Wal-Mart’s investment in solar energy over the last nine years has paid off not only for the company, but also for its competitors and other businesses, as its scale has helped transform the industry.
The company has its sights set on using 100 percent renewable energy and generating 7 billion kilowatt-hours of power by 2020, which the retailer hopes to transform into real savings. A spokesman said the company is about a third of the way toward that goal in global production.
The price of solar energy has plummeted in recent years, making it more competitive with other fuel sources. During that time, the retail giant has ramped up its use of solar energy to pass all other retailers — and most states — in its total solar capacity.
As the retailer has worked with solar asset providers, the company has negotiated friendlier terms for contracts known as power purchasing agreements that could also mean lower costs for other box stores and more access to solar energy for smaller businesses.
According to the Solar Energy Industries Association, a trade group for the country’s solar industry, electricity rates for commercial users have risen 20 percent in the past 10 years, while the cost of solar has declined. A Wal-Mart official said the company’s solar costs have been cut in half in the last five years.
Ken Johnson, vice president for communications at the solar industries association, said Wal-Mart’s interest in solar energy has been driving other retailers to explore it on a large scale.
“Wal-Mart certainly commands attention from Wall Street to Main Street, and the fact that the company is making an unprecedented commitment to clean, renewable energy certainly has people talking and has really done as much if not more than anything to help jump-start solar when it comes to commercial installations,” Johnson said. “People in the business world are smart, and it doesn’t take them long to figure out that if Wal-Mart is doing it because it helps their bottom line and also improves their green thumbprint, then it must be a smart thing to do.”
Johnson said one of Wal-Mart’s biggest contributions to the solar energy industry has been how it used its scale to bring down costs for other companies and make solar more accessible to smaller companies.
“We simply wouldn’t be experiencing the tremendous growth in the commercial sector if not for the leadership of Wal-Mart,” Johnson said.
Leading in Capacity
Wal-Mart’s solar capacity puts it ahead of Apple Inc., BMW Manufacturing Co. and the U.S. Department of Energy, according to information kept by the U.S. Environmental Protection Agency.
The Solar Energy Industries Association released a report in October that found Wal-Mart had added 15 megawatts of solar capacity in the past year, raising its total capacity to 105.1 megawatts across 254 solar projects. That would generate enough electricity to power more than 21,200 homes.
By comparison, research released in July from the nonprofit Interstate Renewable Energy Council has shown 36 states with less than 100 megawatts of solar capacity.
But because of the company’s size, the installations are still on only 5 percent of its facilities.
David Ozment, the senior director of energy at Wal-Mart, said the company’s history with solar began in 2005 and 2006 when it built experimental stores in Aurora, Colorado, and McKinney, Texas, that used test solar arrays. Using data from those stores, the first significant solar projects began going online in 2007.
Construction Varies
Ozment said the solar projects at the company’s facilities vary depending on the amount of land owned nearby and the design.
At a distribution center in Apple Valley, California, the company used more than 5,300 ground-mounted solar panels covering several acres of land to generate one megawatt of power.
A solar-panel-shaded parking lot at a store in Glendale, Arizona, provides power to a store there, and various facilities across the country are topped with rooftop solar panels.
Last month, the company announced it would construct 400 new solar projects nationwide in four years.
Ozment said the company has saved about $5 million on energy costs since the start of the solar energy projects, a savings that he expects to grow over time. Five years ago, the per-watt cost of solar energy was between $5 and $6, but has now dropped to less than $3, he said.
A spokesman did not provide the company’s conventional energy costs per watt for a comparison and said the solar figures were ballpark industry costs.
Wal-Mart has used several companies, including SolarCity of San Mateo, California, and SunEdison of St. Peters, Missouri, to install solar projects under power purchasing agreements. The agreements typically involve those third parties that own the solar panels installing an array at a facility and selling the energy back to the store.
SolarCity said in a press release last month that it had installed 13 carport solar projects and 34 rooftop projects for Wal-Mart in just over a year.
Alan Mantooth, an electrical engineering professor at the University of Arkansas, said Wal-Mart’s use of power purchasing agreements has helped the company keep capital costs low and benefit from the plunging costs of solar while avoiding maintenance costs. Mantooth said that Wal-Mart’s size likely allows it to bargain for lower prices with the providers, which also drives down costs for other businesses.
“I have to give them credit that over the last five to seven years: When Wal-Mart does something they’re going to go all in,” Mantooth said.
Mantooth said Wal-Mart’s interest in solar is powering a lot of activity in the solar industry because there is a lot of future business if more companies leave conventional fuels for solar.
“I think there’s still a lot on the table. A lot. Because the penetration is only 1 to 2 percent, but if commercial were to be big adopters that percentage would go up naturally,” Mantooth said.
One key element in that development would be whether government and utility subsidies continue to bolster the industry. When subsidies dried up for wind energy, development in that field also declined, and the same could happen for solar, Mantooth said.
Mantooth said some commercial and industrial businesses benefit from rebate programs for curtailing their power usage or receive economic development incentives for opening a business in a certain area. If a company using solar is able to produce more power than it uses, that power can also be sold back to the utility company.