Powering up partnership
"This framework is a revolutionary solution to the healthcare industry that provides benefits in energy cost savings, reduced carbon emissions and improved resiliency of our infrastructure to support patient care and support future strategic growth."
Brandon Seibold
Senior Finance Officer and Treasurer, Adventist Health
Delivering
value creation
Adventist Health, a California nonprofit corporation with over $6.8 billion in total assets, leads an integrated health system serving communities across four states. To enhance energy resiliency, advance sustainability efforts, and support growth, the company has entered into a $418 million, 30-year Energy-as-a-Service (EaaS) partnership with Bernhard, one of the largest privately-owned energy infrastructure firms in the nation providing services to 1,300+ hospitals nationwide.
Prior to formalizing this EaaS arrangement, Adventist managed their energy facilities through traditionally-run central utility plants. The EaaS partnership with Bernhard seamlessly combines expertise into a winning formula, retaining existing employees while implementing transformative infrastructure updates to enhance system efficiency and ensure a cohesive approach to energy management.
Accelerating
strategic support
RBC Capital Markets served and sole underwriter for Roseville Sustainable Energy Partner LLC, a special purpose entity (SPE) created to facilitate the partnership agreement between Adventist and Bernhard. By merging traditional municipal finance with an SPE to create an innovative EaaS partnership model, RBC Capital Markets enhanced the investment’s attractiveness to financiers by clearly delineating the project’s risks from those of the parent organization.
The reduction in lifecycle costs and comprehensive utility infrastructure renewal Adventist Health will realize through this partnership will allow the company to reinvest in enhancing the care provided across communities served. The proceeds from this arrangement will be used to develop, construct, and equip energy assets, solar arrays, and other infrastructure improvements at Adventist hospitals and related facilities.
As a longstanding partner, RBC Capital Markets has senior managed over $3.5 billion in transactions for Adventist and has been a consistent credit provider.2 Recently, RBC Capital Markets acted as buyside advisor and the Royal Bank of Canada served as bridge loan provider to Adventist on their $550 million acquisition of two Tenet facilities.
Sustainable synergies and savings
A 20%+ reduction in energy consumption is expected across key facilities, with cost savings to be reinvested in Adventist Health’s core mission-focused initiatives.
"We are thrilled to partner with Adventist Health on this historic Energy-as-a-Service project. This collaboration not only underscores our commitment to delivering comprehensive energy solutions but also sets a new benchmark for the healthcare sector in energy efficiency and sustainability."
Rob Guthrie
Chief Executive Officer, Bernhard
Executing
for success
The innovative partnership model combines municipal finance with an EaaS initiative over a 30-year term, funded on a tax-exempt basis. Lower financing costs enhance investment capacity to support long-term efficiencies and drive strategic growth at Adventist Health. Notably, the transaction marks Bernhard’s first EaaS partnership involving a broker-dealer and the first to be capitalized using tax-exempt financing.
This transformative transaction generates guaranteed reductions in utility consumption, advancing long-standing sustainability objectives for Adventist and expanding the scope of what may have been previously possible. By successfully integrating all of the EaaS project milestones, the agreement will set a benchmark for the healthcare sector in energy efficiency by significantly enhancing Adventists’ sustainability efforts across key energy systems. The Glendale facility will see a 61.1% reduction in purchased electricity and a 63.7% reduction in Scope 2 greenhouse gas emissions.
Sources
All transaction details and forward looking statements sourced from the following press announcement.
¹ Adventist Health and Bernhard Announce Groundbreaking Energy-as-a-Service Partnership
² Bloomberg, as of October 30, 2024