August 3, 2012
Walmart: Renewable Energy Good for the Bottom Line
Walmart, like many other retailers that have invested in renewable energy technologies to provide electricity to stores, has always maintained that financial concerns have driven its decisions. Simply put, the company saves money that it can either drop to its bottom line or reinvest in other areas to drive top line performance.
Recently, the chain announced that it has installed 150 solar projects (100 in California) to date and expects to have 90 megawatts of capacity by year-end. The company has also made investments in other forms of renewable energy including wind and fuel cells.
While Walmart’s solar installations to date are just a drop in the bucket when you consider all the chain’s real estate, the company is still ahead of the retail industry curve. A recent Bloomberg News piece showed that Walmart has more capacity than Apple and IKEA, two other companies that are aggressively pursuing solar options.
The ultimate goal for Walmart, as always, is to drive energy prices down.
"The more we get involved and commit to volume, the more the prices come down for the technology," Marty Gilbert, director of energy at Walmart, told Bloomberg. "Prices for solar panels, fuel cells, wind turbines to some degree, they are all approaching grid parity."
While Walmart has heavily invested in solar in its California locations, it is looking to other areas including Connecticut, Hawaii, Puerto Rico and Ohio where traditional energy costs are highest.
"The only projects that we were doing are the ones that economically make sense at the store level," Mr. Gilbert told Bloomberg.
While not done for altruistic reasons, Walmart’s commitment to renewable energy has brought it good press, as well.
"Walmart’s solar power initiatives shows how companies can help bring cost-effective energy solutions to scale as part of ‘business-as-usual,’" said Gwen Ruta, vice president of Environmental Defense Fund’s Corporate Partnership Program, in a joint press release with the retailer. "This milestone for Walmart’s efforts demonstrates the growing roles for renewables in America’s energy future."
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Discussion Questions
Discussion Questions: Which renewable energy source holds the greatest promise for store and distribution center operators? Is the use of renewable energy sources in areas with the highest electricity costs becoming a business necessity?
Poll
Areas with the highest electricity costs might be challenged to make use of renewable energy — it’s a bit colder, and fewer sunlit days in our northern climes.
Nevertheless, the solar space might work out well for Walmart. The Walton family has a significant investment in solar panel companies. California will continue to guide solar installations, as those in political power, and a portion of the population, don’t see the value in natural gas.
Wind is commanding about .75% of energy use, mostly subsidized, so that renewable source is not likely to expand rapidly. The number of dams are being reduced, so probably not a good bet to see hydro-power grow.
Likely we’ll see a continued drift of industrial companies coming out of California and the Northeast, as those concerns use an enormous amount of power. As they shift, hopefully to the Sunbelt as opposed to overseas, the retail sector will follow.
The use of renewable energy sources is a no brainer. It will definitely cut electricity costs, which help the bottom line. Over time, as the cost of implementing renewable energy sources drops, I believe we will see more businesses — not just retailers — converting to save on operating costs.
Renewable energy installations (wind and solar) should continue to occur in geographies with adequate natural resources (e.g., wind, sun) and with financial incentive programs which are funded. The ROI can make sense, as long as all of the variables are considered, including maintenance costs for the hardware. Stores and DCs are perfect for each, but local ordinances need to be followed.
There is one additional benefit which you don’t hear much about — the message sent to shoppers by the visible equipment. The tasteful windmill on my local Chipotle Mexican Grill says “We care about the environment.” That has to be worth something.
I’m wondering if these projects only “economically make sense” in CA because of all the subsidies offered for trendy “green” concepts. Of course that’s hardly WM’s fault. And the economy out here is simply exploding — even more than in WI! And we have money to burn (it’s competitive with burning oil, and far cheaper than hot air).
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Areas with the highest electricity costs might be challenged to make use of renewable energy — it’s a bit colder, and fewer sunlit days in our northern climes.
Nevertheless, the solar space might work out well for Walmart. The Walton family has a significant investment in solar panel companies. California will continue to guide solar installations, as those in political power, and a portion of the population, don’t see the value in natural gas.
Wind is commanding about .75% of energy use, mostly subsidized, so that renewable source is not likely to expand rapidly. The number of dams are being reduced, so probably not a good bet to see hydro-power grow.
Likely we’ll see a continued drift of industrial companies coming out of California and the Northeast, as those concerns use an enormous amount of power. As they shift, hopefully to the Sunbelt as opposed to overseas, the retail sector will follow.
The use of renewable energy sources is a no brainer. It will definitely cut electricity costs, which help the bottom line. Over time, as the cost of implementing renewable energy sources drops, I believe we will see more businesses — not just retailers — converting to save on operating costs.
Renewable energy installations (wind and solar) should continue to occur in geographies with adequate natural resources (e.g., wind, sun) and with financial incentive programs which are funded. The ROI can make sense, as long as all of the variables are considered, including maintenance costs for the hardware. Stores and DCs are perfect for each, but local ordinances need to be followed.
There is one additional benefit which you don’t hear much about — the message sent to shoppers by the visible equipment. The tasteful windmill on my local Chipotle Mexican Grill says “We care about the environment.” That has to be worth something.
I’m wondering if these projects only “economically make sense” in CA because of all the subsidies offered for trendy “green” concepts. Of course that’s hardly WM’s fault. And the economy out here is simply exploding — even more than in WI! And we have money to burn (it’s competitive with burning oil, and far cheaper than hot air).