Feature Story

Saving energy, saving lives

Innovative energy-efficiency policies can help hospitals make major savings and improve patient care, says Simon Rigby, of Taunton and Somerset NHS Foundation Trust.

The government's Comprehensive Spending Review, the introduction of carbon taxes and mandatory carbon reduction targets have left the NHS facing unprecedented financial pressures. Here at Musgrove Park Hospital, which is part of Taunton and Somerset NHS Foundation Trust, we faced a doubling of our annual £1.8m energy bill by 2017 and knew we had to find an innovative way to deliver improvements to our buildings that didn't have an impact on our operating budget.

Hospitals are the highest energy users by building type in the UK. The NHS has the largest single estate in Europe and has increased its carbon footprint by 40% since 1990. Collectively, we are the largest public sector contributor to climate change, and in England the NHS produces over 18 million tonnes of CO2 per year.

The NHS has been set targets to reduce its energy consumption by 34% by 2020. On top of this the NHS has a carbon reduction strategy and is subject to the Carbon Reduction Commitment Energy Efficiency Scheme that aims to reduce consumption and emissions. To cope with these challenges all parts of the NHS need to make large-scale improvements – and innovative, creative solutions, with assistance from the private sector, can help.

In partnership with Schneider Electric, Taunton and Somerset has come up with a simple solution that will improve our buildings, meet mandatory carbon reduction targets, save money and ultimately target funds where they matter most – patient care.

The project, which is the first of its kind in the UK healthcare sector, will deliver substantial energy-efficiency measures at Musgrove Park Hospital, Taunton. A self-funding scheme, it includes the cost of replacing our old energy inefficient infrastructure and equipment as well as essential estate projects financed by the fuel savings achieved, meaning there is zero cost to the taxpayer.

The benefits of the energy-efficiency measures are striking, with Musgrove Park's average energy consumption set to be reduced by more than 40%, delivering a cut in carbon emissions by 43% – the best of any UK public sector organisation.

The guaranteed energy performance project is aimed at minimising energy demand, reducing backlog maintenance and risk while improving Musgrove Park Hospital. Following a detailed energy audit in 2010, a refurbishment programme has been developed incorporating around 180 individual improvements across the site. Over £2.5m of estate backlog maintenance is being tackled, thereby minimising significant operational and financial risks, with carbon emissions being drastically reduced.

Through the partnership, we will be able to deliver energy savings of 43% by the end of 2012, vastly exceeding those set by central government. The money saved can therefore be ploughed back into patient services, improving the care we offer to our patients, while helping the environment. It is expected to take two years to fully implement, but once completed, the contractor will remain involved for 10 years. There is a performance guarantee in place, based on a percentage decrease in energy units (MWh) against fixed targets.

Above all, the project will be cash-flow positive in every year of its 20 year life, being funded by guaranteed energy savings estimated to be over £750,000 per annum (rising with utility inflation). So, by making energy more efficient and greener, the initiative will help the hospital to improve its financial performance. The project is forecast to generate a net operating cash surplus of £17m over
20 years, and to free up £2.5m of budgeted capital expenditure to spend on other trust priorities, such as further improvements to the patient environment and new medical technologies. Savings have been evident from day one. For the first 18 months of the project we keep all the savings from the measures introduced and after that period we will use a percentage of the savings to cover the costs of the installation. Any additional savings are available to be put back into patient care.

Our private sector partner provided everything from the design to the project management required to ensure that the changes we have implemented are rolled out smoothly. Our role is to support the company in making the improvements. Colin Russell, healthcare specialist at Schneider Electric, commented: "When we were considering entering into the partnership, we looked at the trust's energy reduction targets as well as how long we thought it would take us to achieve these single-handedly. We realised that working with a third party would enable us to not only meet targets far more quickly, but also provide us with a pool of resources and knowledge that would be invaluable. We hope that this project encourages other trusts to enter into partnerships such as this, helping to reduce energy consumption across the NHS and making vital cost savings.

"In projects of this nature Schneider Electric works closely with the estates department to devise an improvement programme that delivers the best value for money and maximum efficiency. Initially, an in-depth analysis of the equipment on site would be carried out. If the existing equipment was found to be ageing, inefficient or in need of replacement, we would opt for the most efficient approach, which might be a combination of traditional equipment and renewable and low-carbon products such as photovoltaic (PV) solar power, solar thermal hot water and CHP (combined heat and power)."

Through innovative solutions, the NHS infrastructure can be revitalised and huge financial and energy savings can be achieved, while making the care environment more comfortable and safe for patients. We estimate that if similar measures to those discussed in this article were replicated across the entire NHS estate, it could result in energy savings of over £200m a year.

Simon Rigby
Director of Clinical Support
Taunton and Somerset NHS Foundation Trust

Taken from the PPP Journal - issue 74