As Shands HealthCare administrators began planning a new cancer hospital in Gainesville, Fla., one question kept coming up in discussions: How can this project become
A leading health care system in the southeastern United
States, Shands is a private, not-for-profit medical network affiliated
with the University of Florida (UF). The company designed its
new Shands Cancer Hospital at UF to be a 500,000-sq-ft facility
offering advanced resources for a wide range of oncology, surgery,
critical care and emergency/trauma patients. It would incorporate
192 private rooms, a tranquil healing garden and other features
reflecting the Shands tradition of quality, patient-centered care.
Shands also envisioned that the hospital would be supplied
with steam and chilled water from its own district energy system
– a system that the company planned to outsource to an energy
partner. The partner that Shands chose, Gainesville Regional Utilities
(GRU), delivered even more economic and operational benefits than
hospital leaders may have anticipated. Its plan for the hospital’s
South Energy Center, which included combined heat and power, has
set new industry standards for partnership and energy efficiency.
The Shands-GRU collaboration is the first national model of
a not-for-profit hospital and municipal utility partnering to create
an on-site energy center that meets all the health care facility’s
power, heating and cooling needs. It is an innovative partnership
that can be instructive for other large public institutions facing
a similar combination of environmental, energy security and
In the mid-2000s, as Shands developed its master plan for the
cancer hospital campus, hospital leaders concluded that turning
their vision into reality required them to turn over areas outside their
core mission – like improving power quality and energy security –
to key partners. In short, Shands ‘didn’t want to own a backhoe.’
When GRU realized that Shands, one of its largest customers,
was planning to solicit proposals for an energy partner to finance,
design, build, own, operate and maintain a new district energy sys-
tem to serve the hospital campus, it knew it was about to face a test.
Others were planning to go after the energy outsourcing project.
Owned by the city of Gainesville, GRU provides electric
generation and distribution, water, wastewater, natural gas
and telecommunications services. Although, as a multi-service
municipal utility, GRU was uniquely vested in the overall success
of the Shands project, hospital planners were not convinced that
Courtesy Burns & McDonnell.
The South Energy Center serving the Shands Cancer Hospital at the University of
Florida is housed in a steel-frame, precast concrete structure designed to withstand hurricane force winds. The three-story structure was built with space to
expand as the hospital’s master plan continues to evolve.
it had the expertise to design and build a power facility that would
deliver the energy security and power quality it needed.
GRU decided to convince the hospital otherwise. It was not
about to stand aside and watch a major customer leave its system
without a fight.
The Case for Innovation
Though municipal utilities typically have fewer reasons to
object to distributed generation facilities than investor-owned utilities, all utilities integrating on-site CHP face challenges to their load
growth planning and future resource development. For this reason,
along with many other challenges, few utilities have experience
owning and operating CHP systems located at a customer’s site.
Despite those obstacles, GRU chose to view Shands’ decision
to become independent of the grid as an opportunity to create a
win-win partnership. GRU’s first step was to identify its competitive
advantages and disadvantages.
The utility chose to view Shands’ decision to
become independent of the grid as an opportunity
to create a win-win partnership.
With its AA bond rating, one of GRU’s biggest strengths was its
access to low-cost financing. The ability to finance the $45 million
energy center over 50 years at a municipal bond rate turned out