Energy Asset Concession
Annual Energy Savings
In December 2020, Midland Health and Bernhard executed a 15-year energy asset concession arrangement, which addressed significant capital renewal, deferred maintenance, and energy optimization priorities at Midland Health’s main and west campuses. The transaction marks the continuation of a 10+-year old working relationship between Bernhard and Midland Health and delivers substantial upfront cash and year-over-year cost savings to the health system. Midland Health is a system of healthcare providers in Midland, Texas, with Midland Memorial Hospital at the center of their operations.
Over the course of due diligence, Bernhard worked with Midland to develop an upfront scope of work with the aim of reducing Midland’s backlog of necessary capital improvements, and achieving an appropriate internal rate of return. Together, Bernhard and Midland compiled a final scope of work to deliver comprehensive value to the hospital’s central energy plant and surrounding facilities. This scope includes accretive improvements to the central energy plant chilled water and tower water systems, as well as installing a central plant security system. Beyond the central plant, the improvements scope includes upgrades to building infrastructure, including air handling units, heating water system, steam system, as well as a system-wide retro-commissioning, lighting, and building automation system program. The improvements to Midland Health facilities are generating a minimum of $664,000 in annual utility cost savings guaranteed by Bernhard.
The project transfers the risk of energy asset renewal to Bernhard over the full 15-year term, eliminating more than $3 million from Midland Health’s future budgets. At the conclusion of the agreement, the energy assets are to be handed back to Midland Health in good working order and at no cost to Midland Health.