Why Wal-Mart Loves Solar

Who is the largest commercial owner of solar? If Wal-Mart (NYSE: WMT  ) was your first guess before reading the headline of this article, I would be shocked; but that's the right answer.

Wal-Mart has now covered 200 of its 4,500 domestic stores and distribution centers with solar panels, and it plans to expand that number. It just announced a deal with SolarCity (NASDAQ: SCTY  ) to install solar panels on up to 60 more stores in California, bringing solar to 75% of stores in the sunny state.

Solar is more than a PR stunt for Wal-Mart, it's a core piece of the company's energy policy, plus it's just good business.

It's all about the money
Wal-Mart is doing this in part for image purposes; but don't think the finances aren't the main driver of all this solar. Solar energy is now cheaper than residential and commercial energy in many locations, and Wal-Mart is taking advantage of this fact. Wal-Mart can offset demand at its stores with solar power generated during the day, saving money in the end.

Wal-Mart and SolarCity aren't releasing the rates they're getting from the utility for solar, but there's plenty of evidence that it's at or near the cost of grid electricity. First Solar (NASDAQ: FSLR  ) , which is one of the low-cost providers of solar, recently bought a project in New Mexico that had a power purchase agreement for 5.79 cents per kW-hr, or about $0.08 after state and local incentives. This compares to an average residential cost for electricity of 11.9 cents per kW-hr, or 10.1 cents per kW-hr for commercial use.

Wal-Mart has millions of square feet of unproductive rooftop space around the country -- space it's now starting to put to use. And other retailers are following suit.

Follow the leader
A report by the Solar Energy Industries Association last year put Wal-Mart at the top of corporate installers, but some big names were close behind. Costco is the second largest installer of solar, and it recently began selling solar kits to its customers.

Kohl's (NYSE: KSS  ) is actually third on this list, with over 150 locations generating solar power. This is a larger renewable energy for Kohl's, which offsets non-renewable energy usage with renewable energy credits. These are sold by renewable power generators to companies that have an environmental goal or mandate to meet renewable requirements.  

You may be seeing a trend above. Three of the largest discount chains are three of the largest solar installers in the U.S. If companies that are focused on bottom-line results are buying solar, why shouldn't we think the trend will advance to more companies with unused rooftop space?

More to come
Even these three companies have just begun scratching the surface of solar. Wal-Mart still has 4,300 locations without solar and, with recent installations announced as far north as Ohio, there's no reason to think this won't be a national strategy. Electricity costs, solar intensity, and local policy will play a role, but I think Wal-Mart will continue to be the leader in commercial solar.

Kohl's has also made a long-term commitment. About 15% of its stores are already solar covered, which is a good start; but that leaves about 850 without solar. That's a huge opportunity for both Kohl's and the solar industry.

Foolish bottom line
Companies like SolarCity and SunRun are making commercial installations possible from a regulatory and installation standpoint, making it easy for big retailers to go solar. Overall, installations in the U.S. grew 76% last year and commercial will continue to be a big piece of this growth. If Wal-Mart, Costco, and Kohl's are believers in solar, you should be too.

First Solar is one of the companies to watch in solar, leading in the utility and commercial space, but the stock has been crushed over the past two years, as competition eats up demand. Is the stock done for good, or ready for a rebound? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must-know side of this stock. To get started, simply click here now.


Read/Post Comments (7) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 14, 2013, at 10:13 PM, madmilker wrote:

    You reckon Greg Penner will invest in another Solyndra for his mother-n-law....

  • Report this Comment On March 14, 2013, at 11:20 PM, Freddbe wrote:

    What Walmart is doing, other big companies need to do. It helps them and the country. It is a step in the right direction ,one of the great right things to do to help save our planet.

  • Report this Comment On March 15, 2013, at 10:11 AM, ALthinker wrote:

    One solar roof installation plus many people seem to ignore is the fact that the panels "shade" your roof thereby lowering the amount of sunlight striking your roof and heating up your building. Any heat you can block is heat you don't have to pay to cool down. So even more money is saved. I know you may say, " But what about in the winter? Stores with refrigeration can and many do, heat with waste heat from the cooling units.

  • Report this Comment On March 15, 2013, at 12:41 PM, ejazz2095 wrote:

    Solar is only "cheaper" because it's subsidized.

  • Report this Comment On March 15, 2013, at 2:06 PM, madmilker wrote:

    The only reason Wal*mart loves solar is because..

    http://investing.businessweek.com/research/stocks/private/sn...

    It's how ignorant rich people stay hidden.

    First Solar has Wal*Mart written all over it.....

    You young Americans had better wake up....

  • Report this Comment On March 25, 2013, at 12:50 PM, amroovi wrote:

    Where reliability and security are vital, our products deliver superior lighting, longer battery life, and enhanced autonomy. We provide hospitals, airports, government facilities, university campuses, and parking lots with dependable lighting during grid failures, wealther events, and security concerns.

    For more information, please visit our website at www.poleco.ca

  • Report this Comment On October 07, 2013, at 1:00 PM, physicsal wrote:

    Solar is cheaper because it is subsidized. Sure. Let's see -- nuclear? Government subsidies created it, built it and continue to limit the potential liability for any accident through the Price-Anderson Act. Coal - subsidized by polluting our atmosphere; oil - subsidized by taxpayers paying for the U.S. Navy.

    You're right - solar is subsidized.

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8/29/2014 3:59 PM
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