➤ In 2016, Kaiser Permanente Inc. set a goal of being carbon neutral by 2020 and carbon positive by 2025.
➤ Kaiser Permanente finalized a 180-MW power purchase agreement in September. The deal enabled the construction of a solar facility and battery-storage facility in California and a wind farm in Arizona. Kaiser Permanente also created the first solar-powered renewable microgrid in California at the Richmond Medical Center.
S&P Global Market Intelligence: In 2016, Kaiser Permanente announced that it wants to be carbon neutral by 2020 and carbon positive by 2025. What are the motivations behind these specific environmental goals for the company?
We started out, when I first arrived here in 2012, with a commitment to reduce our carbon footprint 30% by 2020. We achieved that four years early, so we upped the ante and said we'd get to carbon neutral by 2020, and I think we're on track to now achieve that goal.
One project Kaiser Permanente has developed is the microgrid at the Richmond Medical Center. Why did Kaiser Permanente pursue this project?
Richmond Medical Center has the only microgrid that includes a renewable energy source. All hospitals are required by law to have backup power generation in the event of a widespread power outage. So, all of our hospitals have at least 96 hours of backup power supply that allows them to continue to operate.
What's unique about Richmond is that we installed solar and a battery. In daily operation is a renewable energy microgrid that allows us to reduce our peak energy loads, which is a cost-saving measure as well as reducing the amount of carbon that we are accountable for.
Has the project been successful?
That project has certainly been successful from our standpoint, partly because it was free for us. That was a demonstration project funded by the California Energy Commission to show that behind-the-meter battery storage could help eliminate the need for more natural gas peaker plants on the California grid. Batteries are becoming a way to deal with the intermittency of renewable energy.
A state with a lot of renewable energy generation would need a lot of fossil fuel-fired plants to spring into action when solar and wind aren't available. So, the California Energy Commission is piloting these projects to demonstrate that battery storage and renewable energy can reduce the need for additional fossil fuel-fired power plants.
We're now in the midst of installing batteries at a number of our other locations that, in conjunction with solar at many of those locations, will create additional microgrids in the not-too-distant future.
Since you have been with the company, have you seen the hospital industry become more conscious of its environmental impact and embrace new strategies to help mitigate its effect on the environment?
I think there is momentum in the right direction there. Eliminating Kaiser Permanente's carbon footprint is not going to change the course of climate change. But if we demonstrate leadership and others follow in our footsteps, there could be an impact, and we could mitigate the impacts that we are already seeing.
We see this as an opportunity to demonstrate that we can be good environmental stewards ... and we can do it in a way that doesn't impact us financially. Essentially, our utility costs have been flat over the last five or six years because many of the initiatives that we've implemented have actually saved money.
Have conversations about what to do about current climate threats become more common since you started with the company?
Kaiser Permanente Fontana is one of more than a dozen
As the company has been making these larger environmental goals in the last four or five years, have there been any unforeseen challenges?
There's certainly been challenges, but nothing terribly daunting or surprising. One thing I would say, in terms of challenges, is the landscape is very different state by state. Two-thirds of our business is here in California, and California is a very friendly environment for achieving the type of goals that we've established for ourselves.
Some of the other states that we operate in, it's more difficult to enter into power purchase agreements. It's more difficult to do things at scale, like the power purchase agreement announcement we made in September. That's probably our biggest hurdle, is how to attain these goals in all of our regions in addition to doing it in California.
How does Kaiser Permanente not just work to prevent climate change, but manage the current impact?
For our existing facilities, we are going to have to make them more resilient to the impacts of climate change. Some of our facilities are in wildfire threat areas. Now, you see utilities shutting off the power grid pre-emptively to prevent those forest fires. Which brings us back to the need to install microgrids. Not just at our hospitals, but we have almost 600 medical office buildings, and we don't want them being shut down every time the utilities have to turn off the grid due to the threat of wildfires.
Even in facilities that aren't directly threatened by wildfires, what you see is poor air quality throughout a large region. That fire in Paradise was hundreds of miles away, but our air quality was severely impacted here in the Bay Area. That has a facilities impact where now we need to think about ventilation systems and the ability to keep the interior air quality high, even when the outside air quality is low.