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25.09.13

Maximising energy savings potential in healthcare

Source: National Health Executive Sept/Oct 2013

Darren Riva, head of green financing at the Energy Efficiency Financing scheme, says the NHS is overspending millions of pounds on energy.

he UK’s healthcare sector spends over £900m per year on energy, of which approximately £500m is electricity cost. Unfortunately, a large proportion of energy is wasted due to inefficient energy consumption, meaning that money is being wasted too. According to analysis from the Energy Efficiency Financing (EEF) scheme, the healthcare sector is overspending by more than £93m on energy per year. Close to £50m is wasted on heating and hot water alone and a further £30m is being overspent on lighting. These figures illustrate the significant energy savings potential in the healthcare sector that is yet to be exploited.

Through the use of low-carbon technology, healthcare organisations can unlock hidden savings and capture remarkable economic benefits. Energy-saving compact florescent lamps (CFLs), for example, use 75% less energy while producing less unwanted heat and can last 8-10 times longer. With year-round requirements for electricity and significant amounts of hot water, hospitals are also ideally suited to using combined heat and power (CHP), which can reduce energy bills by around 20-30% in an appropriate application.

With the increasing use of electrically-powered specialist medical equipment, energy consumption in hospitals is set to grow further. At the same time, electricity prices in general are charting an upward trend, making energy efficiency an increasingly relevant topic for the management of healthcare organisations.

Average electricity prices for the non-domestic sector, excluding the Climate Change Levy (CCL), has almost doubled from 4.87p/kWh in 2005 to 9.29p/kWh in the first quarter of 2013.

By implementing energy-efficient technology, hospitals can achieve considerable energy savings, thereby liberating budgets for use in delivering frontline services.

Despite this compelling business case, many hospitals have yet to commit themselves to green investments due to budget constraints in the public sector. Accustomed to the belief that large upfront capital is a prerequisite for the acquisition of energy-efficient equipment, many hospitals currently consider the adoption of green technology to be unaffordable in view of their financial situation. This, however, is a false perception as alternative financing techniques such as the EEF scheme are readily available in the market to enable energy-savings investments in spite of capital budget restrictions.

A joint initiative launched by The Carbon Trust and Siemens Financial Services Limited, EEF is designed to provide finance for energy-efficient equipment for both private and public organisations, where the expected savings in energy costs offset the monthly equipment finance costs, effectively making the investment zero net cost or even cash positive.The scheme enables investment in a wide range of energy-efficient technologies, such as low energy lighting, biomass heating, solar photovoltaic, low carbon conditioning, variable speed drives (e.g. in air conditioning fans) and many more.

By aligning monthly outgoings with monthly energy cost savings, the EEF facility offers an alternative to outright purchase, enabling healthcare organisations to invest in energy-efficient equipment while conserving their funds for priority operational matters. They can also benefit from easier budgeting as monthly payments are fixed and financing terms flexible. As confidence in return on investment is crucial to any investment decision, an energy saving assessment is conducted by experienced specialists from the Carbon Trust prior to finance being approved, giving organisations independent assurance that the expected carbon reduction, and hence financing savings over time, should match or exceed finance payments.

The availability of such specialist financing facilities shows that energy efficiency is an attainable goal for the healthcare sector even at a time of severe budget pressures.

Indeed, austerity measures make it all the more important that precious capital is being deployed effectively for the welfare of patients instead of being needlessly tied up in inefficient capital equipment.

Energy-efficient buildings not only help hospitals cut bills, they also provide better indoor conditions for patients and staff and help preserve the environment with lower carbon emissions. In the UK’s aspiration to becoming a greener economy, the commitment of the healthcare sector to energy efficiency will prove indispensable.

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