Focus on Renewable Energy

By Ryan Gilchrist

Walmart, Kohl’s, Macy’s and select other retailers already rank among the nation’s leading producers of solar energy, with huge investments that are growing every year. But the industry’s strong position in renewable energy still has room for improvement — literally — with millions of unutilized roof space, prime real estate for solar panels and wind turbines.

With new technological advancements, and growing demand from both owners, tenants and customers, 2015 is set to be a pivotal year for the combination of retail and renewable energy. Here’s why:

Space: Retail buildings — including stand-alone stores, malls and shopping centers — account for over 15% of total commercial floor space in the U.S., and that translates to millions of square feet in roof space and parking lots. Most retail space is ideal for renewable energy — it’s often located in open, unobstructed areas that are free of shading and obstacles, which can inhibit energy production.

The flat roofs on shopping centers are also perfect for soaking up sunlight, and typically 80% of the roof is available and unoccupied by HVAC and other roof equipment. Parking lots can be converted into power producers by adding solar carports that provide both shading and energy.

Due to the high ratio of roof space to total square footage in retail developments, a rooftop energy system is not just efficient, but can provide a significant portion of the energy consumed in the retail building. That’s a lot of power. For example, Macy’s largest solar panel system in Edgewood, Maryland, boasts 8,360 solar panels, generating over 3 million kilowatt hours of energy per year.

Costs: Five or 10 years ago, solar systems were expensive, but that’s not the case anymore. Various financing structures have eliminated the upfront costs for installation that were typically a facility owner’s biggest concern. The cost of solar technology has also been rapidly declining.

In fact, solar energy is already cheaper or cost competitive with the utility grid in many states, and expected to achieve this type of “grid parity” in all 50 states by 2016, according to a recent report from Deutsche Bank.

Renewable energy providers have also advanced alongside the technology, and the best can provide full solutions that include financing, monitoring and ongoing system operation. These options make it easier for retailers to focus on their own business while leaving the renewable energy system to the experts.

Reliability: Reducing energy bills with on-site renewable energy can translate to enormous savings for retail operators. Even a 10% reduction in energy costs for the average full-line discount retailer can boost net profit margins by as much as 1.55%. And once a solar system is installed, the cost of the power is fixed for the lifetime of the system, so it’s easier to budget for long-time horizons.

For retailers that own their own buildings, a solar system is an easy choice. Financing structures like power purchase agreements make it easy to eliminate upfront costs, lower operating expenses and reduce energy bills, leaving only a fixed monthly payment for energy over the lifetime of the system.

When retail tenants pay their building owner for electricity through submetering, creative financing methods can be used so that owners have incentives to invest in sustainability, while tenants benefit from reduced monthly bills.

Customers: Solar energy is a clean source of power, reducing carbon emissions that contribute to climate change. This isn’t just good for the earth — it’s also good for business, as customers increasingly choose to support companies that reflect their values.

In a recent study by Forrester Research and the International Council of Shopping Centers, 67% of shoppers said they felt better about a venue if it practices sustainability. In other studies, green building owners report increased customer satisfaction.

We’ve reached a tipping point where solar energy is really a no-brainer for any building owner. The retail industry has been at the forefront of the renewable energy revolution — but there’s a long way to go. Chain stores in particular have a unique opportunity to lead the nation and show other industries how to implement renewable energy as a core aspect of operations. Both the rooftops and the future look bright.

Ryan Gilchrist is assistant director of business development at UGE, a developer of distributed renewable energy solutions, with projects in over 90 countries.