Jan 23 2014
A Hawai'i hospital will save energy and money, thanks to a contract with efficiency services financer Metrus Energy.
Metrus will finance and implement $5.8 million in energy upgrades – including a new central cooling and heating plant, lighting upgrades and energy management and control systems – at Kuakini Medical Center in Honolulu. Kuakini will pay Metrus based on realized energy savings once the project becomes operational.
"Kuakini is our largest deal to date, and our first project with a hospital," said Bob Hinkle, President and CEO of Metrus Energy, Inc. "With rising health care costs, hospitals are increasingly turning to energy efficiency as a way to help reduce operating expenses and achieve more sustainable business practices."
Among the benefits for Kuakini: it will not have to invest millions upfront. Metrus will fund initial costs for the retrofit as part of its innovative Efficiency Services Agreement (ESA) to construct, maintain and monitor the energy-saving improvements. As a result, the hospital will see a reduction in its total utility bill while also improving its efficiency and creating a more comfortable environment for its patients and the community.
"Metrus will handle the financial and technical aspects involved in making our hospital more energy efficient, and allow us to focus on what we do best: providing high-quality and safe patient care," said Quin Ogawa, Vice President of Fiscal Services and Chief Financial Officer at Kuakini Health System. "We are excited to kick off 2014 with this project, which enables us to improve the environmental health and sustainability of our hospital," Ogawa said.
Scheduled for completion in September, the project will generate approximately 3.5 million kWh of electricity savings and 11,000 therms of natural gas savings. This translates into an expected annual savings of more than $1 million.
Metrus is partnering with Energy Industries, which has a strong presence in Hawaii, to provide project installation and ongoing maintenance services.
"We are pleased to implement this comprehensive retrofit project that achieves deep energy savings for such an important organization in our community," said Duane Ashimine, President and COO of Energy Industries Corporation. "The project represents the latest advancements in the eight-year partnership between Kuakini and Energy Industries to continuously deliver energy efficiency services."
New Resource Bank, based in San Francisco, is Metrus' debt partner on this project.
"The Kuakini project fits perfectly within our growing portfolio of energy efficiency investments," said Bill Peterson, Executive Vice President at New Resource Bank. "As a mission-oriented bank, we see energy efficiency as a vital component of our sustainable lending philosophy and a key sustainable business practice for our customers," Peterson said.
A key component of this deal is Metrus' use of an energy savings insurance policy underwritten by Energi, a Massachusetts-based reinsurer serving the North American energy industry. The policy backstops Energy Industries' performance guarantee on the project. Energi, like Metrus, is a Better Buildings Challenge partner.
"Reducing financial risk is the central benefit of the Energy Savings Warranty program and helps to overcome one of the key obstacles for efficiency projects," said Kevin Kaminski, SVP of Alternative Energy Solutions at Energi. "For Metrus' Kuakini project, the warranty program played an integral role in coalescing industry leaders from across the country to create a compelling package."
The Kuakini project is part of Metrus' $75 million commitment to the White House's Better Buildings Challenge. It demonstrates the flexibility of the ESA as a financing solution for a broad spectrum of facilities.