In the U.S., energy-conscious businesses are installing solar panels, wind turbines and other power-generating equipment on their premises to drive down electricity costs and reduce greenhouse gas emissions.
From retailer Wal-Mart Stores Inc. to tech giant Google Inc. and automaker BMW AG, companies are self-generating electricity to power buildings and equipment. Sometimes they sell excess electricity to the grid.
The number of power-generation units at U.S. commercial sites more than quadrupled from 2006 to 2013, reaching about 40,000, according to Wall Street Journal estimates based on federal statistics.
The business case
“It’s cost-effective,” said Joseph Stanislaw, an adviser to consultancy Deloitte LLP. Rising electricity prices, falling solar- and wind-equipment prices and lower installation costs are the big reasons. Government rebates and tax credits also make power-generation feasible where it might not have been just a few years ago.
On-site units usually don’t cover all of a facility’s energy needs. But even by providing a share of the necessary electricity, these units can bring significant savings. Energy accounts for between 5 percent and 20 percent of a typical company’s total costs, according to a Deloitte report co-authored by Stanislaw.
Non-energy businesses invest in power generation to have backup power during outages and to operate in an environmentally sustainable manner.
Environmentalists like self-generation because it depends mainly on renewables. It’s integral to accelerating the transition to a clean, low-carbon energy economy, according to Jim Marston, a vice president of the Environmental Defense Fund.
Retailers Wal-Mart and Inter Ikea Systems B.V. aim to derive all the energy they need from renewable sources. Walgreen Co., the largest U.S. drugstore chain, will have more solar locations than any other company in the U.S. once it completes its current solar expansion. (It now boasts solar panels on 150 of its stores.) If successful, these companies will register significant achievements, experts say. But their influence over suppliers and competitors is even more important. “With our size and scale, Wal-Mart is in a unique position to encourage innovation and accelerate the adoption of cost-effective, clean-energy alternatives,” said Kim Saylors-Laster, a vice president at Wal-Mart.
Not everyone is a fan of self-generated energy. Utility companies worry that it reduces electricity demand and their pricing power, threatening their revenue and growth prospects, according to Edison Electric Institute, a trade association.
But some utility companies are gaining their own footholds in alternative-energy operations in order to protect their profits. Edison International, one of the largest U.S. utility companies, acquired SoCore Energy, a Chicago-based firm that installs rooftop solar systems for Walgreens and others. MidAmerican Energy Company spent $1.9 billion on 448 wind turbines for projects across Iowa, which include providing power to a Google facility.
For now, on-site generation accounts for less than 5 percent of U.S. electricity production, according to the Energy Information Administration. Nevertheless, utilities and environmental groups see that as significant: “It begins to change the natural order of the industry,” said Stanislaw.