) to optimize the facility’s overall performance. This is the latest example of energy management coming to the fore in healthcare facilities. The drivers and barriers for advanced energy management in healthcare are detailed in Navigant Research’s recent report, Energy Management for Healthcare Markets.

The energy management for healthcare market expected is to grow from $949 million in 2015 to over $2 billion in 2024, driven by government regulation on one hand and corporate strategy on the other, both working to keep costs low for hospitals. According to the U.S. Energy Information Administration, energy conservation measures have been employed by hospitals at high rates, yet our research shows that the integration of these system with digital EMSs is less universal.

Surviving Disaster

Improving the energy posture of hospitals can also help them become more resilient. After events like Hurricane Katrina (when the failure of hospital power systems was citywide and catastrophic, as revealed in Sheri Fink’s devastating account, Five Days at Memorial) and Hurricane Sandy, hospitals are incorporating plans to function without utility-based power in the face of a disaster. At the simplest level, a highly energy efficient hospital running with efficient HVAC and lighting systems would need less power than an inefficient one. But the hospital’s ability to leverage onsite backup power can make the difference, literally, between life and death in a disaster.

One Wisconsin healthcare system has taken the concept of resilience to its logical extreme. Gunderson Health System has endeavored to generate its own power from a myriad of sources. This includes burning biomass from waste wood, employing dairy waste digesters, using methane captured from local landfills, and gathering power from wind turbines on farms in the area. Gunderson claims to be the first energy-independent healthcare system in the world. More significantly, the system presents itself as an example of a locally powered healthcare facility, proving that it’s integrated into the local community.

Going Micro

Unlike Gunderson, most hospitals use diesel generators for power backup. These generators are seldom-used but ready to deliver backup power when needed. And if you’ve ever been near the hospital when they’re running, you know how unpleasant they are to be around. While the price of crude oil has dropped in global markets, electricity prices have not universally fallen. The use of fossil fuel-based generators as backups poses an interesting question: If the price of gas stays low, as forecasted, will hospital facilities shift their use of petroleum generators to essentially become microgrids, to save costs?

Although most facilities are not prepared to do so at present, it’s highly likely that all new healthcare facilities will introduce more flexible backup power, to avoid more Katrinas in the future.

 

March Madness—For Clean Energy

— April 7, 2015

This year’s NCAA basketball tournament was more surprising than most, with an estimated 70 million brackets filled out, the series of Big 12 upsets in the first round now referred to as Black Thursday, and our very own James McCray accurately predicting a Badgers/Duke Championship in the Navigant Research pool. What is more surprising than any of this, however, is the Rocky Mountain Institute’s (RMI’s) renewable energy bracket. RMI filled out a bracket based on the renewable energy portfolio of the utility serving the main campus of each school participating in the tournament, and the results are worth delving into.

Upsets & Underdogs

For starters, this year’s Final Four, Michigan State, Wisconsin, Duke, and Kentucky, did terribly in RMI’s renewable energy bracket. Of the four teams, only two made it past the first round. National champion Duke, with 1.1% renewable energy incorporated in its energy mix, was taken down in the first round by Robert Morris with just 6.2% renewable energy generation. Kentucky, which was favored to win the tournament this year but was taken down by the Badgers, lost in the first round due to a whopping 0.5%. Michigan State made it through the first round with 3.5%, but quickly lost in the second round to Belmont, with 15% renewable energy generation. Wisconsin, which has the most impressive renewable generation of the actual Final Four with 12%, made it past the first round, but quickly lost to Oregon.

This brings up the next revelation in RMI’s bracket—Oregon is the clean energy national champion. The Ducks were picked due to the 95% renewable energy generation of their campus, beating Eastern WA with 87.7%. The surprise is not that Oregon is the greenest school in the tournament, but that the percentage of clean energy powering the Duck’s campus is incredibly high. 95% is a pleasantly surprising number to see alongside other contenders in the bracket, such as RMI’s winners for the Midwest and East, Texas and UC Irvine, with just 14.6% and 21.6%, respectively.

Keep Playing

The message to take away from RMI’s renewable energy bracket is that this year’s March Madness teams, especially the Final Four, may be great at college basketball, but each could use some work on their sustainability practices and renewable energy penetration back on campus. Some schools, like Gonzaga with 56% and San Diego State with 23.6%, are a breath of clean air. But most schools fall somewhere below 10%, including highly ranked Villanova with 6.2% and Arizona with 5.6%.

It’s also important to note that different rankings produce different results. For example, the Sierra Club’s Greenest American Colleges ranking places UC Irvine as the greenest school in the country due to its ambitious energy efficiency and energy reduction goals, but RMI’s bracket has it losing in the Final Four. Rankings also depend upon different factors that can produce different results. For instance, Kentucky actually has a combined heat and power (CHP) program that generates 18% of its annual energy production, but the generator in this CHP system runs on natural gas and coal. As far as rankings go, should this CHP system be included because the school doesn’t waste the thermal heat produced during combustion, or should it be left out because the generators do not use sustainable resources?

To learn more about ways that colleges can increase their renewable energy initiatives and become more sustainable, check out Navigant Research’s report on Zero Energy Buildings.

 

Storage Helps Ease Schools’ Demand Charge Pain

— April 7, 2015

For many businesses, demand charges are like room service delivery charges for travelers, only more painful. Utilities levy demand charges on customers for short duration peak power usage during a month, which can add between 15%–50% to the cost of a utility bill for the entire month. In some cases, this can mean hundreds or thousands of dollars for a few minutes of excessive power use.

Utilities justify these substantial fees because high consumption of power at peak times can strain transmission and distribution assets or cause them to invoke their most costly generation equipment.

No Money Down

In power-constrained California, where demand charges run high, five school districts have turned to batteries to save money by reducing or avoiding demand charges. Energy storage solutions provider Green Charge Networks (GCN) developed energy storage systems using battery packs from Samsung SDI for Mountain View-Los Altos Union High School District, Oak Park Unified School District, Butte Community College, Peralta Community College District, and California State University, Fullerton.

GCN’s CEO Vic Shao told me that because of the high demand charges (Shao says San Diego Gas and Electric charges $45 per kilowatt), his company can provide the systems for free to the schools. The company can recoup its investment quickly by receiving a share of the savings that the schools receive from avoiding demand charges. For perpetually cash-strapped schools, a no-money-down solution for cutting energy costs can be compelling.

Solar Fee

Since the partnering schools are focused on reducing emissions, GCN also threw in free Level 2 electric vehicle (EV) chargers to incentivize employees and the districts to buy EVs. Shao said that thanks in part to California’s incentive program for storage and other clean energy technologies, the company has done more business aimed at combatting demand charges in the last 2 months than in the previous 3 years. New York City is another attractive market for storage systems, according to Shao.

Similarly, demand for energy storage systems in Arizona could be on the rise thanks to a controversial new demand charge being levied exclusively on solar customers by the Salt River Project utility.

GCN is one of several vendors, along with Stem and CODA Energy, offering storage products aimed at demand charge mitigation, as described in Navigant Research’s report, Community, Residential, and Commercial Energy Storage.

 

Balance of Power in Building Automation Shifts to Lighting

— March 27, 2015

Earlier in my career, when I worked for a mechanical, electrical, and plumbing (MEP) design engineering firm, my boss used to tell me, “Mechanical drives the bus.” The mechanical design of a building is composed primarily of the heating, ventilation, and air conditioning (HVAC) system, which has historically been the most complicated of the MEP systems. Moreover, HVAC equipment accounts for about 30% of commercial building electricity consumption in the United States. What my boss wanted to get across was that HVAC needs to be designed first—and all of the other systems can fit in afterwards.

Indeed, until relatively recently, the idea of building controls really meant HVAC controls. Before widespread adoption of microprocessor controls, HVAC controls consisted of a series of tubes (pneumatics, not the Internet), lighting controls consisted of a switch, and the idea of integrating more than one building system was preposterous. Building automation emerged from HVAC controls. Now, however, the integration of multiple systems into a single building management platform is becoming more common. Navigant Research’s recent report, Commercial Building Automation Systems, maps these trends in the integration and interoperability of systems.

More Equal Than Others

Even in highly integrated buildings, the HVAC system retains priority—but that may be changing. As part of the Continental Automated Building Association’s Intelligent Buildings and Big Data research project, Navigant Research quantified the number of data transactions generated by the automation systems of intelligent buildings. In the future, lighting might generate far more data than HVAC. The rapid adoption of LED lighting coupled with faster and cheaper computing options creates the possibility of individual light fixtures having their own sensors and controls. While HVAC systems may still be more complex, the data volume created by the dense sensor networks of these advanced lighting controls is immense. Soon, it may make more sense for HVAC operations to be managed through an additional module on a lighting controller, using data gathered by lighting sensors.

New Pecking Order

The market seems to be reacting to the new pecking order. Acuity Brands recently announced its plans to acquire Distech Controls, a building controls and energy management company. Despite having a complete portfolio that includes lighting, access control, and closed-circuit TV (CCTV), Distech Controls emphasizes HVAC. The company’s integrated room controls solution, for instance, creates an environment where the HVAC controller also controls lighting and automated blinds. Acuity Brands, on the other hand, is a lighting company. It is a designer, manufacturer, and distributor of a variety of indoor and outdoor lighting fixtures and lighting controls.

Overall, as integration between building automation systems increases, so too does the opportunity for the crossover between HVAC companies and lighting companies. Indeed, Daintree Networks, a leader in wireless mesh networking for integrated lighting controls, expanded into HVAC controls in 2013. But the trend has been for established HVAC players to acquire lighting solutions or for lighting players to organically expand into HVAC. Acuity Brands’ acquisition of Distech Controls may signal a shift in the balance of powers.

 

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