Third-Party Generator Ownership: What You Need To Know
Energy-as-a-service is growing in popularity and may have many benefits for facilities managers. But challenges remain.
Many hospital emergency generators are approaching the end of their life cycle. Even though codes and standards are still being met, best practices aren’t necessarily implemented. Additionally, the emergency power supply system may be inadequate for the facility due to expansion and ever-changing codes, leaving portions of the critical systems vulnerable.
With limited capital resources, healthcare facilities must prioritize their spending. Projects directly relating to patient care or attracting patients will have the strongest ROI. Therefore, infrastructure-related upgrades are often pushed into “maybe next year” status.
Although it is a challenge to get hospitals to commit large amounts of capital to emergency and contingency equipment that is sparsely exercised, many lives are at stake when the power goes out and emergency power is needed. Utilities are now entering the picture with expertise and cash, leveraging resources to help hospitals achieve their sustainability goals and upgrade critical infrastructure components. As a result, a hospital can shift resources to patient care.
A utility will invest its capital for infrastructure improvement that aims to maximize operational efficiency and ensure the hospital can continue to provide premium care to every patient. The utility provider will analyze the facility’s current emergency power capabilities; review requirements for additional capacity or replacement considerations; then propose a solution for the hospital. Under the energy-as-a-service construct, the utility will design, purchase, install, and commission the equipment while managing routine repairs and maintenance. This approach allows the facility to complete needed upgrades to emergency systems, improving resiliency and compliance, and freeing the facility management team to focus on more pressing day-to-day operations.
An energy-as-a-service arrangement may offer the following benefits:
• Replacement, management, and maintenance of key electrical and mechanical infrastructure systems.
• Emergency and standby power for the entire facility.
• Stringent monitoring, inspections, testing, and compliance reporting as mandated by state, CMS, and NFPA standards.
• Capital optimization that transitions costs to other areas.
• Fixed total cost of ownership for the term of the agreement.
• Certified professional power expertise.
According to Skip Gregory, NCARB, former bureau chief in the Office of Plans and Construction at the Agency for Health Care Administration for the state of Florida, third-party utility sharing and ownership is not a new idea and should be allowed as long as the project passed his “4-A” test:
1. Authority of the AHJ over the entity that owns and operates the hospital utility plant.
2. Access by the AHJ to inspect the hospital utility plant for full compliance with all codes, standards, and rules.
3. Approval by the AHJ for all renovations, changes, repairs, or replacements involving the hospital utility plant.
4. Accountability of the entity that owns and operates the hospital utility plant for upkeep, maintenance, testing, etc., of the plant.
Energy-as-a-service has its challenges because it’s a disruptor in the healthcare segment. The hospital must commit to a cultural shift of “giving up control” over portions of the electrical and mechanical infrastructure. Simply put, the new mindset should be “taking care of patients is our core mission.”
Risk and responsibility of third-party owned assets shifts to the new owner. Contractually, the third-party asset owner is responsible for making sure their equipment meets prevailing compliance standards across the various AHJs. An accredited third-party owner will work collaboratively with the hospital and facility staff to ensure all the priorities are addressed.
Dan Chisholm, Sr. (firstname.lastname@example.org), is an emergency power consultant at MGI-EPSS Consulting. He serves as chairman of the technical committees responsible for NFPA 110, Emergency and Standby Power Systems, and NFPA 111, Stored Electrical Energy Emergency and Standby Power Systems.