As part of its commitment to renewable energy, retailing giant Wal-Mart (NYSE:WMT) last month issued a request for proposal (RFP) to solar electric suppliers. This is a big deal for both Wal-Mart and the burgeoning solar industry.
Although the details of the RFP have not been released to the public, it has been reported that the installation could total 100 megawatts of power. That's more than 60 times larger than the 1.6 megawatt facility Google (NASDAQ:GOOG) is installing at its headquarters, and 200 times bigger than the 480-kilowatt project Microsoft (NASDAQ:MSFT) recently equipped at its office in Silicon Valley.
In one way, the news that Wal-Mart is embracing solar power isn't really that surprising. After labor, electricity is Wal-Mart's largest cost. Now that Sharp, Kyocera (NYSE:KYO), SunTech Power (NYSE:STP), and others, along with various generous tax credits, have made solar more competitive with other sources of electricity such as coal and nuclear power, it's only natural that Wal-Mart would start looking toward the sun.
The news is an even bigger deal for the solar industry, and investors should watch carefully to see which company or companies win Wal-Mart's bid. Success should be a good indication of which firms can compete to supply and install such large-scale projects.
That's important, too. If the Wal-Mart project is successful, I suspect the company will need more than 100 megawatts of power in the future. In addition, I'll bet that other large retailers such as Target (NYSE:TGT) and Home Depot (NYSE:HD) (which last year began a partnership with BP Solar (NYSE:BP) to provide solar installation to its customers) will also likely get into the act. After all, they'll want not only to stay competitive by trimming electricity costs, but also to improve their corporate images as eco-friendly businesses.
If so, they'll only add to the solar industry's growing momentum.
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Wal-Mart, Microsoft, and Home Depot are Motley Fool Inside Value recommendations. SunTech Power is a Motley Fool Rule Breakers pick. Whatever your investing style, the Fool has a newsletter for you.
Fool contributor Jack Uldrich does not own stock in Wal-Mart, but he does buy his energy-efficient light bulbs at its stores. He does, though, own stock in SunTech Power. The Fool has a strict disclosure policy.
