Solar power is not new to Kaiser Permanente, but the California-based health system is planning to ramp up its usage.
In July, Kaiser Permanente announced a program to install on-site solar at over 100 hospitals. It installed solar panels at 13 locations in 2011, including hospitals, medical offices and a distribution center. With a generation capacity of 11.3 megawatts, these arrays generated 18 million kilowatt-hours (kWh) of electricity in 2013 – equivalent to the electricity use of about 1, 200 average American homes each year.
Kaiser Permanente will increase its on-site generation capacity in 2014 with solar installations at many additional locations, including in Hawaii and at Oakland Medical Center in Oakland, Calif. and Hidden Lake Medical Offices in Colorado.
Additionally, the health system is actively investigating the opportunity to add as much as 40 megawatts of solar power capacity with on-site installations at dozens of medical campuses and other locations throughout California.
According to Rame Hemstreet, Kaiser Permanente’s chief energy officer, the decision to use on-site solar has to make sense financially.
“It really depends what your avoided cost is and it depends what your utility rates are, so it’s a case-by-case basis not just state-by-state, but utility rates can vary widely across a state between utility and municipal utilities and sites where you have direct access,” Hemstreet said. “Those are all factors that need to be considered when you're looking at the cost of a power purchase agreement versus avoided cost of the power you would have been buying through one of those other means.”
Hemstreet said solar power will remain a viable option as long as tax incentives stay in place. Investment tax credits are scheduled to expire for solar in 2016, Hemstreet noted, and if they do, there will be a drop off in those participating in the use of solar.
Kaiser Permanente is ranked as the #2 commercial solar user in the U.S. health and beauty sector by Solar Energy Institutions Association (and 13th among all companies).
John Ebers, associate director of facility engagement and energy programs at Practice GreenHealth, an environmental solutions resource for the healthcare sector, said on-site solar becomes an attractive option if certain factors are in place.
“In areas on the coasts where energy tends to be higher, a simple payback plan is sometimes all a facility needs to green-light the project,” Ebers said. “Certainly, many utilities are offering rebates and/or providing leasing options for on-site solar, which often will help a facility that is in a market with inexpensive fossil fuel derived electricity.”
Another consideration, he said, is the value of adding capacity to a facility’s emergency back-up power.
One day, solar power will become prevalent in healthcare believes Simon Watson, senior manager in the Ernst & Young power and utilities practice.
“Solar economics are getting there in terms of their ability to compete with utility retail rates,” Watson said, “but the economics of integrated systems that can provide the environmental and economic benefits that other sectors enjoy have some way to go.”