Motivated by a desire to help reduce reliance on fossil fuels and create a healthier environment — while also impressing their customers by being good corporate citizens — some retailers are turning to renewable sources of energy, often called “green power.”
Green power can take many forms, including solar, wind, geothermal, biogas, biomass and low-impact hydroelectric generation. In any form, it is considered cleaner than conventional fossil fuels and generates far less carbon dioxide, the main greenhouse gas linked to global climate change.
“There is a lot of interest in renewable energy now,” said Gregg Fishman, a spokesman for the Folsom, Calif.-based California Independent System Operator Corp., which runs the state's energy grid. “Just a few years ago, the number of states with renewable programs was far less. It's now a growing trend.”
Some of the credit for the growth belongs to large chain retailers like Wal-Mart Stores, Safeway, Whole Foods and Starbucks, all of which are playing a major role in increasing the adoption of renewable energy sources, such as wind power.
Either by purchasing green power certificates that help offset the cost of producing renewable energy, or by installing on-site generating capacity, these retailers are demonstrating that renewable energy can make sense operationally, economically and environmentally.
In one unusual experiment, Wal-Mart has installed an “advanced midsized wind turbine” in the parking lot of two experimental stores in McKinney, Texas, and Aurora, Colo. The two 50-kilowatt turbines sit atop 120-foot towers and are designed to be low-maintenance and to generate wind power from wind speeds as low as 4.5 miles per hour.
“The wind turbines that utilities use to generate wind power typically are bigger, 1,500- to 2,000-kilowatt turbines and need at least 13 mile-per-hour wind speeds to turn, so this is an interesting first-of-a-kind experiment with this size of turbine,” said Mike MacDonald, a project manager for Oak Ridge, Tenn.-based Oak Ridge National Laboratory (ORNL). The lab, part of the U.S. Department of Energy, is monitoring Wal-Mart's renewable energy operations in the McKinney store.
Wal-Mart recently reported some technical difficulties that are causing the turbines to take longer than expected to produce operationally reliable energy.
“But remember, this is not mass production,” said MacDonald. “This is a prototype of a fairly complicated device. Turbines of this size and type have never been built before, so it is normal to be working out the bugs as you go along.”
Both Wal-Mart — the first and so far only retailer to test advanced midsized wind turbines — and Bergey Windpower, Norman, Okla., the developer of the turbines, said they are optimistic that the technical difficulties, primarily involving the electronics that make wind power compatible with utility power, will be resolved soon.
Two smaller, 1-kilowatt Bergey turbines in each Wal-Mart parking lot are not prototypes, but proven products in standard commercial use, and they are reportedly working fine. They produce enough energy to light the Wal-Mart outdoor signs at the sites.
The advanced midsized wind turbines that Wal-Mart is testing, would, if operational, only generate enough energy to power about 5% of each store's current energy needs. But with multiple or bigger turbines, and with the stores using less energy through other conservation means, that percentage could potentially rise to about 25% over time, said Mike Bergey, president of Bergey Windpower.
Buying and installing wind turbines or solar panels requires a significant up-front capital investment. But when tax credits, rebates and other incentives are available, a capital investment in on-site renewable energy can be recouped in an estimated six to 15 years, according to industry sources. After that time, the retailer owns the energy producing equipment outright, continues to pay nothing to utility companies for the energy it produces, and can worry less about future power cost increases.
The possibility also exists that retailers with on-site wind turbines could also pick up additional revenue by leasing tower space to companies that provide cell phone service in areas where cell phone coverage is spotty. “Charging rental fees could potentially provide a much greater return than the electricity produced,” said Bergey. Wal-Mart, he said, has expressed an interest in exploring this option at some future point.
THE ROLE OF CREDITS
But with the technology for on-site wind power still in the development stage, most green-oriented businesses are opting to buy renewable energy credits, which help offset the additional cost of generating electricity in renewable ways rather than by burning fossil fuels such as coal.
The cost of wind energy has come down, sources said, and in some situations can be just pennies higher than the cost of conventional fuel. Safeway, for example, reportedly has reached the point where it is paying a 2% premium over prices for conventional energy for its substantial wind energy purchases.
According to Joel Makower, the founder of GreenBiz.com, wind power today has become “much more competitive with conventional energy, at least in certain times of the day and in certain regions. And there are lots of utilities that now have Green Energy Programs, where consumers and businesses can buy power that comes from renewable resources like wind and solar energy. But the decisions to use those resources are still being made, for the most part, on a region-to-region or even a store-by-store basis, depending on the resources available in that market.”
Retailers that buy energy credits are not tapping wind energy directly. They are using the same energy mix as everyone else, but are making sure that the power they use is being replaced by wind power supplied to regional power grids by wind farms.
“Purchasing renewable energy credits is helping bring more wind farms online, because they can benefit from an extra source of revenue,” said Christine Real de Azua, a spokeswoman for the Washington-based American Wind Energy Association. “That means that, over time, we are going to see a larger share of our electricity being generated from wind, and that's a very good thing.”
According to Real de Azua, wind farms produce only about 0.7% of the total U.S. electricity supply. But wind power, she noted, is growing fast. About 1,500 utility-scale wind turbines were installed in 2006 alone, adding about 2,400 megawatts of generating capacity to the nation's system of power plants, according to AWEA.
“Each one of these new turbines is a feat of high-tech engineering and produces on average enough electricity to serve 400 average American homes or more, year after year,” said Real de Azua.
Safeway, Pleasanton, Calif., has invested in renewable wind energy as part of its commitment to the Environmental Protection Agency's Green Power Partnership program, under which organizations pledge to replace a portion of their fossil fuel consumption with renewable energy.
Through its purchases of renewable-energy credits, which last year totaled 87 million kilowatt-hours, Safeway has accrued enough credited wind energy to power its corporate offices in Pleasanton and Walnut Creek, Calif., as well as all 15 of its San Francisco stores, three stores in Boulder, Colo., and all 293 of its retail fuel stations.
Safeway spokeswoman Teena Massingill said management has committed to buying just as many credits this year and next, in the process helping both itself and the country “transition more of our usage to wind energy, becoming less reliant on conventional energy and fossil fuels.”
The EPA estimates that Safeway's green-power purchases have, to date, prevented the release of more than 85 million pounds of carbon dioxide, which is comparable to planting more than 10,500 acres of trees. Each store contributes to reducing atmospheric carbon dioxide by an amount equivalent to planting 200 acres of trees.
To make consumers aware of its efforts on behalf of the environment, Safeway has posted signs at the San Francisco stores and fuel stations. The signs, which show a photo of wind turbines, read, in part: “This building is 100% powered by wind energy.”
Whole Foods Market, of Austin, Texas, the top retailer in EPA's Green Power Partnership, last year made what was the largest retail wind energy purchase in history: 458,000 megawatt-hours of renewable energy credits. Whole Foods is currently the only Fortune 500 company to offset 100% of its power use with renewable energy purchased through renewable energy credits.
Wind energy certificates help offset the energy used in all 180-plus Whole Foods stores, as well as in its bake houses, distribution centers, regional offices and national headquarters in both the U.S. and Canada.
Over the coming years, sources said, renewable energy will become a broadly available and “normal” alternative to conventional energy, but will probably not, in any of its various forms — including wind and solar energy — totally replace conventional energy sources.
“As retailers make and fulfill their commitments to be carbon-neutral or 100% renewable-powered, they will do a number of different things,” said Makower. “They will buy solar panels, wind energy, energy credits and conventional energy. It will be a portfolio of different products and product services, and they will likely always need to buy some conventional energy for those occasions when neither wind nor solar power can produce enough energy, for weather-related reasons, to keep their businesses fully operational.”