Given that it is the most massive retail store on the planet, Walmart is an unlikely champion for sustainable causes. But it has engaged in the past on issues ranging from local food and responsible sourcing to phasing out toxic chemicals.
Every time Walmart makes a green commitment, it has reverberations throughout entire industry sectors. That’s just what happens when you’re the world’s largest corporation. And that’s why Walmart’s work in renewable energy could have a major impact.
In 2005, Walmart announced three broad sustainability goals: creating zero waste, selling products that sustain people and the environment, and powering itself by 100% renewable energy. At the time, the company didn’t have any set time frame or any real metrics for reaching its goals. Since then, it has reached a number of milestones, including a 20% reduction in greenhouse gases in 2012 from the baseline it set in 2005–in other words, the company’s footprint that existed in 2005 now uses 20% less energy, but its total footprint has increased as it has expanded since then. By 2020, Walmart wants to procure 7 billion kWh of renewable energy globally (the equivalent of powering over 620,000 average American homes for a year), and reduce its energy demand on a per square foot basis by another 20%.
Today, Walmart has 150 solar installations in seven countries, as well as 26 fuel cell installations in the U.S. and a smattering of experimental micro-wind and large scale wind projects (hundreds of stores in Mexico also purchase wind power from Eléctrica del Valle de Mexico).
“One of the big paradigm shifts was that we had to start opening up our doors. In the past, we thought we could keep our heads down. We had to learn from experts, and we started meeting with NGOs and academia,” says Kim Saylors, VP of Energy at Walmart.
Jenny Ahlen, a project manager at Environmental Defense Fund, has worked since 2011 at EDF’s small office in Bentonville, Arkansas–a branch of the nonprofit dedicated to working with Walmart. EDF isn’t the only NGO that Walmart works with, but the two organizations have a close relationship (The Walton Family Foundation–controlled by the Walton Family that also owns a majority stake in Walmart–also gives a considerable amount of money to EDF). On the day that Ahlen and I spoke, she had just wrapped up a coffee meeting with Greg Poole, who makes deals for Walmart’s renewable energy arm. “We have learned a lot about how Walmart functions,” she says.
In the renewable energy arena, she says, Walmart is taking a piecemeal approach, where lots of individual projects add up to an impressive whole. Still, Walmart has its share of challenges to deal with: technologies are still evolving, and regulatory and financial hurdles abound.
“Like any big company, there’s always going to be fire drills moving people’s resources and time away from daily activities, which can slow progress,” Ahlen says.
SolarCity, one of a handful of solar leasing companies operating in the U.S., has worked with Walmart on the majority of its solar installations (and will presumably continue to work with the company as it ramps up to solar photovoltaic systems in 6,000 stores in the next six years). Lyndon Rive, the CEO and founder of SolarCity, believes that Walmart chose to work with his company because of simple economics. “There is no capital investment, installation is free, and you lock in electricity pricing for 20 years [with SolarCity’s solar leasing plan],” he says. “It’s a mistake not to do it.”
Plus, Saylors says, “We didn’t know enough about the technology to own and operate the systems.” The easiest and most efficient option was to enter into power-purchase agreements, where solar providers either own or operate the systems and sell the power to Walmart.
Walmart’s emphasis on cost-effectiveness–the company wants ditch fossil fuels, but nothing passes muster if it doesn’t make financial sense–means that solar still is limited to certain locations. In states where the retail cost of energy is low (including many states in the Midwest), Saylors says that Walmart is “continuing to make progress,” but that it doesn’t yet have the full answer as to how it will deal with these more challenging markets.
SolarCity itself doesn’t yet operate in all 50 states because of poor economics. But, says Rive, “In most states where the cost is really low, it’s because they’re burning the most coal. As our costs come down, we will be able to expand into newer states.” (The cost of solar is rapidly dropping in many states).
For Walmart, U.S. markets aren’t nearly as challenging as foreign markets. “Just in terms of our ability to get a product approved … in China it is very difficult. We just got the first solar installation on a rooftop that was a non-government building. That was a big deal,” says Saylors.
Ultimately, Walmart believes that it won’t be able to reach its renewable energy goals without new technologies coming on the market–the company can’t just rely on rooftop solar (and the micro-turbine tests haven’t been as successful as Walmart hoped, though Saylors says that the company still thinks the technology has a future). “We do believe that new, innovative technology will have to continue to help us,” she says.
Even though the company still has a long way to go to reach its goals, it has already impacted the larger solar market in the U.S. Once Walmart announced that it was beginning to rely on solar, Saylors says that the retail chain received tons of calls from other companies wanting to learn more. At the same time, she believes that Walmart’s commitments have helped solar companies drive down the costs of solar since “they could go out and buy larger amounts and know they had someone there ready to consume it.”
Rive thinks that the mere fact of Walmart’s budget-consciousness may have increased the size of the corporate solar market. “Some companies that want to do the right thing but don’t mind spending more money–that carries less weight. Walmart is not going to do something that’s not cost-effective,” he says. So far, seems to be: in 2012, Walmart saved $2 million by relying on solar installations instead of traditional energy sources.
When those new and innovative energy technologies come along, they should be so lucky as to get a boost from the world’s largest company. It’s the best advertisement that anyone could ask for.