Macy’s Day in the Sun

Macy’s West, the $6 billion, 193-store San Francisco-based division of Macy’s, is installing rooftop solar-power systems in 26 of its stores in California. The initiative is a collaboration with SunPower Corp., whose PowerLight subsidiary will install its PowerGuard systems on Macy’s stores.

In addition to installing the solar panels, PowerLight will assist Macy’s in improving the efficiency of the 26 stores via energy upgrades that include high-efficiency lighting and HVAC equipment and energy-management systems.

The solar-power systems, combined with the energy upgrades, are expected to offset 24 million kilowatt-hours of energy consumption annually and allow Macy’s to achieve an estimated 40% reduction in utility-provided energy, almost doubling the impact of the solar power alone.

One of the biggest challenges with regard to solar power is the high up-front cost. To avoid the capital outlay, many retail chains utilize a model whereby a solar-power supplier takes on the burden of paying for all the equipment, installation and other up-front costs. The company then sells the energy generated by the solar-power system back to the retailer.

Macy’s will use this model in 15 of its 26 locations, purchasing solar-generated electricity under the SunPower Access program. At the end of a 10-year term, the retailer has the option to renew the agreement, transfer the equipment to a different location, or buy the system.

Kohl’s Solar Push

Kohl’s Corp. is making its solar debut. The Menomonee Falls, Wis.-based retailer plans to convert more than 75% of its locations in the Golden State to solar power.

The effort is being done in two stages, with 24 of Kohl’s 80 stores in California slated for its immediate entry into solar energy. The chain is also pursuing permits and approvals for an additional 40 or more locations within the state. The first two stores are due to be completed by the end of August, with all designated solar locations in California finalized by the end of 2008.

Kohl’s initial purchase of solar power will generate more than 35 million kilowatt-hours of renewable energy. In the first year of operation, the company’s clean energy output will offset more than 28 million lbs. of carbon dioxide, a greenhouse gas.

“The scope of Kohl’s commitment to domestically produced, clean renewable energy is signified by the size and breadth of its solar program—the single largest purchase of solar energy in U.S. history,” said Jigar Shah, CEO, SunEdison, Beltsville, Md., which is taking 100% responsibility to build, own and operate the solar arrays at Kohl’s. The company will sell the solar energy produced to Kohl’s.

California Is Solar-Friendly

In 2007, the California Public Utility Commission launched the California Solar Initiative, the largest solar-energy policy ever enacted in the United States. It allots $3.2 billion for solar-energy rebates in the state for the next 11 years, with a goal of creating 3,000 MW of solar power, roughly the power equivalent of six large natural-gas fired power plants, by 2017.

But Macy’s is taking a different strategy in the remaining 11 stores, where it’s buying the solar-power systems through an outright system purchase.

“We’re using our own capital for the solar in those 11 locations,” said Marc Gordon, VP of operations, Macy’s West. “We’re accepting the risk, but we feel we will have a better return for it.”

Utilizing both models, Gordon added, is a balanced approach that will allow Macy’s to compare how the two stack up.

In undertaking the project, Macy’s was able to take advantage of the California Public Utility Commission-regulated Self-Generation Incentive Program, which has since expired. All 26 locations qualified for the rebate program, considered more lucrative than even the current print will be reduced by more than 195 million lbs. of carbon-dioxide emissions over the lifetime of the systems. Gordon said that the financial returns of solar power aren’t always that compelling and Macy’s overriding reason for installing the solar-power systems is to help the environment.

“It’s tough when the returns aren’t great, but you have to figure out a way to do it,” he added. “We made a compelling case on the locations that have the most opportunity for the best returns.”

This is Macy’s first wide-scale solar-energy program, but not its first. Two stores in the Macy’s East division—in Hamilton and Jersey City, N.J.—are powered in part by solar energy.

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