The Economist & NRG Energy Case Study€¦ · Watt’s Up Doc NRG Energy Case Study 2 Table of Contents I. Executive Summary II. Abstract of New Jersey Hospital a. Hospital Description

Watt’s Up Doc NRG Energy Case Study 1

The Economist & NRG

Energy Case Study:

Optimizing the 21st Century Hospital

Team: Watt’s Up Doc

Abdulkamal Abdullahi

Michael Brown

Jose Poblete


Table of Contents

I. Executive Summary

II. Abstract of New Jersey Hospital

a. Hospital Description

b. Location Description

c. State Incentives

III. Technology Summary

a. CCHP, Combined Cooling, Heating, and Power

b. Photovoltaics

c. Battery Storage

IV. Operating Summary

a. Hospital Power Requirements

b. CCHP, PV, Battery Storage Implementation, Operations, and Cost

V. Financial Summary

a. Financing Infrastructure

b. Employment of Cash Flows

c. Financial Metrics

VI. Conclusion


I. Executive Summary

People and organizations usually take supply of electricity for granted, but natural disasters

and other threats remind us how dependent modern society is on energy reliability and how

vulnerable the electrical grid can be. Hospitals comprise a subset of systems that can be categorized

as critical infrastructure whose “assets, systems, and networks that, if incapacitated, would have a

substantial negative impact our society”1.

The need for reliability and the opportunity to increase efficiency led Watt’s Up Doc to select

the New Jersey Hospital as its project. Hospitals are on average the most energy-intensive facilities

in the United States, spending more than $8B on energy per year and representing 10% of total

energy used in commercial buildings2. Their operational nature subjects them to high costs of

energy during peak months and hours of the day, without opportunity for taking advantage of

interruptible services for its power and energy needs.

We recommend a CCHP system, Solar PV panels, and battery storage to make the Hospital’s

energy supply independent, reliable and resilient for years to come. Smart grid controls allow our

system to make the best use of electricity and heat generated with natural gas. Solar energy

produced and stored in batteries optimizes fuel consumption and provides ancillary services in-

house and for utilities. The 5MW energy solution will cost $23M in capital investment, and will

pay out in 7 years with an IRR of 12%. Given the debt environment and public status of our

hospital, we elected to finance the project with debt and municipal bonds. Our project is

expected to save the hospital over $100M in efficiency improvements over 20 years, improve

power reliability, and reduce CO2 emissions by 14,564 ton/year.

1 “Combined Heat and Power: Enabling Resilient Energy infrastructure for critical facilities” ICF International, March 2013 2 Energy.gov: Energy Department’s Hospital Alliance Helps Partner Save Energy and Money


II. Abstract of New Jersey Hospital

A. Hospital Description

A hospital located in New Jersey presents an attractive opportunity for a renewable

infrastructure upgrade. Our hospital operates a total of 2,000 beds and has energy demands of 5

MW, landing in the top 15% of all US hospitals in terms of size and energy consumption3; with

such a large size, we conclude that the hospital operates in a high population density area on the

New Jersey side of the Philadelphia or New York City metropolitan areas. We also assumed that

the hospital is a general health care facility providing services in emergency care, general

practice, and all standard specialty practices. Therefore, it operates large, energy-intensive

equipment including tomography and MRIs, creating spikes in demand.

At this size, our team carried the assumption that this hospital is a public entity operated like

a VA hospital or large non-profit. Therefore, it has access to financing through bank debt,

municipal bonds, and existing capital. It does not have access to equity capital investments.

B. Location Description

Our hospital is in the Edison township in Middlesex County, New Jersey on the north side

of the Raritan river and New Brunswick. A hospital in this location could serve local townships,

universities and associated research scientists, and cities from Philadelphia to New York by train,

New Jersey is in climate zone 2 meeting requirements for less than 2,000 cooling degree

days (CCD) and 5,500-7-000 heating degree days (HDD)4. The high number of HDD influenced

our decision to provide an energy solution that could meet the high energy demands of a hospital

in such a climate.

3 Energy Information Administration: 2007 Commercial Buildings Energy Consumption Survey 4 Source of Energy consumption in hospitals, by end use, for five U.S. climate zones

https://www9.nationalgridus.com/non_html/shared_energyeff_hospitals.pdf


Figure 1: Tentative location of Target New Jersey Hospital

Figure 2. U.S. Climate Zones – Energy Requirement Forecast


Utility Service:

Due to the size and location of the hospital and proximity to a large population, utility

service is provided by Public Service Electric & Gas Company (PSEG). PSEG services the

corridor from Philadelphia to Newark. This utility is primarily serviced by nuclear and coal

power systems, and supplemented by gas, steam, and combined cycles during peak periods.

PSEG is also the gas utility for our operating area and market prices are available on the Henry

Hub. All primary voltage and gas distribution prices for PSEG were used in our operating and

financial models.

Figure 3. PSE&G Generation Stack5

C. State Incentives

New Jersey offers several incentives that make our investment in CCHP and PV an

attractive solution. As of 2016 the NJ Public Board of Utilities introduced a CCHP incentive

program that rebates on-site power generation that has a proven payback in under 10 years. New

Jersey targets 4.10% of the state’s electricity to be solar by 2028; to achieve this New Jersey and

5 PSE&G Generation Information


Pennsylvania have created an SREC market that is now the largest in the country, with 1 MW

now selling for over $2006.

Figure 4. New Jersey SREC Credit Market LTM

III. Technology Summary

A. CCHP, Combined Cooling, Heating, and Power

A combined cooling, heat and power (CCHP) consists of a combination of equipment able to

produce electricity and use the heat generated in the process to deliver heat and cooling solutions.

Hospitals are an excellent fit with CCHP because their energy demand is composed by electric and

large heating and cooling needs. CCHP systems have the same efficiency of electric generation as

utility-scale plants, around 35% but, as a distributed generation resource, achieves approximately

an additional 40% of efficiency by using the heat.

The main element of the system is the gas turbine, which transforms fuel, natural gas in our

case to have a more environmentally friendly fuel, into mechanical energy. We have selected the

Siemens Gas Turbine SGT-1007 for our system, a 5.4 MW turbine. The mechanical energy is then

converted to electricity in a generator. The exhaust heat generated by the turbine is harnessed by a

6 SRECTrade: http://www.srectrade.com/srec_markets/new_jersey 7 http://www.energy.siemens.com/us/en/fossil-power-generation/gas-turbines/sgt-100.htm#content=Technical%20data


Heat Recovery Steam Generator (HRSG), transforming it into steam, which is used by our thermal

loads. The HRSG selected is the Cleaver Brook’s Max-Fire8, that includes additional natural gas

burners, which would allow running the CHP at a lower output while meeting the thermal needs

(in the event exporting excess electricity becomes less profitable). Our Heating needs are

comprised mainly by hot water and room heating. Finally, for the Cooling needs we recommend

using steam, instead of additional transfers to hot water, new backup boilers or electricity, to drive

a LG WCSS9 capable of producing approximately 4,000 RT.

This solution offers the opportunity to improve critical infrastructure resiliency, providing

independence and mitigating the impacts of an emergency by keeping critical facilities running

without any interruption of service. Any excess of electricity could be exported to the grid and

additional heat needs could be satisfied with the HRSG burners. The system allows to reduce

carbon emissions in 14,564 tons of CO2 per year10.

Figure 5. CCHP Process Flow Diagram

8 http://www.cleaverbrooks.com/products-and-solutions/boilers/hrsg/max-fire/index.aspx 9 http://www.lg.com/global/business/download/resources/sac/Leaflet_F_LG_Absorption_Chiller.pdf

10 Based on 2014 Electric grid study https://www.epa.gov/energy/emissions-generation-resource-integrated-database-egrid


B. Photovoltaics

Solar Photovoltaic panels allow our system to have an additional renewable component and

take advantage of favorable conditions to reduce the systems fuel intake. The rationale behind the

selection of roof-top photovoltaic panels is two-fold: first, installing solar panels reduces the

overall carbon footprint of the hospital by taking advantage of the considerable rooftop space

(137,000 ft2) and offsetting part of the electrical power demand (330 kW). Second, because utility

companies in the state of New Jersey reward customers for clean energy production, via net

metering11, the panels could serve as an additional revenue source for the hospital. In our financial

model we have used the solar production to reduce our natural gas consumption, therefore our

system could have an upside by selling our solar production to the market.

C. Battery Storage

Battery Storage systems are quoted as a 1 MW power per 4-hour energy service (4MWh),

and is scalable up to optimize load requirements. NEC’s GSS system provides the necessary

elements for our system, although other providers offer storage, control software or both in

different types of business models that could be beneficial. For example, Tesla and BYD provide

scalable battery solutions, and STEM provides a SaaS12 option that doesn’t require storage

investment. Storage control algorithms have advanced at a fast pace during the past years and the

systems can provide peak demand correction, dynamic load learning for frequency and voltage

regulation13, provide black-start capability, among other applications. Additionally, the smart

grid control can route energy generated by the solar panels or the generator to the storage, or

discharge energy to the hospital or the grid, allowing an optimization and flexibility of resources.

11 New Jersey Clean Energy Program: Net Metering and Interconnection | Net metering in New Jersey 12 STEM would own the batteries and provide the service of energy management for the goals the Hospital requires. 13 https://www.linkedin.com/pulse/nigeria-electric-grid-spinning-reserve-inadequate-control-igbokwe provides an illustrative

example of the voltage/frequency problem. Utilities pay for these services in addition to the energy it is consumed during the

service, so our solution would also benefit from cheaper generation.


A 2014 study on Hospital equipment14 indicates Computed Tomography (CT) and Magnetic

Resonance Imaging (MRI) operate frequently in a narrow range of Power, but maximum Power

demand can be 17 times more in CTs and almost 5 times more in MRI machines. The study also

shows that these peaks can last from seconds to 45 minute intervals, and have random

occurrences between days, allowing only to separate similar behavior among weekdays and

holiday/weekend days. These situations translate to unexpected demand for the CHP system and

can stress the system by inducing voltage and frequency variations that can eventually shut down

generation or cause heating in wiring or equipment and overcharge certain circuits.

Figure 6. Power Surge Frequency and Size

In Figure 7 we can observe the basic function of the peak correction. If the imaging

equipment produce a peak in demand, the battery storage would provide the excess power and

energy above a predetermined threshold. In hospitals certain machines are highly predictable, for

example most MRIs and CTs are usually scheduled in advance (except emergency room

machines), which allows the algorithm to optimize readiness for charge and discharge. For the

14 “Healthcare Energy End-Use Monitoring”, Michael Sheppy, Shanti Pless, and Feitau Kung, National Renewable Energy

Laboratory, Technical Report, NREL/TP-5500-61064, August 2014


solar panels the algorithms can consider the weather and adapt to take part of the charging load

from the solar panels.

Figure 7. Battery Peak Demand Correction Example

IV. Operating Model Summary

A. Hospital Power Requirements

Power and Steam: The power requirements for a hospital can be divided into 5

consumption categories. Figure 8 indicates the energy each category consumes a percentage of

total energy and utilizes either steam or electricity or steam to operate.

Figure 8. Hospital Energy Consumption (% of total)

12.5%

4.5%

18.1%

10.4%

54.5%

64.9%

Fans Imaging Equipment Light, Offices Chiller Heat & HW


Calendar Demand Adjustments: Our 5MW New Jersey hospital was modelled over a 12-

month period to account for seasonal changes in steam and electrical consumption. Our CCHP

system has been sized to address the entire demand of power and energy and not as a complement

to the grid connection. In sizing the system, we have assumed a 10% security factor for the

Hospital’s energy demand. The power and steam requirements were then sized using industry

standards for efficiency: 40% steam capture, and 35% electrical capture to determine the nominal

demand of our technology solution. Our annual power requirements are shown below in Figure 9.

Figure 9. Hospital Calendar Seasonal Demand (MMBtu)

Our 12-month projection of hospital power demand is detailed in Exhibit 2.

B. CCHP Operations and Costs

Given the higher efficiency of the steam and heating component (40%) of the CCHP, the

equipment is designed to provide head most efficiently. Electricity can be more easily exported

(sold to grid) or any shortfall is supplied by storage or acquired (purchased) to provide adequate

electricity. This design methodology also minimizes cost of equipment. The capital cost of

$3,000/MW represents the high range of capital costs assuming this is a greenfield installation and

-

500

1,000

1,500

2,000

2,500

3,000

3,500

1 2 3 4 5 6 7 8 9 10 11 12

MM

BTU

Heat & HW Fans Chiller Imaging Equipment Light, Offices


leveraging a $3MM project rebate from the NJBPU. Installed costs represent engineering design,

procurement, installation, and commissioning of all major equipment.

The CCHP will be run at maximum availability, with scheduled 4000-hour preventative

maintenance services. We expect a 94% run time efficiency, and flat fixed and variable O&M

costs. The primary cost driver of the CCHP is natural gas price. Gas consumptions was calculated

based on monthly demand, unit efficiency, and market price.

Table 1. Cost Model for CCHP

Cost Line Total Unit

CCHP Installed Cost 3,000 $/MW

CCHP Fixed O&M 15.37 $/kW/year

CCHP Variable O&M 3.27 $/MWh

C. Solar PV Operations and Costs

Our PV installation was modelled using an assumed roof surface area of the hospital,

seasonal efficiency, and operating costs. Efficiencies ranged from 12%-18% of capacity

depending the month of the year. Even though PV installations using already acquired land cost

less than $2,500 per MW, we modeled our installation cost on the high end of the spectrum

considering additional equipment to make a smart grid, appropriate operational expense, and

SREC credits.

Table 2. Sizing Model for Solar PV

Beds 2,000 beds Roof area 137,143 ft^2

Size 960,000 ft^2 Solar PV Space 60% availability

ft^2/bed 480 ft^2/bed Roof area 1.89 acres available

Floors 7.0 floors PV Capacity* 5.50 acres/MW

Floor size 137,143 ft^2 PV Installed 0.34 MW

PV Efficiency* 18% Capacity factor

Solar PVHospital Data


Table 3. Cost Model for Solar PV

D. Battery Storage

Battery storage will be available to curb equipment peak power loads, provide backup power, and

serve to sell solar PV at optimal market time. The battery system will provide 1MW for 8 hours of

service. Our electrical requirements are primarily for Imaging equipment but could serve to power Fans

and lights/offices as well.

Table 4. Cost Model for Battery Storage

From our estimate of the imaging equipment in a 2,000 bed Hospital, the peak power

demand for a simultaneous use of all the equipment, with every equipment demanding its

maximum load, would be 1.4 MW. Our system has a 2MW storage system able to provide 8

MWh, which covers the maximum expected peak and allows our solution to provide Ancillary

Services to our Utility (frequency and voltage regulation, peak energy demand during

weekends/holidays) and open a new revenue stream. In our financial model, we assumed a

revenue stream the provided a 7.0% IRR for the storage system investment.

Table 5. Peak Demand Model Assumptions

Cost Line Total Unit

Solar PV Installed Cost 2,500 $/MW

Variable O&M ($) 19 $/kW/year

SREC Revenue 0.01 $/kWh

Description Total Unit

Batter Installed Cost 60,000 $/MW

Service 8 hrs.

Capacity 8 MWh

Equipment Type Peak Demand (kW) Avg Demand (kW) # Units Max Average

CT Scan 115 7 9 1035 63

MRI 55 12 7 385 84

Total 170 19 16 2720 304

Aggregate Demand

Imaging Equipment Power Demand

Unit Demand


V. Financial Summary

The 3-solution project to construct a CCHP, install solar PV and battery storage will cost

$23 million including financing fees, has an internal rate of return (IRR) of 11.7% and 7-year

payback. As a municipal project, we will leverage bank debt and the municipal bond market to

secure long term fixed rate financing.

Bank Debt: Local bank debt will finance $8M of the project. The project will incur a 3%

financing fee and be 100% amortized over 5 years. Bank debt and cash on hand will be

withdrawn to pay for planning, front-end engineering design, (FEED), and permitting.

Municipal Bond: We will work with a bank to syndicate $15M of municipal debt. The

project will incur a 5% financing fee and be redeemed at maturity of 15 years. Coupon rates for

municipal bonds for NJ Healthcare systems range from 4%-5%. Proceeds will be put toward

procurement and general construction.

Risks: A fixed rate long maturity bond presents several risks. If interest rates fall the project

could pay financing costs above the market. Bonds contain covenants that may restrict the

hospital's overall capital structure for the duration of the bond life. Bank debt is senior secured,

which may negatively influence the coupon rate the project can secure. Interest payments will be

required prior to full realization of savings. We have increased our exposure to gas price

volatility by increasing our consumption, this should be mitigated by futures contracts. There are

no contract costs considered in our model.

Benefits: By financing with debt, we will increase our savings by eliminating a PPA that

floats on an index. However, service contracts must be established under our estimated variable

costs to manage the facility.


A. Employment of Cash Flows

The project’s cash flows consider the amortization of the bank loan starting at year 1, generating

$16.6M in cash flow extinguishing the bank debt in year 5. Through year 6 until the payment of

the municipal bond the project generates $45.5M in cash flow paying the municipal bond in year

15.

Table 6. Consolidated Statement of Project Cash Flows

B. Financing Infrastructure

Bank debt and municipal bonds offers stable long term financing for our CCHP, PV, ad

Battery storage solution. Construction is expected to take 18 months and will be handled by a 3rd

party developer.

C. Sensitivity Analysis

As we have said before, by projecting higher installation costs and low divergence of natural

gas to electricity prices, we believe our base scenario is conservative. We have performed a

sensitivity analysis that captures the impact of different scenarios.

First, looking at our financial costs, our base scenario considers a weighted average interest

rate of 4.1% (3.5% for bank loan 35.9% and 4.5% for bond 64.0%). Increasing interest rates have

an average 0.3% IRR decrease per 50 basis point. It is important to mention that this is a general

conclusion due to the different structure of our financing option.

Condensed Statement of Cash Flows 2018-2022 2023-2032 2033-2037 Total

Project EBIDA (no taxes paid) $ 20,825,061 52,069,086 32,452,391 105,346,538

Interest Expense $ (4,184,770) (6,599,475) 0 (10,784,245)

Debt Ammortization $ (8,240,000) (14,665,500) 0 (22,905,500)

Project Free Cash Flow $ 8,400,290 30,804,111 32,452,391 71,656,793


Table 7. IRR CAPEX vs Interest Rates

Approximately 30% of our ROI relies on savings from a higher growth in utility rates

(PSE&G) compared to gas price growth rates. Our base scenario considers gas prices growing at

2% from $ 2.5 per MMBTU and electricity rates growing at 3% (total). Our analysis shows that

our project’s IRR is more sensitive to PJM energy prices, approximately 0.9% IRR per 50 basis

point change, and less sensitive to Gas prices, approximately 0.3% IRR per 50 basis point

change.

Table 8. Gas vs. Utility Growth Rates

A detailed operating and financial model are included below in Exhibits 1, 2, and 3.

11.7% 4% 4.000% 4.500% 5.000%

150000.0% 21.2% 21.1% 21.0% 20.9%

1750 19.2% 19.1% 19.0% 18.9%

2000 17.4% 17.3% 17.2% 17.1%

2250 15.8% 15.7% 15.6% 15.6%

2500 14.3% 14.2% 14.2% 14.1%

2750 13.0% 12.9% 12.9% 12.8%

3000 11.7% 11.7% 11.6% 11.6%

3300 10.4% 10.3% 10.3% 10.2%

Weighted Avg Project Interest Rate %

CH

P C

apit

al In

vest

me

nt

$/k

W

11.7% 2% 2.500% 3.000% 3.500% 4.000%

2% 9.8% 10.7% 11.7% 12.6% 13.5%

2.5% 9.5% 10.5% 11.5% 12.4% 13.3%

3.0% 9.2% 10.3% 11.2% 12.2% 13.1%

3.5% 8.9% 10.0% 11.0% 11.9% 12.9%

4.0% 8.6% 9.7% 10.7% 11.7% 12.7%

Power PJM/PSE&G Growth

Gas

Pri

ce G

row

th


VI. Conclusion

The selection of a comprehensive CCHP, solar and battery solution will not only provide the

hospital’s daily energy needs, but is flexible and robust enough to adequately manage anticipated

power demand spikes and feed electricity back to the grid during times of excess production.

Financing this project using a combination of bank loans, NJBPU grants, and municipal bonds

will yield a payback period of <7 years and create value for the hospital in the long run.


Exhibit 1. Operating Model

Installed Cost Gas Turbine Solar PV Battery

Min $/kW 1,200$ 2,493$ Capacity (hrs) 8

Max $/kW 3,000$ 2,500$ Cost $/kWh 600 60000

Demand (MW) 5.5 0.3 Capacity kWh 8000

CAPEX 16,547,143$ 860,000$ 4,800,000$

Month 1 2 3 4 5 6 7 8 9 10 11 12

% of Peak 94% 94% 97% 86% 66% 69% 69% 69% 62% 86% 100% 94%

Demand (MW) 6.29 6.29 6.50 5.78 4.40 4.61 4.61 4.61 4.15 5.78 6.70 6.29

Hours 730 730 730 730 730 730 730 730 730 730 730 730

kWh 4,590,886 4,590,886 4,742,726 4,221,281 3,211,354 3,363,194 3,363,194 3,363,194 3,026,552 4,221,281 4,894,566 4,590,886

1 LMP ($/kWh) 0.02955 0.02677 0.02394 0.02768 0.02323 0.02565 0.03221 0.03178 0.02896 0.02821 0.02573 0.03192 Cap ($/kW) 20.1095 20.1095 20.1095 20.1095 20.1095 29.7275 29.7275 29.7275 29.7275 20.1095 20.1095 20.10952 T&D ($/kWh) 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342 0.0342

O&M ($/kWh) 0.011 0.011 0.011 0.011 0.011 0.011 0.011 0.011 0.011 0.011 0.011 0.011

Cost ($/kWh) 0.064$ 0.061$ 0.058$ 0.062$ 0.057$ 0.060$ 0.066$ 0.066$ 0.063$ 0.062$ 0.060$ 0.066$

Utility Cost ($) $419,000 $406,000 $406,000 $377,000 $273,000 $338,000 $360,000 $359,000 $314,000 $380,000 $428,000 $430,000

3 CCHP Operating Cost ($) $88,000 $88,000 $91,000 $80,000 $59,000 $62,000 $62,000 $62,000 $55,000 $80,000 $95,000 $88,0003 Solar PV Operating Cost ($) $240 $240 $170 $170 $90 $90 $90 $90 $170 $170 $240 $240

3. Refer to CCHP Operating Model

PSE&G Monthly Cost Forecast 2017

Infrastructure CAPEX

1. PJM Historical Monthly Average of Day-Ahead LMP

2. PSE&G Primary Voltage Service Costs


Exhibit 2. Infrastructure Engineering Model

Safety Factor (demand) 1.1

Month 1 2 3 4 5 6 7 8 9 10 11 12

Relative CCD 1 1 2 3 3 4 4 4 4 3 3 1

Relativd HHD 9 9 9 7 4 4 4 4 3 7 9 9

35.1% A Electricity 1,409 1,409 1,409 1,409 1,409 1,409 1,409 1,409 1,409 1,409 1,409 1,409

12.5% A Fans 502 502 502 502 502 502 502 502 502 502 502 502

4.5% B Imaging Equipment 181 181 181 181 181 181 181 181 181 181 181 181

18.1% C Light, Offices 727 727 727 727 727 727 727 727 727 727 727 727

10.4% D Chiller 152 152 304 456 456 607 607 607 607 456 456 152

54.5% E Heat & HW 3,030 3,030 3,030 2,356 1,347 1,347 1,347 1,347 1,010 2,356 3,030 3,030

Month 1 2 3 4 5 6 7 8 9 10 11 12

A+B+C 1.9 MW Electricity 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9 1.9

G CCHP Electrical Efficiency 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 35%

F/G 5.5 Total (MW) 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5 5.5

CCHP Steam Efficiency 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40%

Total Steam Recovery (MW) 3,182 3,182 3,333 2,812 1,802 1,954 1,954 1,954 1,617 2,812 3,485 3,182

Fuel Demand (Mmbtu/mo.) 27,140 27,140 28,436 23,987 15,372 16,668 16,668 16,668 13,796 23,987 29,731 27,140

Price Gas ($/MMBtu) 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50

Fuel Cost ($) 67,851 67,851 71,089 59,969 38,431 41,669 41,669 41,669 34,490 59,969 74,327 67,851

Fixed O&M ($) 7,065 7,065 7,065 7,065 7,065 7,065 7,065 7,065 7,065 7,065 7,065 7,065

Variable O&M ($) 13,167 13,167 13,167 13,167 13,167 13,167 13,167 13,167 13,167 13,167 13,167 13,167

Total Variable Cost ($/yr) 88,082 88,082 91,320 80,200 58,662 61,901 61,901 61,901 54,721 80,200 94,558 88,082

Solar PV Efficiency 12% 12% 15% 15% 18% 18% 18% 18% 15% 15% 12% 12%

Energy production (MWh) 30.09 30.09 37.61 37.61 45.13 45.13 45.13 45.13 37.61 37.61 30.09 30.09

O&M Cost ($) $544 $544 $544 $544 $544 $544 $544 $544 $544 $544 $544 $544

SREC Revenue (0.01 $/kWh) $301 $301 $376 $376 $451 $451 $451 $451 $376 $376 $301 $301

Total Variable Cost ($/yr) 243 243 168 168 93 93 93 93 168 168 243 243

Imaging Equipment (MW) 0.248 0.248 0.248 0.248 0.248 0.248 0.248 0.248 0.248 0.248 0.248 0.248

NJ Hospital Total Demand demand of Hospital

CCHP Sizing

Solar PV

Battery Storage

Assumes Solar PV panels in roof, production is substracted from CHP's fuel demand.

Hospital Energy consumption (MWh)

Steam


Exhibit 3. Financial Model

Operating Assumptions:

CHP+Fuel Cell CAPEX $22,207,143 Power Inflation 3%

Percent Funded with Debt 100% Gas Inflation 2%

TOTAL FINANCING $22,905,500

PPE Useful Life 20.00

Source of Funds

Funding Source Leverage Total Rate Fee Amor. Maturity

BANK LOAN SENIOR NOTE $ 8,240,000 3.50% 3% 100.00% 5 4%

NJ HEALTHCARE FAC MUNI NOTES $ 14,665,500 4.50% 5% 0.00% 15

TOTAL DEBT $ 22,905,500 4.14%

0 1 2 3 4 5 6 7 8 9 10

Cash Flow Statement 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Earnings (Cost Savings) $ 3,926,069 4,041,781 4,161,194 4,284,425 4,411,592 4,542,819 4,678,231 4,817,961 4,962,141 5,110,912

Interest Expense $ 948,348 894,566 838,903 781,291 721,663 659,948 659,948 659,948 659,948 659,948

Depreciation 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357 1,110,357

Debt Amortization $ 1,536,607 1,590,388 1,646,051 1,703,663 1,763,291 0 0 0 0 0

Free Cash Flow $ -22207143 1,441,115 1,556,827 1,676,240 1,799,471 1,926,638 3,882,871 4,018,284 4,158,013 4,302,194 4,450,964

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on Bank Debt $ $1,536,607 $1,590,388 $1,646,051 $1,703,663 $1,763,291 $0 $0 $0 $0 $0

Payments on Bonds $ $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Financing Items: $

CASH FLOW for INTEREST REPAYMENT

BANK LOAN SENIOR NOTE $ 288,400 234,619 178,955 121,343 61,715 0 0 0 0 0

NJ HEALTHCARE FAC MUNI NOTES $ 659,948 659,948 659,948 659,948 659,948 659,948 659,948 659,948 659,948 659,948

Balance Sheet 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Assets 16,547,143 16,451,651 16,418,090 16,448,279 16,544,087 16,707,433 20,590,304 24,608,588 28,766,601 33,068,795

Project Cash 0 1,441,115 2,997,942 4,674,182 6,473,653 8,400,290 12,283,162 16,301,445 20,459,458 24,761,652

Net PP&E 16,547,143 15,010,536 13,420,149 11,774,097 10,070,434 8,307,143 8,307,143 8,307,143 8,307,143 8,307,143

Liabilities

BANK LOAN SENIOR NOTE $ 8,240,000 6,703,393 5,113,006 3,466,954 1,763,291 0 0 0 0 0 0

NJ HEALTHCARE FAC MUNI NOTES $ 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500 14,665,500

Net Debt: $ 22,905,500 19,927,779 16,780,564 13,458,273 9,955,139 6,265,210 2,382,338 1,635,945 5,793,958 10,096,152

Finacial Summary

Capital Investment 22,207,143

Payout (years) 7

IRR 11.7%

Documents

The Economist & NRG Energy Case Study€¦ · Watt’s Up Doc NRG Energy Case Study 2 Table of Contents I. Executive Summary II. Abstract of New Jersey Hospital a. Hospital Description