Financial Strategies Summary for Reduction in Energy Consumption Sustainability Initiative

Financial Strategies Summary for Reduction in Energy Consumption Sustainability Initiative

Summary of the Sustainability Initiative Proposal

In today’s healthcare environment, sustainability initiatives are crucial for reducing costs, eliminating waste, and improving patient care. The intended proposal focuses on lighting optimization at a local hospital, aiming to enhance energy efficiency and reduce operational costs while maintaining high standards of patient care. Notably, the proposal is guided by the local hospital’s mission statement, which aims to create an energy-efficient hospital environment that enhances patient care and reduces operational costs through optimized lighting solutions. Notably, this initiative seeks to integrate environmental sustainability with the hospital’s commitment to high-quality patient care, ensuring all stakeholders see clear benefits in operational efficiency and patient well-being. As a result, LED lights will be prioritized in the initiative for installation.

The implementation of the lighting optimization initiative will involve several key activities. Firstly, the existing lighting systems shall undergo energy audits to determine the efficiency level of their current position. From these audits, a comprehensive roadmap that depicts the day-to-day activity, the time frame, and the cost implications of the project shall be prepared. The next step will be changing conventional lighting fixtures to LED and smart lighting solutions; this would require engaging expertise to ensure minimal disruptions to the hospital’s operations. A schedule for the maintenance of the new lighting systems will be set to ensure the new system functions optimally, and the use of monitoring devices will enable the measurement of energy conservation and efficacy of the new system (Lisauskas et al., 2022). Educational sessions for employees will help them learn more about the new lighting systems and understand the value of using energy-efficient lighting and the correct usage. Lastly, surveying the feedback of the staff and the patients on the new lighting systems will assist in modifying what is needed and enhance the efforts being put forward towards the cause.

The lighting optimization initiative has some potential opportunities and positive impacts. First, they will help save on lighting costs as incorporating LED and smart lighting solutions will significantly reduce energy costs. In addition, these new lighting systems have longer lifespans, so maintenance costs are low (Furszyfer Del Rio et al., 2021). On the other hand, enhanced light intensity can benefit the patient’s condition and recovery time; proper lighting is necessary for accurate surgery, among others. Reduced energy use means decreased utilization of energy that may be generated from carbon-emitting sources, hence lower carbon footprints, which are the aims of environmental sustainability. Systematic replacement of the current lighting with energy-efficient lighting tackles the problem of non-compliance with local and national energy-efficient standards, which attracts penalties. Moreover, it has also been noted that with centralized computer control, LED lighting systems in the building do not require frequent manual alteration, thus eliminating consequent errors and staff wastage of time (Hafez et al., 2023). The financial strategies to fund the initiative are given in the next section.

Financial Strategies to Fund the Implementation of the Initiative

The first financial strategy for the sustainability initiative will be reduced energy usage and tax credits. Therefore, there is a need to acquire funding from other activities within the local hospital, which will be returned in the long run through cost savings. The energy consumption levels within the facility will be reduced at the expense of improved patient and worker experience. Further, there will be a reduction in costs associated with maintaining the lighting system. According to the U.S. Energy Information Administration, over 70% of the electricity used in healthcare facilities goes toward cooling, lighting, and ventilation (Zielinska-Dabkowska & Bobkowska, 2022). Of that entire 70%, lighting alone uses more than 40%. Switching to LED lights or fixtures provides superior, almost maintenance-free illumination for aged eyes. Notably, this solution offers attainable payback periods and long-term financial advantages when used with lighting controls, which may decrease energy consumption by up to 70% over fluorescent lighting.

Instead of stretching the deductions over several years, taking of a one-time deduction for the entire amount of this investment is preferred. The only drawback is that bonus depreciation will gradually be eliminated in 2023, impacting the current maximum deductions. The following shows the tax credits/deductions that will apply to the project in the first four years.

The advantage of this technique is that ongoing financial benefits over four years will be acquired as opposed to a big one-time discount. In the same way, that is also a drawback because money had to be taken from capital forecasts or other plant operating budgets to finish the project. Notably, this also poses a risk because those funds may be used earlier than expected or be unavailable if unforeseen replacements or repairs are required. However, with this strategy, we can save funds that would otherwise be spent on resident expenses and, over time, provide the community with capital alternatives through our energy gains and tax credits.

The second financial strategy that the hospital will need to consider is energy efficiency rebates and grants. Grants for energy efficiency are available to businesses, helping to defray the expense of switching to LED lighting. Grants are non-repayable funds or merchandise if your company satisfies the criteria. We should think little when evaluating this, unlike the tax credit. Federal energy grants are frequently more competitive than state grant programs. Notably, these state-funded renewable energy grants may be simple to apply for, but their total value might also be less. Depending on the capital amount, some grants may additionally call for a firm match equivalent to the donor’s contribution, which could be both a strength and a disadvantage.

PECO is one instance of a state supplier that offers refunds. The refund, which depends on how efficient the fixtures are, can be up to $150 per fixture. Iron Stone Real Estate is one business that profited from this. Instead of the outdated 150W High-Pressure Sodium (HPS) fixtures, they installed 90W LED canopy lights. They reduced their energy consumption from 64.5 kW to 38.7 kW, saving significant energy. Notably, this LED transition saves Iron Stone about 40% monthly overhead. The project’s overall cost was $430, with a rebate for the improvement of $64,500 due to obtaining the maximum rebate (Paris et al., 2022). Iron Stone quickly recouped their first investment because the LED upgrade only cost $430. After two months, they were thought to have saved more than $1,000 only via energy savings.

The benefit of this financial strategy is that there may be little to no cost for the project, and there are no repayment obligations, unlike when using borrowed financing. Essentially, this enables a faster and larger return on investment with practically immediate capital savings. The grant’s shortcoming is that there is no certainty that we will be accepted, and there is still a chance that we may have to pay out of pocket. The hospital will have to spend the capital initially for the refunds, and we will then get our money back in one to three months. Along with those advantages and disadvantages, there is also the possibility of not being eligible for grants or rebates as a whole. With grants, the hospital will also have to compete for financing, and considering its financial strength and base, it can qualify for a part due to the ability to meet a significant part of the lighting optimization costs.

Given the nature of the local hospital, this financial strategy is viable for consideration. Since the hospital will not use the lights for financial gain and the lighting idea goes far beyond sustainability, this designation will increase our chances of receiving grant money. The organization’s geographic location, the energy provider rebate, and the energy savings give it the best chance of receiving the maximum refund, resulting in the project’s lowest capital cost.

The hospital’s last financial strategy for funding the lighting optimization initiative is the consideration of lighting as a service. Notably, this financial strategy is uncommon, but the advantages entail no immediate utilization of capital. Future Energy Solutions has financed this initiative, and through its Gold Initiative program, over $80 million has been used to finance lighting upgrades. The company’s model creates a zero-upfront capex lighting solution that allows business owners to enjoy instant energy savings from day one. FES will maintain and install a new lighting system with high efficiency at zero initial cost to the hospital. Part of the monthly energy savings achieved from the improvement is applied toward the Lighting-as-a-Service program.

Compared to the other two options, this strategy offers the best rewards, making it the hospital’s best choice. The hospital’s service operations staff may continue to execute their tasks in the work environment without incurring any upfront fees, thanks to a team of professionals who handle the bulk of the work. Additionally, the hospital will begin saving from day one, making accounting for tax credits and refunds easier. With this service arrangement, the organization will have a set monthly payment rate dependent on the savings made and will still be less than what it initially spent. With the credits described above, it almost becomes profitable for the local hospital to use electricity more sustainably.

Both parties gain from this relationship as they will be able to maintain and grow their great reputations, and the local hospital will be able to carry out its company’s objectives regarding this sustainability initiative with little to no cost. One drawback is that, while having worked with more than 55 businesses from the neighbouring state of Pennsylvania, this would be the first endeavour in our state. Additionally, given that the local hospital can serve as a shining example of a community in the state, the vulnerability may present a chance for increased savings. However, considering the initiative will be the state’s first project, this could pose a concern because it positions the local hospital for potential delays or hold-ups. By investing with FES, the local hospital will utilize their skilled contractors for maintenance and disposal over ten years, resulting in zero wastage.

Evaluation of how the financial Strategies Impact the Sustainability Initiative

Tax credits and decreased energy use financial strategy.

With this financing strategy, the local hospital will be free to pursue community partnerships. Community partnerships will only positively impact this financial strategy through their support in recommending the initiative’s implementation. Further, the initiative will offer a wide range of options, including architectural lighting setups, fixtures for the hospital’s memory support units, and a team of electricians to ensure that the task is skillfully done and successfully removes our waste. Thus, the proposed waste reduction efforts will be enhanced through the initiative. By partnering with other non-profits or groups with the best reputations, the organization will manage to exercise its freedom of choice and utilize its non-profit status to the maximum. Every one of them has a chance to lead to the hospital’s next financial choice, sponsorship from one of these businesses using Energy Efficiency Grants. The overall benefit will be improved patient care outcomes through better service delivery.

Energy Efficiency Grants and Rebates Financial Strategy

The proposed community partnerships will have less impact on the second financial strategy because they have little to do with energy efficiency grants and rebates. However, the proposed waste reduction efforts will positively impact the financial strategy. Notably, this is so because higher grants and rebates are offered when initiatives being undertaken contribute to waste reduction (Smith, 2022). The proposed improved patient care outcomes will positively contribute to the execution of the initiative because the overall target of the plan is to improve patient care and the work environment.

Lighting as a Financial Service Strategy

The three proposals regarding community partnerships, waste reduction efforts, and improved patient care outcomes will positively influence the financial strategy. Notably, this is so because they are the motivations behind soliciting funds to implement the sustainability initiative. Therefore, they should be given a center-stage position to finance the sustainability initiative.

Petition to the Leadership for the Financial Strategies Approval

It will take some research and time to fully understand the material. We kindly ask that you seize this chance as soon as possible. As we exit Covid-related challenges, resource demand will increase, and the need for sustainability in our actions will be highlighted again. Since the medical advantages of these LED lights for our most vulnerable are growing every day, this straightforward change in our lighting not only allows us to save money that we can reinvest in the neighbourhood and our people, but it also offers us the chance to do so. With the new lighting optimization initiative, we will also be able to make the residents happier, which will reduce turnover and help the staff have fewer stressful days.

References

Furszyfer Del Rio, D. D., Sovacool, B. K., & Griffiths, S. (2021). Culture, energy and climate sustainability, and smart home technologies: A mixed methods comparison of four countries. Energy and Climate Change, 2(100035), 100035. https://doi.org/10.1016/j.egycc.2021.100035

Hafez, F. S., Sa’di, B., Safa-Gamal, M., Taufiq-Yap, Y. H., Alrifaey, M., Seyedmahmoudian, M., Stojcevski, A., Horan, B., & Mekhilef, S. (2023). Energy Efficiency in Sustainable Buildings: a Systematic Review with Taxonomy, Challenges, Motivations, Methodological Aspects, Recommendations, and Pathways for Future Research. Energy Strategy Reviews, 45(101013), 101013. https://doi.org/10.1016/j.esr.2022.101013

Lisauskas, A., Kveselis, V., Dzenajavičienė, E. F., Masaitis, S., & Perednis, E. (2022). Analysis of energy audits results and impacts: the case of small and medium enterprises in Lithuania. Energy Efficiency, 15(7). https://doi.org/10.1007/s12053-022-10052-x

Paris, B., Vandorou, F., Balafoutis, A. T., Vaiopoulos, K., Kyriakarakos, G., Manolakos, D., & Papadakis, G. (2022). Energy use in open-field agriculture in the EU: A critical review recommending adopting energy efficiency measures and renewable energy sources. Renewable and Sustainable Energy Reviews, 158, 112098.

Smith, J. A. (2022). Optimizing lighting systems for sustainable healthcare settings. Journal of Sustainable Healthcare, 7(3), 123-136.

Zielinska-Dabkowska, K. M., & Bobkowska, K. (2022). Rethinking sustainable cities at Night: Paradigm shifts in urban design and city lighting. Sustainability, 14(10), 6062.

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Prepare the Financial Strategies Summary for your sustainability initiative in 6 to 8 pages.

Include the following in your summary:

Financial Strategies Summary for Reduction in Energy Consumption

A brief summary of your sustainability initiative proposal
A minimum of 3 financial strategies to fund the implementation of your initiative
An analysis of the strengths, weaknesses, opportunities, and threats of each of your financial strategies for the implementation of your initiative
An evaluation of how each of the following impacts those financial strategies within your initiative:
Proposed community partnerships
Proposed waste reduction efforts
Proposed improved patient care outcomes
Petition to the leadership for approval of your financial strategies to enact the initiative