Focus on Solar Power

Two of the nation’s leading retailers—Kohl’s Department Stores and Macy’s West—discussed their chains’ solar initiatives at

Kohl’s: The decision to go solar at Kohl’s was triggered by a variety of factors, including the rising volatility and price of energy, favorable market conditions for faster adoption, and its plentiful—and available—rooftops.

“Also, we see energy efficiency and green power as equaling environmental and business sustainability,” said John Fojut, VP, facilities, Kohl’s Department Stores, Menomonee Falls, Wis., which operates 957 stores in 47 states.

One of Kohl’s key considerations in going solar was whether to own the system itself or enter into a power purchase agreement (PPA). It decided to take the PPA approach, owing to the economics (immediate cost savings), the fact that accountability remains with the solar provider (Kohl’s solar partner is Beltsville, Md.-based Sun Edison) and the financing.

“By taking this route, there was no balance-sheet impact,” Fojut told conference attendees. “There was no cost to Kohl’s.”

Kohl’s solar program is wide in scope, with a total of 123 planned locations. To date, some 46 sites (in California, New York, New Jersey and Wisconsin) are activated.

Sun Edison provides Kohl’s with an in-house single point of contact. Program professionals work directly with Kohl’s and provide assistance with service and rollouts. Sun Edison’s in-house technicians are responsible for related maintenance issues.

Kohl’s solar initiatives have proved popular with Kohl’s associates, customers and vendors, according to Fojut.

“Our stores are really proud of solar,” he added. “And it has been really a hot button with our younger associates.”

As to how Kohl’s benefits from solar power, Fojut cited the annual energy-cost savings, environmental leadership, retention of renewable energy credits to support green power strategy, and readiness for future regulatory action.

“As we see it, we’re getting ready for the future,” Fojut said. He added it is likely that legislation at the federal and state levels will continue to provide tax incentives for renewable energy.

Macy’s: Energy challenges also led the 235-store Macy’s West to utilize solar power.

“Future energy-price escalators can no longer be accurately predicted,” Marc Gordon, VP of operations, Macy’s West, told conference attendees.

Key drivers for the chain in going solar, Gordon said, were the depletion of traditional low-cost sources of energy and the fact that legislators are mandating renewable and greenhouse-gas standards at an aggressive rate.

Macy’s West has committed to solar power in 28 stores, with the installations scheduled from August 2007 through September 2008. At the same time, Macy’s is undertaking energy-efficiency upgrades (lighting, HVAC and EMS improvements) in the 28 stores.

Unlike Kohl’s, whose solar installations are all being done through a solar power-purchase agreement, Macy’s West is taking a two-pronged approach. Seventeen of the 28 locations will be financed through a purchase power agreement (similar to Kohl’s) and have no up-front capital requirement. But the chain is funding the solar-power installations on the remaining 11 stores itself, with the help of a 30% federal tax credit, the Self-Generation Incentive Program and the California Solar Initiative.

Gordon outlined the expected electricity and emissions savings associated with the solar-power installations and efficiency upgrades. They include an estimated 40% reduction in utility-provided energy, and the offset of 24 million kilowatt hours of power annually. The savings also include the reduction of more than 195 million lbs. of CO2 emissions over 30 years.

Some 25 states have mandated that their utilities produce some sort of renewable energy, according to Craig Kline, partner, Troutman Sanders, New York City, who reviewed the financial implications of solar power during the “Renewable Option” session.

“There are a variety of state and governmental incentives available that promote renewable resources,” he explained. “Some incentives go directly to developers or owners of renewable-energy projects.” Kline also discussed another type of incentive: renewable-energy credits or certificates, which are commonly referred to as “RECs” or “Green Tags.”

“These allow electric consumers, wholesalers and utilities to purchase green power on a national basis without regard to the specific source of the generation,” Kline said.