Renewable Energy Saves Hotels and Hospitals Money!

Impact of renewable energy  increases hotel values and saves hospitals huge operating expenses. 

Environmental Solutions ( did an analysis of hotels and hospital, to see the feasibility of using renewable energy for cost efficiency as well as increasing value for these buildings. After studying over 500 hospitals and hotels, it was determined that while wind turbines could generate electricity, that they were not always practical for hospitals in crowded urban areas.  Solar panels are ideal for producing electricity, but the PV panels, often need more roof space than is available in multi story hospitals or hotels, where land costs are high, therefore multi-story development is ideal.  But, in every case, our feasibility study concluded that due to the high use of hot water in hospitals and hotels, that solar water heating was a key to reducing utility expenses, and increasing Net Operating Income by thus lowering expense. Most people do not realize, that in pure levels of efficiency, solar water heating is 6 times more efficient than solar PV panels that produce electricity.

Hotel Castaneda, Built 1901, Las Vegas, New Mexico, is being renovated and reopened!  The investor says: "I use solar water heating in my hotels, it saves money, and makes us money." 

In a case of one hospital, it was noted that the use of solar water heating reduced utility expenses of the facility by 9 to 16%.  Now this is a significant number, but makes sense when it is understood that the costs to heat water in a typical hospital or hotel, can range from 18 to 24% of the total utility bill.  In interviewing a prison facility, we learned that utility costs were running nearly $70,000 per month.  Now just think with me.  If we reduce this expense by 16% (.16 x $70,000 = $11,200 per month, x 12 month = $134,400 per year. 

Capitalizing $134,400 by 8.2%  (134,000/.082= $1,639,024) means that using solar water heating increased the capitalized market value of the buildings by $1,639,024. 

The fact is that solar water heating makes financial sense.  We have worked with technology that heats the water and puts it under pressure, to temperatures of 290 to 300 degrees.  We then store this water in well insulated tanks in the hospital or hotel, of 7,000 to 10,000 gallons, normally in a basement or equipment room, and then mix the water to the appropriate temperature for use for laundry, cleaning, showers, cooking and so forth. 

What about cost and time of recovery?  Well, first consider this. If you do nothing, and continue to be a slave to the public utilities, how much will you recover anything? Never. You will be paying them forever, and paying ever higher utility bills. But, in the last 7 years the cost of PV solar panels, and solar water heating systems has dropped significantly. The same solar panels that we once paid $800 for, can be purchased now for $300. Plus federal and state incentives lead to a grant or incentive reimbursal of 30% to 38% depending upon the state. Mississippi, Alabama, Georgia, Texas are some of the tightest states, and even there, a 30% credit, or incentive can be realized. In California, with combined state and federal incentives, 38% is an easy target of reimbursed expense for renewable energy. The old adage that it takes 16 to 20 years to recover costs for solar is simply not true. For a typical solar water heating system, we see a typical recovery rate of 6 years, and for a solar PV system, a full pay back of investment of 9 to 14 years.  But, remember, by not doing it, you NEVER get a pay back, you simply stay as a dependent to rising utility costs forever. 

There is one other factor to consider. The message that a building sends to its occupants and to the overall community and society. If you think a building is not meant to send a message then think again. Why to we have architects and designers who wish to make buildings beautiful, strong, secure, or inspiring. When a building is constructed with renewable energy it sends a message to people, the community and the tenants that “We are thinking. We are progressive. We are good caretakers of this earth and its environment. We wish to leave it cleaner than we found it. We want a clean air and clean water future for our kids.”  That is the message, and it is an important one. 

In our feasibility studies we learned one other thing. That typically commercial buildings that use renewable energy attract more stable tenants, enjoy higher rents, and longer term leases. This surprised us, although it should not have.  

So in short, advantages of renewable energy additions for hospitals, hotels and even prisons are: 

  1. Lower operating expenses
  2. Higher rent income
  3. Higher Net Operating Income
  4. Higher building appraised values
  5. Positive message to the community
  6. State, local and Federal incentives to those who invest in renewable energy
  7. Great interest and appeal for investors


Teddi Roosevelt, at Hotel Casteneda, with Rough Riders

Our study found none.  There was a higher up front cost to buy and install, but after a few years the renewable energy actually became a profit center for the building, increasing net operating income. Or in the case of a non profit, renewable energy was able to save enough operating expenses to match up contributions that donors make to support our projects.  Consider this, what if you spend one million dollars on solar water heating, and in doing so, you save $130,000 per year in utilities. That means you don’t have to raise as much in donations for the future, and it also means that your facility has higher market value should you decide to sell the property in the future. 

Now all of this is written with a point in mind. The owner/investor of the Hotel Castaneda, in Las Vegas, New Mexico recently informed me: “Yes, I use solar water heating in my hotel properties in Arizona, it is great. I plan to use solar water heating in Las Vegas as well.”  

Teddi Roosevelt, who engineered the national parks system and who recruited the “Rough Riders” for the war in Spain and stayed at the Castaneda Hotel often, would be proud today.