Procuring renewable energy for health care facilities


Health care access to renewable energy

Procuring renewable energy is a highly impactful step hospitals can take to reduce their carbon footprint and negative health impacts. As the cost of renewables falls, transitioning to renewables can reduce energy costs along with pollution. Practice Greenhealth urges health care facilities to set a goal of 100% renewable electricity by 2030. Renewable energy resources, availability, and policies vary significantly between markets, and every hospital has different needs. There is no one “right” approach to procuring renewable energy. 

Most major buyers utilize several different approaches to diversify their portfolio, drive impact, and minimize market risks. The main approaches buyers take to procure renewable energy include onsite generation, community solar, power purchase agreements, virtual power purchase agreements, green tariffs, and renewable energy certificates. These approaches are summarized in the table below. To learn more, refer to our resource on renewable electricity procurement.


Approach Description

Onsite generation

Renewable energy technology is placed on the building or property of the institution, such as rooftop solar panels or solar thermal. Where regulations allow, onsite renewable projects may be owned by the organization, contracted for via a power purchase agreement, or leased and paid back through reduced energy bill savings.

Community solar

Community solar allows renewable energy customers large and small to buy into local, large-scale utility projects together. This brings the cost savings and environmental benefits of solar power to all buyers including small businesses, households, and low-income consumers. 

Offsite power purchase agreement (PPA)

A PPA is an agreement between an energy buyer and a third-party owner or operator of a renewable energy project. The buyer enters into a long-term contract to purchase renewable energy (including RECs) from a new renewable energy project built and operated by the project developer at a fixed rate over a fixed time period. The power is delivered to the buyer through the existing grid. Rates for electricity are agreed upon between both parties to provide an economic incentive for creating the PPA. A PPA can be done relatively quickly without commitment of capital or human resources and provide price stability, but contracts are typically long, which can create risk if markets and technologies advance to more favorable opportunities.

Virtual power purchase agreement (VPPA)

Similar to PPAs, VPPAs are long-term contracts to procure renewable energy from offsite projects, such as wind and solar farms. The distinction is that with VPPAs, the project can be located in a different market from the facility or facilities consuming the power, as the electricity is sold into local wholesale markets, while the buyer retains the renewable attributes (RECs), allowing them to go renewable in markets with limited renewable energy access.

Green tariff

Green tariffs are special rates set by traditionally regulated utilities for customers who wish to procure renewable energy. Customers access renewable energy directly from their utility through the existing grid and pay for it using existing billing systems. These programs help support the development of renewable resources by the utility and may lead to new renewable energy development. 

Renewable energy certificates (REC)

A REC is a market-based instrument that represents the property rights to environmental, social, and other non-power attributes of renewable electricity generation. Hospitals can purchase RECs from new or existing renewable energy facilities equivalent to a portion of their energy consumption and retire those RECs in their name. When implemented well, RECs provide financial support that allows for the development of new renewable energy projects. 


Learn more about the imperative for hospitals to transition to renewable energy. 

Learn more about the different types of renewable energy and their use by hospitals. 



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