Transforming Infrastructure: From Expense to Revenue Stream

Transforming Infrastructure: From Expense to Revenue Stream

Published

17 November 2025

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Can Infrastructure Be a Profit Center? How Optimum Energy Can Turn Central Plants into Cash Flow

The Deal Podcast | November 17th, 2025

With Ken Bernhard, VP of Project Development

Ken Bernhard, VP of Project Development and fourth-generation construction industry professional, discusses our innovative approach to infrastructure development through energy-as-a-service models. The conversation covers how Optimum Energy transforms expensive capital expenditures into revenue-generating assets for hospitals, universities, and large manufacturing facilities.

Read the Full Transcript Here

Joshua Wilson:
Good day, everybody. Welcome to The Deal Podcast powered by FA Mergers. I’m here with a friend—a new friend—but I’ve known these guys for a while. Mr. Ken, welcome to the show. Tell us who you are and what you do.

Ken Bernhard:
So, I’m Ken Bernhard. It’s great to meet you and to be with you today and spend some time. I’m a developer—an energy developer—but not in the sense of oil and gas.

Joshua Wilson:
Right, energy developer not in the sense of oil and gas. Now, we’re here in Lafayette, Louisiana. I do a lot of work in Texas, and if you’re in Texas and say you’re in energy, people expect oil and gas—or maybe something involving the Dallas Cowboys, which I know you have a few stories about. So energy, but not oil and gas. Explain what that is.

Ken Bernhard:
Yeah, I don’t know much about oil and gas. I have a lot of friends who grew up in it, but I know very little. We’re on the energy conservation side. We do something called energy as a service, where we take infrastructure that’s primarily an expense and turn it into a revenue source.

These large central plants that run hospitals, higher education campuses, big universities, smart manufacturing—Intel, Johnson & Johnson, car manufacturers—they all have massive central plants they’re forced to build. But those plants aren’t revenue sources for them.

Growing up in the mechanical construction business, we built those plants. We were the experts. And we found a clever way to finance them off balance sheet and shift the risk onto the concessionaire. We did that, sold that company, and that went well. But then we found a better way to do it. So now I’m back a second time, doing it the better, smarter way—focused on long-term relationships and utilizing AI, because that’s where we are now.

Joshua Wilson:
Interesting. Okay, walk us through one of those deals. This is The Deal Podcast, so let’s talk deals. Two things I want you to go over:

Turning an expense into revenue — where did that idea originate, and how did your family execute it?

The clever way you financed things off-balance-sheet.

Walk us through both.

Ken Bernhard:
Sure. To get there, I’ll give a little background.

I’m fourth-generation in a mechanical construction business started by my great-grandfather. My grandfather expanded it, and my dad expanded it further. My uncle, who wasn’t part of the mechanical business, built a construction company from three people to 30,000. They built and maintained nuclear facilities, chemical facilities, military bases—that sort of thing.

When he sold his company, he came back to the mechanical business and said, “We did something interesting in the past—we built a big co-generation plant for LSU and Louisiana Tech. We were looking at one for Texas A&M. How do we do that again? And why did you stop?”

The answer was: the price of natural gas skyrocketed after Katrina, so it was no longer advantageous for universities. But their utility bills remained extremely high—1, 2, 3, even 7 million square feet of campus.

We explained the business model. He understood it immediately. Then he asked, “What stops you from doing it now?” And we said, “Easy money.” He replied, “I’m starting a capital company—so we’ll eliminate that. What else stops you?”

We realized nothing else stopped us. People just didn’t understand how to do it. So we set out to finance energy plants differently—by becoming a third-party concessionaire.

Here’s what that looks like:

We go into a large healthcare system. We long-term lease their central plant. In exchange for that lease, we perform a large energy conservation project inside their facility—maybe $25 million worth. That refreshes their infrastructure at a time when money is tight, margins are razor thin, and the political environment is shifting constantly.

After that, we sell back the chilled water, heating water, and steam that the central plant produces as a commodity—just like natural gas or water.

Auditing firms will classify this as off balance sheet if certain tests are met—one is having the ability to sell that commodity to neighboring properties within about three miles. As long as those tests are met, the hospitals keep the debt off their balance sheet and reserve their borrowing for revenue-generating projects like surgery suites and ER expansions—not for a $100 million central plant that only creates cooling.

But to us, the central plant is revenue generating.

We own, operate, and maintain it for 20–25 years. That was the opportunity. And it worked—it was wildly successful.

Joshua Wilson:
Okay, before we get to the “different,” let’s talk numbers. What does a typical range look like?

Ken Bernhard:
It depends on the size of the facility. The valuation of a central plant isn’t replacement cost—it’s more like real estate, or really, the output of the plant. What can it produce? For how long? At what price?

One question I always get: “Why would you reduce energy use if you’re selling chilled water as a commodity? Wouldn’t you want them to use more?”

Our thesis: No. Every central plant is oversized by 30–40%. There’s stranded capacity. If you reduce the building’s thermal appetite through conservation, you create even more stranded capacity—which you can then sell to neighbors.

That’s margin.

Joshua Wilson:
I love it. So the pitch is: we take an expense off your books, refresh your infrastructure, you pay the same or less for chilled water, and we assume the risk. And the hardest part isn’t the engineering—it’s trust.

Ken Bernhard:
Exactly. When you innovate, you immediately meet resistance. “This isn’t how we’ve always done it.” But once trust is established, everything else follows.

Joshua Wilson::
Now let’s go to the new way—AI. You sold the first company. Congrats. Now you’re approaching this differently. What does that look like?

Ken Bernhard:
The past company was named Bernhard. We were vertically integrated—design, build, finance. But to achieve off-balance-sheet treatment, we had to take control of the asset, meaning we operated it for 25 years. That tail was necessary, but our focus back then was really design and construction.

Then we discovered a small software company in Seattle—Optimum Energy. Their software dramatically reduces the cost of operating a central plant. Operators can do it manually, but not at scale. Optimum originally thought they were a pure software company—sell a CD, load software, run algorithms. But every central plant is different. Their software needed the plant to be “prepared” first.

They ended up becoming a tool for large ESCOs. Johnson Controls white-labeled it as “Central Plant Optimization 30%” because on average it saved 30% in utilities. Huge impact—40% of a campus’s electricity goes to the central plant.

Johnson did 140+ projects using it.

When we saw Optimum, we realized something:
They weren’t a software company.
They were an energy-as-a-service company—they just didn’t know it yet.

Today, Optimum’s AI augments operators. It doesn’t replace them—it scales them. One operator could never run 100 plants manually. Software can. We leverage the savings to refresh infrastructure and manage long-term performance.

We’re focused on the 25-year relationship—operations and maintenance excellence. Do a good job for the first 25 years, and you’re hired for the next 25. That’s a 50-year plan.

Joshua Wilson::
Your family has been building businesses for four generations. Why is a multi-generational mindset so important?

Ken Bernhard:
We’re owned by a family capital company—Bernhard Capital Partners. At the end of the day, what we’re building is a utility company. Mid-sized cities used to have their own utilities. Over time, infrastructure matures and must be rebuilt. We’re in the business of rebuilding—smarter.

Air conditioning hasn’t even been around that long. Two generations ago most homes didn’t have it. Infrastructure needs to be refreshed.

Joshua Wilson:
With data centers, EVs, crypto mining—all these new power demands—how does your model fit into that?

Ken Bernhard:
Conservation is cheaper than building more generation. The demand for power has never been greater, and the grid can only scale so fast. In many regions—especially the Northeast—the grid is fragile.

So the responsible approach is: use technology to do more with less.

Just like cars went from carburetors and eight miles per gallon to 30-mpg trucks and electric vehicles, infrastructure must evolve. We’re just helping it evolve.

About Optimum Energy
Optimum Energy is an established global leader in holistic energy infrastructure optimization, providing comprehensive and integrated solutions to mission-critical facilities. Its expertise spans a full spectrum of services, from initial engineering and construction to ongoing maintenance, asset management, and Energy-as-a-Service (EaaS) offerings. By serving key sectors such as healthcare, higher education, and advanced manufacturing, Optimum Energy delivers measurable efficiency and enhanced resilience. The company leverages proprietary innovation and AI-driven technology to provide continued savings, reliability, and resilience, while its flexible financing models, including off-balance sheet structures, enable its clients to accelerate cost savings and meet performance goals with confidence. For more information, visit www.optimumenergyco.com

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