How Cogeneration Reduced Munson Medical Center's Electricity Usage by 50%

Munson Medical Center, the largest hospital serving northern Michigan, faced increasing pressures that are becoming common across the healthcare landscape. These include escalating energy costs, rising expectations around sustainability performance, and operational vulnerabilities tied to utility outages. The 442‑bed regional referral center operates more than one million square feet of critical healthcare space and supports advanced medical services for 24 counties. Its energy needs are continuous, intensive, and essential to patient care. As with many modern hospitals, its infrastructure required a long-term strategy that could enhance reliability, reduce operating expenses, and support broader environmental commitments.

To respond to these challenges, Munson Healthcare partnered with Trane to implement a natural gas-powered combined heat and power system, also known as cogeneration or CHP. The resulting 2.5 MW installation now produces the hospital’s baseload electricity while simultaneously capturing waste heat to generate steam and hot water. Through this project, Munson transformed how energy is produced and consumed on its campus, achieving cost savings, sustainability gains, and enhanced resiliency beginning the day the system went live.

A Hospital Facing Intensifying Energy Demands

For years, Munson Medical Center had been contending with rising electricity costs, aging central plant infrastructure, and a heightened need for reliable year-round thermal energy. The hospital operates continuously, which means its electric and heating loads never cycle down. Surgical suites, imaging equipment, intensive care units, sterilization systems, food services, patient rooms, etc. all rely on stable electricity and steam. At the same time, the hospital had limited backup generation capacity, only able to support about half of the campus during a loss of grid power.

Increasingly, this level of resiliency was inadequate. Weather-related outages in northern Michigan had become more severe, and hospital leadership recognized that current infrastructure did not fully support their mission of uninterrupted patient care. Additionally, sustainability and carbon reduction emerged as organizational priorities. The combined pressures made it clear that incremental improvements would not be enough. Munson needed a transformational approach to energy management.

The Opportunity, Why Cogeneration Made Sense

Cogeneration, also known as combined heat and power (CHP) emerged as the most promising solution during early discussions with Trane. It uses a single fuel source, in this case natural gas, to produce electricity. What sets CHP apart is its ability to capture the otherwise wasted heat from power production and convert it into usable thermal energy for heating and hot water. For hospitals, which maintain high and steady demands for both electricity and heat regardless of season, cogeneration is uniquely suited to their operational profile.

“Cogeneration is really beneficial for hospitals because they have a great baseload of electrical usage all year round,” said Brian Langerak, Account Manager at Trane. “Plus, they have steam usage all year round as well as hot water usage. The system can run 24/7/365 and produce electricity, steam and hot water and really make a big dent in utility bills.”

Trane’s initial feasibility analysis confirmed that Munson had the perfect load characteristics for CHP: a large and stable electrical baseload, consistent steam and hot water demand, and a strong need for resiliency. The analysis also showed substantial cost savings potential, especially when including newly available federal financial incentives. With the passage of the Inflation Reduction Act (IRA), Munson qualified for nearly $1 million in rebates, significantly improving the project’s rate of return.

A Comprehensive, Data Driven Approach

Using a focused, data driven assessment of the campus’s energy use, resiliency needs, and financial goals, the team confirmed that CHP aligned exceptionally well with Munson’s year-round thermal and electrical demands.

With a clear business case and strong organizational alignment, the project moved forward through a streamlined planning and approval process. Trane and Munson worked collaboratively to ensure the solution could be integrated smoothly into existing infrastructure without disrupting patient care. With clear support from facilities, finance, and executive stakeholders, the project moved into implementation.

Engineering the Cogeneration Solution

The final CHP system designed for Munson is a 2.5 MW natural gas generator configured for continuous operation. The system captures exhaust heat to produce both steam and hot water, reducing the load on existing boilers and meeting the hospital’s daily thermal demands. This highly efficient use of fuel significantly reduces both operating costs and emissions in comparison with purchasing grid electricity and separately generating steam.

Trane integrated the cogeneration plant into the hospital’s building automation system (BAS), enabling the hospital facilities team to manage and monitor the cogeneration system onsite or remotely,  giving Munson’s facilities team on-site and remote visibility into system performance. Ensemble continuously evaluates system conditions and adjusts operations to maintain efficiency.

With the CHP plant operating alongside existing emergency generators, the hospital now has the capability to maintain full operations during a loss of grid power. This strengthens patient safety and helps ensure the hospital can meet regulatory expectations for emergency preparedness.

Delivering the Solution Without Disrupting Patient Care

Large energy infrastructure projects in hospitals require careful coordination to protect clinical operations. Throughout construction and installation, Trane worked closely with Munson’s facilities and clinical teams to prevent patient care disruptions. All work met infection control requirements, and scheduling was coordinated with sensitive clinical areas.

Electrical tie ins were planned meticulously to avoid downtime, and steam modifications were executed with redundant safeguards. Commissioning occurred in multiple phases to validate mechanical, electrical, and thermal performance. Once the system was operational, the facilities team underwent training to ensure confident, independent management of the CHP plant, both on site and through the BAS.

Transformational Results

From the first day of operation, the cogeneration system delivered measurable and significant benefits.

The hospital cut its electricity costs by more than 50%, saving about $70,000 each month. These savings closely matched projections from the feasibility and audit stages, reinforcing confidence in the system’s long-term financial value. Munson also reduced its carbon footprint by 28%, supporting organizational sustainability goals and lowering dependence on the grid..

Perhaps most importantly, operational resiliency improved dramatically. With the CHP plant and the hospital’s emergency generators working together, Munson can maintain full campus electrical load during outages, providing a significant layer of protection for patient care and continuity of essential services.

“As far as operational savings go, we’ve seen right around our projected estimated amounts which were $70,000 a month,” said Ed Belanger, Director of Facilities & Plant Operations, Munson Healthcare. “It’s been a good process, very smooth, well communicated. We are pleased with Trane’s holistic approach. We especially appreciate their understanding of available funding resources, leaving us more resources to devote to direct patient care.”

A Strong Sustainability and Financial Outlook

FThe CHP system positions Munson to meet future sustainability objectives with confidence. The efficiency inherent in combined heat and power means less energy waste and lower greenhouse gas emissions. The system’s long operational life also stabilizes costs, protecting the hospital from fluctuating utility prices.

The financial benefits were significantly enhanced by federal incentives. With the support of IRA rebates, the project achieved an internal rate of return above 20%, resulting in a cash positive project beginning on day one. Over time, the savings will support additional campus upgrades and investments in high quality patient care.

Lessons for Healthcare Facilities Nationwide

Munson’s project offers several important insights into healthcare systems considering similar energy transformations. 

1. Data driven feasibility work is essential for building stakeholder confidence and establishing a strong business case.
2. The benefits of CHP extend well beyond utility savings, providing meaningful improvements in resiliency, operational stability, environmental stewardship, and long-term budget predictability.
3. Strong collaboration among facility teams, engineering partners, and clinical stakeholders is critical to delivering major infrastructure projects without disrupting patient care.
4. Strategic use of incentive programs can make forward looking energy upgrades financially attainable.

The success and impact of this effort have also been recognized at the national level, as Munson Health received a Smart Energy Decisions’ Innovation Award in the Energy Efficiency Technology category, highlighting the project as an industry leading example of effective and innovative energy strategy in healthcare.

Looking Ahead

Munson Medical Center is now positioned for continued progress in energy management and sustainability. With resilient, efficient infrastructure, reduced carbon emissions, and substantial operational savings, the hospital can move confidently toward future improvements that support its mission of delivering excellent patient care.

The success of this project stands as a model for how healthcare organizations can reimagine their energy systems. Through thoughtful planning, strong partnerships, and a commitment to innovation, Munson Medical Center has created a sustainable and resilient energy platform that supports its community today and, in the years ahead.

Disclaimer: Trane does not provide tax, legal, or accounting advice. This material is for informational purposes only and it should not be relied on for tax, legal, or accounting advice. Tax law is subject to continual change. All decisions are your responsibility, and you should consult your own tax, legal, and accounting advisors. Trane disclaims any responsibility for actions taken on the material presented.