Climate change, human wellbeing, and energy management are closely linked for health care system Kaiser Permanente.
Driven by that connection, the Oakland, California-based provider joined climate initiatives including RE100, the California Healthcare Climate Alliance, and Ceres Connect the Drops. In 2018, the Kaiser Permanente Richmond Medical Center became the first hospital in California to install a renewable energy microgrid. Their pioneering system is powered by a 250-kilowatt rooftop solar panel.
Then, last fall, the nation’s largest nonprofit integrated health care system announced a goal of becoming carbon neutral in 2020.
Seth Baruch, Kaiser Permanente’s national director for energy and utilities, manages the organization’s sustainable energy programs, which includes onsite generation and larger utility-scale projects offsite. He works closely with 39 hospitals and 695 medical offices.
We recently caught up with Baruch to learn about Kaiser Permanente’s renewables, storage, and energy resiliency strategy.
What is Kaiser Permanente’s approach to onsite solar?
Our goal is to deploy onsite solar wherever it’s cost-effective, meaning at or below what we’re currently paying for electricity. Our solar program started in 2010 in California. I joined in early 2015 to roll out onsite solar because the organization was seeing sustainability and affordability benefits. Our members also like being able to park underneath the carport canopies. About 60 different locations have rolled out, and there are another 50 or so in the pipeline.
What were the biggest initial challenges?
In the beginning there were challenges with clearing easements and getting permits, which would sometimes take longer than planned, or there were additional costs we hadn’t foreseen. We’ve gotten better at being able to anticipate those.
The biggest is parking disruption. Generally these are all carport solar projects, so you’ve got portions of parking lots taken out of commission for weeks. We had to make sure it doesn’t happen during cold and flu season. There are times when the impact can be reduced such as leasing parking lot across the street or using a valet service.
How have the projects gone with local utilities?
In general utilities have been cooperative. The solar provider knows what to do. That’s one of the nice things about a power purchase agreement — it’s designed to be turnkey. Our facilities people are running a medical building or a hospital so we rely on the partners to handle the interconnection work. Besides California, we have seven solar projects in Colorado, seven in Hawaii, and just started a couple in the mid-Atlantic region.
Have there been any recent hurdles?
One big impact, particularly in California, has been the fact that the peak time-of-use hours are shifting to the early evening, which has altered the economics of solar. As a result, we’ve asked our solar partners to incorporate storage into their analysis.
We’ll go back to some of the sites and look at installing storage to recapture economic benefits. It’s not going to be everywhere, but we can charge the battery during the off-peak sunny hours and discharge it during the higher-priced early evening hours.
What is Kaiser Permanente’s procurement strategy for offsite renewables?
In states that allow virtual PPAs, California being by far the biggest from a Kaiser Permanente footprint perspective, we are looking to offset our Scope 2 emissions through offsite renewable procurement. The total portfolio by 2021 will be about 330 megawatts of offsite wind and solar capacity in California or feeding into the California grid.
The next solar project, 131 megawatts in eastern Riverside County, will be complemented with 110 megawatts of battery storage. That will allow NextEra, operating the facility on our behalf, to avoid some curtailment issues in that part of the state.
That was important, not just to offset Scope 2 emissions, but also to demonstrate that storage is a key tool for handling the intermittency of solar and wind. The cost of storage is coming down enough so that it’s still quite cost-effective for us to invest in these projects and commit to 20 years of off-take.
How are you working to reach the RE100 goal?
California is about 70% of our load, but we have a presence in other states that are regulated. If you do these offsite projects, you have to do them in partnership with utilities. In Colorado and Washington, we’re working with utility community renewable programs. That’s an important component in getting to 100%. We are looking at doing a utility-scale offsite project in the mid-Atlantic to offset our load on the East Coast.
Initially there was a little bit of fear that getting to 100% was going to cost us an arm and a leg. We’re not seeing that. For California, those are virtual PPAs, and the models are indicating that we’ll do quite well. And I’ve been impressed with some of the indicative pricing for offsite projects on the East Coast.
With the green tariff pricing for Colorado and Washington State, we may be saving money right off the bat. Electricity is going to start at or slightly below the current pricing. We’ll also likely see a lower escalator for most of these projects because there are no variable fuel costs.
After PG&E’s bankruptcy, what have your interactions been like with the utility?
As far as the bankruptcy, we really haven’t seen any impact yet. We have a lot of interactions with PG&E, but one of the most notable ones recently has been for the program where they shut down entire distribution circuits during periods of high fire risk. It’s not just PG&E — all three California utilities have given us a list and it’s dozens of Kaiser Permanente medical buildings and hospitals that could be curtailed.
That’s driven some of the discussion on microgrids. There’s now a push to have more backup resiliency. The hospitals already have backup, but some medical buildings that don’t could be substantially affected. We’re now engaging with stakeholders: Is it solar plus storage, fuel cells, or some combination of solutions? And how do you do that in a way that’s cost-effective and environmentally sustainable?
Where is Kaiser Permanente’s energy strategy heading?
Being able to invest in these projects where you’re not paying a high premium — or any premium — is a sign of things to come. I have no doubt that we’ll get to our 100% renewable goal.
To get to 100% carbon neutrality means we’ll be focusing on a sustainable course for our Scope 1 emissions that relies on carbon offsets in the short term, but diminishes that reliance as we come up with more alternatives, whether it’s solar thermal or biogas. Then there’s discussion about resiliency, particularly as the wildfires with climate change get worse.
Kaiser Permanente is constantly building new facilities to replace old facilities or meet the needs of our growing membership. The last thing, as I look to the future, is making sure that new buildings have all the onsite resources needed to operate as environmentally sustainably as possible.
Want to learn more about energy resiliency? Join us at the 4th Annual Environmental Leader & Energy Manager Conference May 13 – 15, 2019 in Denver. Register to attend here.
