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Energy From the Sun

BY CSA STAFF

Retailers are showing increased interest in solar energy, with Wal-Mart Stores and Kohl’s Corp. among the latest to announce solar deployments. Chain Store Age executive editor Marianne Wilson spoke with Mark Culpepper, VP and chief spokes-person for SunEdison, Beltsville, Md., North America’s largest solar-energy services provider, about the benefits and challenges of solar-power installations.

Chain Store Age: What basic principles are involved in solar power?

Mark Culpepper: In very general terms, photons from a light source strike a material (a solar cell) which has specific material characteristics that allow it to convert those photons into electricity. The individual cells are combined into a solar module, also called a panel. The modules are, in turn, wired together to form a solar array. Multiple arrays are combined into a solar system, which uses a device called an inverter to convert that DC electricity into AC electricity for use in a home or business.

CSA: What type of equipment is required?

Culpepper: The installation involves solar modules; an inverter, which converts DC to AC; and what is known as BoS or Balance of System components. These are generally other electrical equipment such as disconnect switches, fuses, panel boxes, etc. The fundamental technology is well-understood, fairly simple and very predictable in its performance. The implementation is complex.

CSA: How does solar power benefit the environment?

Culpepper: Solar is completely silent, generates no emissions and is a net positive energy source—meaning that the lifetime energy output is significantly larger than the energy used to manufacture the panels.

CSA: Is it expensive to implement? Culpepper: SunEdison uses a solar-energy service-provider model. It requires no up-front expenditures for a solar-power plant. The service provider finances, installs, owns, operates and maintains the power plant. The customer pays only for the energy generated by the power plant. As with their existing utility, if for some reason the system goes offline, the customer pays nothing for that time period.

CSA: What are the major challenges in going solar?

Culpepper: The obstacles for retailers looking to go solar via the solar-energy-services model include building lease arrangements—if the retailer owns its buildings, it makes the process easier. Lease arrangements can slow down the deployment process.

Another obstacle involves the age and condition of the rooftop. Rooftops over seven years in age can present challenges, as these systems typically last 20+ years. If the roof needs replacing sooner than the aging of the system, this presents a challenge.

Financial status and credit also can be challenges. Our model works with lending institutions to provision the system and the installation itself. The hosting customer where the array is located must be in good financial standing in order for this model to work. Finally, local permitting departments, many of which have never seen a solar array, are major inhibitors.

CSA: What types of facilities are most appropriate?

Culpepper: The ideal facility is a new building, located in a state that is solar-friendly, with 100,000 sq. ft. of roof space, a relatively new roof, a favorable orientation, and relatively heavy energy requirements that coincide with the peak summer months. Facilities less than 50,000 sq. ft. are less preferred, as the amount of deployable roof space for the solar system tends to be too small.

CSA: Where is solar power not recommended?

Culpepper: There are no technical reasons why solar cannot be adopted across all of North America. That said, some states have not yet adopted well-accepted standards for interconnection and net metering, preventing business from connecting to the grid while generating their own power on site. Additionally, many states do not have active incentive structures in place to encourage the adoption of solar. So while every facility is a potential energy generator, not every facility is legally enabled to do so.

CSA: SunEdison takes complete ownership of the solar installation. What does this entail?

Culpepper: Typically this entails a long-term contract with the customer to deliver electricity at, or below, their existing retail energy rates, with a fixed-price escalator for the contract lifespan. The benefits for the retail chain include: immediate savings, immediate ROI, long-term predictable pricing for a portion of their most expensive electricity and a complete service solution requiring no maintenance on the part of the retailer.

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Sears comps hurt by energy costs

BY CSA STAFF

HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $216 million, or $1.40 per diluted share, for the first quarter ended May 5, compared with net income of $180 million, or $1.14 per diluted share, for the first quarter ended April 29, 2006.

“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said Aylwin Lewis, Sears Holdings’ ceo and president. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers’ needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”

Domestic comparable-store sales declined 3.9% during the first quarter of fiscal 2007. Sears domestic comparable-store sales declined 3.4% for the quarter, while Kmart comparable-store sales declined 4.4%. We believe these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears domestic recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, which we believe reflects both a slower U.S. housing market and the impact of increased competition.

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Big Lots 1Q net sales up 3.4%

BY CSA STAFF

COLUMBUS, Ohio Big Lots today reported first quarter fiscal 2007 income from continuing operations of $29 million, or 26 cents per diluted share, compared to income from continuing operations of $14.5 million, or 13 cents per diluted share, in the first quarter of fiscal 2006. Including the impact of discontinued operations, first quarter fiscal 2007 net income totaled $28.8 million, or 26 cents per diluted share, compared to $13.7 million, or 12 cents per diluted share, in the prior year.

Net sales for the first quarter ended May 5, increased 3.4% to $1.13 billion, compared to $1.1 billion for the same period in fiscal 2006. Comparable-store sales for stores open at least two years at the beginning of the fiscal year increased 4.9% for the quarter.

For the second quarter 2007, the company expects income from continuing operations of 7 cents to 10 cents per share versus income from continuing operations of 4 cents per share last year. Comparable-store sales are expected to increase 2% to 4%, compared to a 5.2% comparable-store sales increase recorded last year.

For fiscal 2007, the company expects income from continuing operations of $1.25 to $1.30 per share versus income from continuing operations of $1.01 per share last year.

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