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Wal-Mart Leads Companies Investing in Solar

By Cheryl Kaften – Oct 17, 2013 at 1:35PM

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Big box and discount stores are betting on solar generation, based on findings of new SEIA report.

Solar continues to "go through the roof" in the U.S. commercial sector. The Top 25 corporate solar users nationwide have deployed 445 MW of capacity thus far this year, up 48% over the same period in 2012, according to a report released this week. And leading the pack for the second consecutive year is America's largest retailer, Wal-Mart (WMT -1.93%), with 89 megawatts of photovoltaic capacity installed at 215 company facilities in 11 states. 

Those are the findings of "Solar Means Business 2013" study, conducted by the U.S. Solar Energy Industries Association, a trade group based in Washington, DC, in cooperation with the Vote Solar Initiative, a non-profit organization based in San Francisco.

Despite a number of constraints -- among them, trade disputes involving China and the European Union, tight sales margins, and fluctuations in government funding -- commercial solar still is going strong.

The reason: Investing in solar pays off. Electricity costs represent the single largest operating expense of many U.S. companies. As solar system prices continue to dwindle and innovative financing models cut the up-front costs of deployment, companies are finding that they can either generate or purchase solar energy at or below-market electricity rates.

Based on Q2 2013 market data, the average cost of a completed PV system has dropped by 11% over the past year to $3.05 per watt. The average price of a solar panel has declined by 60% since the beginning of 2011. Solar generation enables companies to lock in a price, as a valuable hedge against rising and volatile retail electricity rates. 

In fact, at the beginning of 2013, Wal-Mart estimated that it would add $150 million in benefits to its bottom line from sustainability initiatives such as solar and wind energy projects, fuel cell installations, and its zero-waste program in fiscal year 2013.

Wal-Mart's solar installations have been completed by SolarCity (SCTY.DL), the downstream leader in the U.S. industry, which also has announced plans to install solar panels at BJ Wholesaler's in North Brunswick, N.J.

The Top 25

The rest of the Top 25 list, ranked by installed capacity, in descending order, are Costco, Kohl's, Apple, IKEA, Macy's, Johnson & Johnson, McGraw-Hill, Staples, Campbell's Soup, U.S. Foods, Bed Bath & Beyond, Kaiser Permanente, Volkswagen, Walgreens, Target, Safeway, FedEx, Intel, L'OREAL, General Motors, Toys "R" Us, White Rose Foods, Toyota, and Dow Jones & Co.

General Motors (GM -3.52%), which sits at number 21 on the list (with 6.7 MW), is second only to Volkswagen (with 9.6 MW) in automotive industry solar adoption. GM has deployed solar generation in five U.S. states, to fill 38% of its domestic energy needs. What's more, counting its global facilities, GM is up and running with a full 30 MW of solar power. Last year, 54 of GM's plants collectively saved $90 million using solar generation.

In 2011, GM Ventures LLC made an equity investment of $7.5 million in Sunlogics PLC (now Empower Energies),  a vertically integrated global solar energy systems provider specializing in solar project development and installation. At that time, GM signed a commercial agreement for the installation of solar plants at GM properties nationwide in the United States. 

Diverse Demands 

The energy demands and load profiles of the Top 25 vary significantly by company and by facility. For example, at number two on the list, Costco boasts only slightly less than half the solar generation (47.06 MW) of Wal-Mart. Kohl's comes in at 44.72 MW; Apple, at 40.73 MW; and IKEA, at 35.08 MW; before the list drops off sharply, with Macy's at 20.78 MW and Johnson & Johnson at 17.43 MW.

At Johnson & Johnson, which now powers 18% of its operations with solar energy, the health care provider reports that the deployment, completed by Silicon Valley-based SunPower, has:

  • Met the company's worldwide goals of emission reduction (to achieve a 20% absolute reduction of  facility carbon dioxide emissions by 2020);
  • Reduced operating and monthly electricity costs;
  • Decreased heating and air conditioning requirements through better insulation; and
  • Lowered the load on local grids.

Looking at geographic coverage, however, Wal-Mart comes in at a mere third; following IKEA, which has installed capacity in 20 states; and Kohl's, which has deployed solar in 12 states.

What's more, Wal-Mart is bottom-ranked in terms of percentage of facilities with solar power -- which is more a tribute to the size of Sam Walton's organization today than it is a reflection of solar spirit. Indeed, Wal-Mart only powers 5% of its facilities with its 89 MW of capacity.

Compare that to IKEA, which has powered 89% of its retail space with solar modules; and to Bloomberg, which does not even rank among the Top 25, but powers 40% of its facilities with solar generation. 

Indeed, in some cases, businesses that have significant energy needs at one or two locations have installed large solar arrays to help offset that demand. Other companies have multiple sites appropriate for solar and continue to deploy arrays at facilities nationwide, building off the success of prior solar investments.  

Trending Up

One trend is evident—companies that started installing solar are continuing to add more. Cumulatively, the Top 25 companies have installed more than 950 individual systems, a clear sign, according to the SEIA, that solar meets diverse energy needs.

Adam Browning, executive director of Vote Solar, said, "For years, the promise of solar was always 'just around the corner.'  Well, solar has turned the corner, and found itself on Main Street, USA." 

Solar growth among these leading businesses reflects the growth in the U.S. commercial solar sector as a whole. As of Q2 2013, commercial solar deployment totaled 3,380 MW and was located at more than 32,800 facilities nationwide.

One note: The "Solar Means Business 2013" rankings only include systems that supply power directly to on-site company facilities. The report does not include companies, such as Google, Bank of America, and Merrill Lynch, which have directly invested billions of dollars in the financing of solar energy installations across the country.

Look for commercial solar installations to continue apace in the United States through year-end, which should be good news for the likes of SolarCity, SunPower, SunEdison and Empower Energies.

Fool contributor Cheryl Kaften has no position in any stocks mentioned. The Motley Fool recommends Apple and Costco Wholesale. The Motley Fool owns shares of Apple and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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