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Hospitals get the green light for green backup power

Kaiser Permanente already sees microgrids as its “first line of defense.”

Solar panels at a parking lot at a Kaiser, Point West, in Sacramento.

Image via Shutterstock/zikG

Microgrids have have been hailed lately as a new, tech-enabled path to resilient and sustainable communities.

In a basic way, however, microgrids have been around for a long time in one particular sector: healthcare. Hospitals, long required to maintain backup power sources to keep critical services running during a grid outage, already have such systems in place.

But thanks to a recent change in federal regulations, healthcare facilities in the U.S. are no longer required to power those backup generators with fossil fuels, opening the door to a new era of clean-energy microgrids at hospitals.

"Hospitals are so innovative and they’ve really been struggling over many years. They know they’re energy hogs," said Jana Gerber, president of microgrids, North American, at Schneider Electric. "So having now another way to be innovative, where they were hindered before, is exciting for them."

The updated regulation came by way of new guidance from the Centers for Medicare & Medicaid Services (CMS) released at the end of March. Prior to this change, hospitals were allowed to install renewable energy sources, such as solar panels, but still had to keep a diesel- or gas-powered generator on site as the primary backup power source, according to Antonia Herzog, associate director of climate policy and advocacy at the nonprofit Health Care Without Harm.

In a power outage, this microgrid will be our first line of defense — prior to employing diesel generation.

"They were not allowed to use renewable microgrid systems, for example, solar with batteries," as the sole source of backup power, Herzog said.

The updated guidance from CMS removes that obstacle, bringing regulations in line with the national electrical code, which permits the use of microgrids and other clean energy systems for emergency power generation.

‘Microgrids are an incredible fit’

The way Gerber thinks about it, all hospitals are already, in essence, microgrids. 

During storms or hurricanes, healthcare facilities can cut themselves off from a failing power grid and become an "island" that generates its own electricity. 

Typically, that energy comes from diesel-powered generators, which seem the most reliable form of power during an emergency. But more than a few recent weather events have proven that those diesel stores can easily run out. And at that point, "sometimes getting that fuel to the locations they’re needed is also challenging," Gerber said.

Herzog said this became a problem during Hurricane Katrina, and more recently during Hurricane Maria in Puerto Rico. "The diesel systems are not that robust. They break, and then after the fuel runs out, they can’t get fuel," she said.

The recently passed Inflation Reduction Act is packed with rebates for clean energy improvements.

This is where renewable microgrids have the potential not only to reduce carbon emissions, but to increase resiliency. "The solar systems keep on working," Herzog said, especially if they’re paired with battery storage. "It’s not like it has to constantly be sunny for it to work."

Hospitals could look at a big range of technologies for backup power, each with their own benefits that fit well in the healthcare industry, Gerber said. Hydrogen fuel cells, for example, are good for supporting constant loads, which means dependable power for 24/7 hospital operations. Solar and wind are obvious choices for power generation, especially on large hospital campuses. And battery storage could help maintain energy supply, or even level out grid usage when there’s not an emergency.

Gerber sees hospitals as a perfect use-case for this type of setup. "The thing with microgrids is they are really good for solving for customers with multiple needs," Gerber said. Yes, they can keep the lights on during an emergency. But they can also boost sustainability and lower the cost of energy and backup systems.

A health system leading the way

Kaiser Permanente, the nation’s largest nonprofit health system, did not wait for the new federal guidance to start investing in microgrids as one — but not the only — source of backup power at its hospitals.

Ramé Hemstreet, vice president of operations and chief energy officer for Kaiser Permanente, said the nonprofit began in 2017 with a project at its Richmond Medical Center in California. It involved installing 1 MW of battery storage with a 250 kW solar array on the hospital’s parking garage roof.  

That investment, largely seen as a success, allowed Kaiser Permanente to access additional funding from the California Energy Commission to create a more ambitious microgrid. That one is taking shape at the Ontario Medical Center in Southern California, where the hospital is installing 2 MW of solar generation and a 9.5 MHW zinc hybrid battery. Hemstreet said it’s 10 times the size of the Richmond project, and will be completed in early 2024.

"In a power outage, this microgrid will be our first line of defense — prior to employing diesel generation," Hemstreet said in an email. "The microgrid can provide emergency power to critical medical center systems."

And as Gerber pointed out, that’s not the only benefit of this type of system.

"It also reduces the facility’s energy bills," Hemstreet said. "The microgrid can create and store solar energy during the day, when electricity prices are low, and then discharge it during the night, when electricity prices are high."

It also reduces the facility's energy bills.

Kaiser Permanente is also experimenting with fuel cells for backup power. Hemstreet said that while this technology is not completely carbon free, it has lower carbon emissions than grid power and represents a reliable source of backup energy.

Costs and challenges

These investments, however, come with their obstacles. Gerber and Hemstreet underlined some challenges for hospitals to move in this direction.

"As we think about hospitals, they are on very critical cost constraints," Gerber said. Retrofitting existing medical centers with these new systems could become a question of capital and cash flow. 

Indeed, Hemstreet said his company works to ensure "that projects like this are cost-neutral or cost-saving. This is why we don’t install solar, battery storage or fuel cells at all our facilities. We do it where it makes economic sense."

In that way, the new guidance from CMS comes at a good time. The recently passed Inflation Reduction Act is packed with rebates for clean energy improvements. "We want our health care systems to be able to access those incentives, which they can now," Herzog said, noting that her organization was pushing for the change in regulation in part for this reason. "To not be able to tap those IRA incentives just seemed wrong." 

Hemstreet pointed directly to the IRA as a critical source of support for Kaiser Permanente’s ongoing sustainability investments. (The company was certified as carbon neutral for Scope 1, Scope 2 and select Scope 3 emissions in 2020, 2021 and 2022.) He said the IRA incentives could also help the health system reduce or eliminate the combustion of natural gas in its facilities.

These efforts, while difficult, are all driven by a mission that’s at the core of what hospitals do. 

"Kaiser Permanente believes that where we live, the places we work and the air we breathe profoundly impact our health," Hemstreet said.

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