Considering Energy-as-a-Service? Start at the Finish Line.

Tip #41

Christy Fetsch
Healthcare Vertical Market Strategy Leader, Trane

In our last article, we looked at what modern resiliency looks like for healthcare facilities. Now, we’re going to take a closer look at how alternative funding models, including Energy-as-a-Service (EaaS), are making comprehensive upgrades more accessible.

Depending on the arrangement, an EaaS provider may design, finance, build, own, operate, or maintain infrastructure while the hospital pays a service fee for contracted outcomes. This approach can help organizations move needed improvements forward without relying solely on traditional capital, but the model itself does not define the destination.

Before selecting an alternative funding model, facilities and finance leaders can start at the finish line by agreeing on what the organization needs to achieve. These five questions can help define that destination and determine whether EaaS or another option offers the best path to reach it.

Five questions to evaluate EaaS and alternate funding models:

1. How Will Success Be Measured?

Regardless of the funding model, success starts with agreement on the outcomes that matter most, such as energy use, comfort, reliability, and response time. An EaaS provider can help translate those priorities into contract terms supported by clear baselines, performance measures, and reporting. The arrangement also needs to specify how results will be verified and how disputes will be resolved.

2. What Problem Are We Trying to Solve?

A clear understanding of the need must come first. Is the primary challenge aging equipment, reliability concerns, sustainability goals, workforce limitations, capital constraints, or a combination? An EaaS provider can assess existing infrastructure, energy use, maintenance demands, and capital plans to help determine whether the model fits that need.

3. What Matters Most?

Facilities and finance leaders first need to agree on their priorities and acceptable tradeoffs. Alternative funding models structure financing, ownership, operations, maintenance, performance accountability, and risk differently. An EaaS proposal should show how that structure could affect capital flexibility, project speed, cost predictability, control, and reliability.

4. What Is Included?

With those priorities established, facilities and finance leaders can work with the EaaS provider to define the scope, whether the work will focus on a specific project, begin as a pilot, or extend across a broader portfolio. The proposal must identify which facilities, systems, and equipment are covered and what remains outside the agreement. It also needs to explain how phasing, equipment standards, technology integration, and staffing will be addressed.

5. Who Is Responsible?

Alternative funding models can assign responsibility for ownership, operations, maintenance, and performance in different ways. In an EaaS agreement, every role must be explicit, including who makes decisions, maintains the equipment, resolves problems, and responds when a chiller serving the operating rooms goes offline at 2 a.m. These responsibilities and response expectations must be settled before the agreement is signed.

Choose the Right Path for Your Organization

EaaS is one of several alternatives to traditional capital and can affect more than how improvements are funded. Depending on the agreement, it may shape how improvements are designed, delivered, operated, and maintained. Defining the destination first can help facilities and finance leaders compare their options and determine whether EaaS offers the best path forward. Whatever funding model the organization chooses, facilities leaders should be involved early, not as a formality, but because they will live with the operational outcome long after the agreement is signed.