BUSINESS

Retailers, led by Ikea, make big moves into on-site renewables

Two of the largest solar arrays to be built on the East Coast this year will not bear the names of the region's electric utilities or even major solar power companies like First Solar Inc. or Suntech Power Holdings Co.

Rather, the photovoltaic (PV) panels will be owned and operated by home furnishings giant Ikea, which last month set a new bar for renewable energy installations among big box retailers by announcing it would produce almost 5 megawatts of electricity atop two sprawling distribution centers in Maryland and New Jersey.

The planned installations are among a flurry of recent announcements involving rollouts of large solar arrays by the company that built its brand around inexpensive, European-styled furniture and home accessories, but is increasingly becoming known as a clean energy behemoth among retailers.

With the recent announcements of the East Coast distribution center projects -- as well as newly operational solar arrays atop stores in Florida, Michigan, Texas and Virginia -- Ikea has expanded its renewable energy portfolio to cover 89 percent of its U.S. operations, according to company officials.

The company operates 22 solar power systems at its U.S. retail stores, and it has 17 more arrays in development. When finished, those projects, along with large arrays on four of its five distribution centers, will push Ikea's solar generation assets to roughly 38 MW.

But unlike renewable energy programs implemented by other large retailers, in which stores purchase renewable energy credits or enter power purchase agreements with developers of green power facilities, Ikea retains direct ownership over the solar energy it produces, putting most of the electricity to use in its own buildings and operations.

"As a private company that controls every phase of our operations, from product development to retail stores, we try to incorporate sustainable practices wherever we can along that chain," said Joseph Roth, a spokesman for Ikea's U.S. operations based in suburban Philadelphia.

While most of the company's U.S. solar generation has come online in the past 12 to 24 months, it builds on Ikea's long-standing policy to seek alternatives to fossil-fuel-derived energy for its facilities worldwide. In Europe, Ikea owns 96 wind turbines, and the company expects to meet all of its electricity needs in Sweden using wind power over the next few years.

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Just this week, with the powering of nearly 3,400 rooftop PV panels atop its Houston store, Ikea became the largest commercial owner of solar power in Texas, according to the company. Similar PV arrays atop two other Texas stores, at Frisco and Round Rock, will come online this summer, and the three stores combined will have the capacity to generate roughly 4.9 million kilowatt-hours annually.

The company's U.S. division has also embraced geothermal energy, drilling 130 wells to depths of 500 feet at its recently completed suburban Denver store to take advantage of the Earth's natural heating and cooling capabilities, and it has installed electric vehicle charging stations at eight of its U.S. stores.

"For us, sustainability is a cornerstone of our business, and it's gotten to the point where our co-workers expect it, our customers expect it and it's inherent to our values," Roth said.

Thinking outside the 'big box'

Others are following Ikea's lead in droves. And they are doing so for more than the boost in public status that comes from the greening of their businesses.

Rahul Raj, Wal-Mart's director of sustainability, told attendees of last month's Cleantech Open conference in Santa Clara, Calif., that the retailing giant, which ranks second on the Fortune 500 list, aspires to meet all its future electricity needs with renewable energy.

Currently, 22 percent of Wal-Mart's global power demand is met using renewable resources, and it has signed some of the largest power purchase contracts among U.S. retailers. Raj said that in California, the company plans to have rooftop solar panels installed on 75 percent of its stores by 2013, according to an AOL Energy report from the event.

Roger Ballentine, president of the Washington, D.C., consulting firm Green Strategies Inc. and one of the architects of sustainability programs at Wal-Mart, Coca-Cola and others, said several factors are driving retailers toward greater investments in renewable energy.

"One, the price of renewable energy, and especially solar power, is going down," Ballentine said. "Companies that used to view such projects as beyond their reach can afford to do them now. Two, it provides a hedge against fluctuating electricity prices, which is a significant concern in today's economy. And of course, there's the reputation and sustainability benefits that come with using renewable energy."

While large go-it-alone firms such as Ikea and Wal-Mart are setting the pace, thousands of other businesses large and small are embracing renewable energy purchases as a viable option for meeting electricity needs.

Ballentine pointed to the meteoric growth of voluntary green energy programs, such as U.S. EPA's Green Power Partnership, which claims more than 1,300 participants from almost every sector of the economy, as well as municipalities, educational institutions and nonprofits.

Big 'green power' partners

According to EPA, the partnership's members are generating or purchasing more than 23 billion kilowatt-hours of green power annually, and by doing so they are displacing the equivalent of carbon dioxide emissions from more than 2 million average American homes.

Big box retailers on EPA's partner list include Best Buy Co. Inc., Kohl's Corp., Lowe's Cos., REI, Staples Inc., Safeway Inc., Whole Foods Market Inc., and Wal-Mart stores in Texas and California. Other Green Power Partnership companies that don't meet the formal definition of "big box" retailer but that have substantial physical footprints are McDonald's USA, a subsidiary of McDonald's Corp., and Starbucks Corp.

Ikea does not participate in the Green Power Partnership program, according to EPA and Ikea officials. But Roth said that the agency and company have discussed the partnership program and that the chain would be open to joining.

An EPA spokeswoman in Washington said that retailers account for "the single strongest sector" in the program in terms of total kilowatt-hours of green power used, and that most of the companies participate by either purchasing renewable energy credits or entering power purchase agreements with utilities.

On-site renewable installations, such as those done by Ikea, account for just 5 percent of the program's participating projects. But, she added, "there is certainly a steadily growing interest in on-site opportunities, especially as solar prices continue to drop and organizations consider the long-term price-stability benefits of on-site green power deployment."

Kohl's -- the top retailer on EPA's Green Power Partnership list -- last month said it would expand its 5-year-old rooftop solar program by 25 percent in 2012, with plans to operate 150 solar installations in 13 states by the end of the year, including atop stores in Massachusetts, New York and Ohio.

Raising megawatts on the roof

Kohl's, of Menomonee Falls, Wis., already offsets more than 100 percent of its conventional companywide energy use through the use of on-site solar, renewable energy credits and power purchase agreements with wind energy developers. In 2012, the company plans to purchase more than 1.5 billion kilowatt-hours of green energy.

"As a national retailer with more than 1,100 stores, we consistently challenge ourselves to find new ways to reduce the operational footprint of our facilities, to be more energy efficient, use fewer resources and be a good neighbor in the communities where we do business," Kohl's Chief Administration Officer John Worthington said in a statement.

The department store chain said it expects its store-top solar arrays to produce 20 to 50 percent of a store's on-site electricity. With the completion of 30 new locations in 2012, the company's solar arrays will produce more than 74.2 million kilowatt-hours of energy annually -- and offset greenhouse gas emissions equivalent to what is emitted from 10,032 passenger vehicles.

Beyond the retailers, large regional malls that house hundreds of small and midsized retail stores are converting their rooftop space to accommodate solar arrays.

The Westfield Group, which owns retail mall properties in 11 states, last summer installed nearly 6,000 PV solar panels atop two of its Los Angeles-area shopping centers at a cost of $6.6 million. The solar arrays at Westfield's Fashion Square and Topanga malls generate a combined 1.7 MW of electricity and are the fourth and fifth solar installations the company has installed in recent years, according to Westfield's website.

Similarly, Simon Property Group of Indianapolis, which owns 340 malls in the United States, in 2008 installed a 173-kilowatt solar array on top of the Shops at Mission Viejo in Mission Viejo, Calif.

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