Hospitals Seek Cost Savings in Alternative Fuel Sources

The year before a New Hampshire critical access hospital converted to a renewable fuel oil system, it spent $450,000 on heating oil. It expects to spend less than $275,000 in its first year on the new system.

With winter on the way and energy costs rising, some hospitals are choosing alternative heating fuels and systems to heat and power their facilities.

At Memorial Hospital in North Conway, NH, a 25-bed critical access hospital on the edge of the White Mountain National forest, leadership found the idea of moving to an alternative energy source especially compelling.

"In the Mount Washington Valley, it's important to have the pollution reduction," says Scott Gage, director of support services at Memorial Hospital. He first introduced the idea of switching to an alternative energy source to his hospital's leadership.

Memorial opted to go with a renewable fuel oil, (RFO) in this case a liquid fuel converted from solid biomass materials—mostly wood—supplied by a sole Canadian manufacturer, Ensyn.

While Gage says there was a mild amount of hesitation about switching to a new and hard-to-supply energy source, Memorial Hospital's leadership was swayed by both the green factor and the cost savings. Ensyn paid the $750,000 it cost to convert Memorial Hospital's standard boiler to a boiler capable of burning RFO says Greg Gosselin, the regional sales manager from Ensyn who worked with Memorial Hospital.

In the year before Memorial Hospital's conversion to RFO, it spent $450,000 on fuel. Gage anticipates spending significantly less than that, $213,000, on RFO during the period between July 2014 and July 2015, plus an additional $50,000 on traditional #4 heating fuel oil for backup.

As a precaution against supply chain interruption, Ensyn installed a "double boiler," capable of switching between the hospital's previous fuel source, #4 heating oil, and RFO. Memorial Hospital keeps between 8,000 and 13,000 gallons of RFO on hand and can easily switch over to burning traditional fuel if needed.

So far, the only kink has been a short-lived maple syrup-like aroma, which was easily remedied by correcting the temperature at which the fuel is burned.

Another New Hampshire CAH, Valley Regional Hospital in Claremont, has decided to make the switch to RFO for similar reasons. "We looked at a variety of proposals including CNG, biomass, and geothermal systems, but for what we were looking for and the infrastructure we had, this project was very economical and will reduce out fuel costs by one-third," says Peter Wright, FACHE, CEO at Valley Regional.

Wright adds that, in rustic New Hampshire, being green is a priority on par with being cost-efficient.

Recoil From Oil
"Humanity needs to get off gas," says Chris Lotspech, director, sustainable resources at Celtic Energy, an independent energy engineering consultancy in Glastonbury, CT, which counts multiple hospitals among its clients.

"If you're interested in public health, you shouldn't be undermining it by contributing to climate change more than necessary." Additionally, he says, the prices of traditional fuel oil are likely to increase, making alternative energy a more viable option for healthcare systems.

Hospitals do have unique needs, says Lotspech—in particular, hospitals need an effective backup system, and cannot have any gaps in service. Additionally, hospitals are "relatively energy-intensive facilities," he says.

Lotspech and his colleague, Augustino Dell'Oso, manager of engineering services at Celtic Energy, agree that there are better alternatives than standard heating fuel for hospitals, but that there is no one-size-fits all solution.

"It depends on where you are in the country," said Lotspech. "If you're in Maine or the upper Midwest, you will have access to a lot of wood bioproducts, and they will be cheaper than… if your facility is in the Southwest."

Dell'Oso adds that organizations ought to remember that even biofuel systems may need pollution control devices. "We've seen instances where a local regulatory body will require that [devices] need to be added to the system to alleviate some of the pollutants generated by such things as a [biomass] fuel source."

Liquid biofuels are an emerging and rapidly changing market, and might work well for some organizations that have set up proper distribution channels and are comfortable with taking risks. "Various kinds of biofuels that are sustainably sourced will be good options," says Lotspech, but he makes a point about sustainability: "If you're clear-cutting rain forests in northern Brazil to make a soy plantation, then shipping it to the United States to turn it into fuel oil, that's not very sustainable.

"It's important that you do supply chain management," Lotspech continues. "Look for third-party certification. Know where your fuels come from, particularly if you're going to claim a sustainability benefit…. If you're paying triple to go to biofuels, it might be better to go to a cleaner fuel—maybe natural gas or even compressed gas over oil, and then spend the money you would have spent on fuel on making your facility more fuel efficient."

Strategically Green
"Going green" isn't for every hospital or healthcare system. There are definitely ways to save money without making a radical change or adopting an alternate energy source, says Kevin Gombotz,
director of commercial energy sources with Envinity, a State College, PA-based engineering group.

In Pennsylvania, where gas has historically been cheap and plentiful, Gombotz tends to stick to what he knows. "There were quite a few biomass projects in PA that were based on more expensive gas. Now that organizations have access to cheap gas, they still have a biomass boiler, but are not utilizing it to the same degree," he says.

"Working within the infrastructure that is already in place, there's a lot I can do a lot with a limited investment," Gombitz says. He suggests creating a five-year strategic energy plan consisting of 20 to 30 small projects that will create savings, then using the savings from those to invest in more ambitious energy projects. "Lead with projects that have a higher return on investment," he suggests.

The most important, and often most overlooked, area where hospitals can save on energy costs is by simply being more efficient, says Gombotz.

He suggests new, more efficient boilers, combing power systems, and projects that focus on making existing equipment work more efficiently. "The improvements made and reconditioning of existing assets can often fund more costly new assets," Gombotz advises.

For both of the New Hampshire hospitals that opted to go biofuel, the choice was clear. The opportunity to cut fuel costs by 30% yearly, the vendor's financial assistance with transitioning to a new boiler system, and the appeal of using a sustainable energy technology, combined to make RFO the most viable choice.

"We might have found something that would save us more money, but it wouldn't have been green," says Wright, whose hospital is slated to complete their transition to RFO by April 2015. "The responsibility for us as one of the biggest employers and leaders in the community to take a stand is one that we welcome."