By the time I sold SunEdison in 2009, retailers like Walmart, Costco, Macy’s, Kohl’s, Whole Foods, Staples, Walgreens, and others had already started installing solar on store and facility rooftops. A catalyst was President Bush extending, in October 2008, the 30 percent tax credit for solar by eight (8) years, through 2016. That deadline is now a mere 27 months away, a true limited time offer from the US government.
As a result, right now many of these chains are scrambling to install solar on every store they own. And it’s not just them: school districts, churches, real estate investment trusts, water districts, airports, just about anyone with a large flat roof. With the 30 percent tax credit, solar is now cost effective in 47 states. Plus, acting now is just sensible business. Solar remains the best way to counterbalance electricity costs that are rising faster than the rate of inflation.
Walmart Took Advantage of Solar Sale
Since 2008, solar power costs for companies like Walmart have dropped by over 50% to less than $2/W. The 30 percent tax credit and these lower solar prices have got Walmart moving fast to put panels on most of their stores. If they put solar on EVERY store they have nationwide, the average solar installation will save Walmart more than 20 percent vs. what they pay the local utility company. For Walmart, the savings mean millions now and protection from future electricity rate increases.
Walmart has over 4,400 stores and millions of additional square feet of distribution centers. This means that Walmart alone can probably put over 5,000 MWs of solar on their rooftops nationwide. Throw in their parking lots in 25 states with expensive power and you add another 5,000 MWs. The entire United States only uses about 1,000,000 MWs of power and 4,000 Terawatt-hours of energy. 10,000 MWs from Walmart would generate about 1 percent of all of the peak power generating capacity in the United States. If you added up the roof space from the top 100 retailers in the United States this number would grow to about 50,000 MWs or 5 percent of peak generating capacity. Add warehouses, 4,000 square miles of brownfields, and buffer land around airports and you can see how far this can go.
Why Do It Now?
Because the government will phase out the 30 percent tax credit at the end of 2016. So CFOs, who have been the main folks saying “no” to solar, are now racing to install solar. Every month that goes by is lost savings. And savings are a competitive advantage.
If Walmart cuts its overall utility costs by 25 percent using solar and energy efficiency, that puts its competitors, like Target at a disadvantage. If Safeway decides to use solar and combined heat and power that also puts its competitors at a disadvantage. Remember, with a net profit margin of only 3-4 percent for most retailers, fast rising electricity costs are actually pinching profit margins.
So what is possible? The United States has the trained workforce to deploy over $70B of solar in 2015-16, probably 30,000 MWs of solar. If Walmart takes 5,000 MWs of solar for their premises, that leaves 25,000 MWs of solar for everyone else. This includes the US Military, retailers, schools, city government buildings, and even residential customers. To put this in perspective, the entire global solar industry was 30,000 MWs in 2012 – not that long ago. So to get this done, the industry needs companies like Walmart to do some planning – at least 12 months of planning from a signed contract to a finished project. That means that companies like Walmart has to sign contracts soon if the solar industry is to have a fighting chance to finish all of their solar installations by 2016.
Now, if you are reading this and you own a home, I hope I got you thinking like a Walmart CFO. Whether you agree or disagree with President Bush’s commitment to clean energy, you only have until 2016 to make your final decision – but don’t wait too long. Because this is a one-time-only limited time offer.