Retail Stocks and Solar Ambitions: Shining a Light on Renewable Profits

Will Kenton, Kapitall: Big box retailers like IKEA and Walmart want solar power to replace high energy bills. Will retail stocks benefit?

Environmentalists who oppose the Keystone XL pipeline may be worried by today’s story in Bloomberg that “Speculators Boost Bullish Oil Bets to Record” due to the opening of the southern leg of the supply line in January. But before you sell your Birkenstocks and add oil and gas companies to your portfolio, you should be aware of another trend in energy that might up-end the electricity game for all players.

Fast Company Exists reports that many large retailers, including Walmart (WMT), Costco (COST) and Kohl's (KSS) are adding solar and wind power generating infrastructure to bring down their energy costs in the long run. By far the leader in alternative power generation, Walmart can produce 89 megawatts of electricity, almost twice the level of power generation produced by the next largest producer.

IKEA, the world’s leading retail home furnishing company, has planned to install 1 million solar panels and thirteen wind farms by 2016. Steve Howard, IKEA’s chief sustainability officer, says in a Forbes interview, “IKEA also has a long-term business philosophy, where we own most of our stores, our factories, and the land they are built on. We have the capital, so why would we rent? It’s the same with energy – if we can own our own energy production why would we not want to do it?” Some businesses operating in big box stores don’t own their locations, but retailers who own, like Walmart, would be foolish not to follow IKEA’s lead.

"You can turn a fallow roof into a fertile economic asset," says Howard. Energy security and thrifty good business go hand in hand with this strategy, which means higher profits for retailers down the road. Clearly, solar panel makers, installers and maintenance personnel also stand to gain from a widespread acceptance of solar energy by the retail industry.

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