1
Financial Strategies Summary for Reduction in Energy Consumption Sustainability
Initiative
Author
Institution
Professor
Date
2
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,
3
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
4
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, we can take a one-time deduction
for the entire amount of this investment. 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.
Year in which the property is placed in
service
Percentage deductions
1st year 80%
2nd year 60%
3rd year 40%
4th year 20%
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
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.
5
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
6
those advantages and disadvantages, there is also the possibility of not being eligible for grants
or rebates or 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 capex 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,
7
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
8
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 centre-stage position to finance the sustainability
initiative.
Petition to the leadership for the financial strategies approval
9
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.
10
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
.LRenewable and Sustainable Energy Reviews,L158, 112098.
11
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.LSustainability,L14(10), 6062.
