Wal-Mart Solar Investment

Wal-Mart's Million-Dollar Solar Play

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It's been a few years since I've been to an IKEA store.

Although I've spent a decent chunk of change there, I'm actually more a fan of antique furniture — quality old-world stuff that reminds me why it's important to respect and strive for perfection.

From the 1890 Oak Roll Top Desk that I'm using at this very moment to the sturdy rosewood bed that's been in my wife's family for generations, I fully appreciate the feeling of owning and using a small piece of history.

Of course, you don't have to look far to find a few IKEA bookcases, juice glasses, and lamps in our home, either.

Truth is I'm actually a bit of an IKEA fan, as this is an empire that was built by not falling in line with the status quo.

Whether it's the design of the stores, the shopping experience that doesn't involve pushy salespeople, or the fact that this company has allowed regular folks to have something stylish and unique, I'm always a sucker for market disruption — and the success that follows.

That's why I was pleased to learn this week that once again, IKEA is raising the bar.

Mitigating Volatility

This past Tuesday IKEA announced that by 2020, it will produce more renewable energy than it consumes in its stores and buildings.

By investing nearly $2 billion in energy efficiency, wind, and solar, the company is seeking to use renewables as a way to mitigate the risks of relying solely on fossil fuels, which certainly carries significantly more volatility when you look at long-term pricing structures.

Of course, it should be noted that it would be nearly impossible for IKEA to pull off such an aggressive goal without the rapidly decreasing cost of solar and wind...

While this has definitely been a dark cloud for solar panel and cell producers, it's been a blessing for installers and large companies that are now using lower-cost solar to build more economically sustainable operations.

In fact, over the past couple of years, we've seen an absolute boom in commercial solar installations.

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All About the Money

Although IKEA's renewable energy agenda is an impressive one, it's not the only major retailer slapping up solar panels at a record pace...

When you look at all the major retailers out there, the most aggressive on renewable energy has actually been Wal-Mart (NYSE: WMT).

By capacity, Wal-Mart boasts 144 solar power systems generating 65 megawatts, or enough to power more than 14,600 homes. Some of these were actually installed by soon-to-be public SolarCity, which will trade under the symbol SCTY once it debuts.

Wal-Mart intends to have 1,000 solar power systems operating by 2020.

The retail giant has also set a goal of powering all of its stores with 100 percent renewable energy.

But this isn't just about a clean energy PR campaign. It's about the money.

Wal-Mart announced last year that it saved about $1 million in operating costs after installing solar panels at several of its retail locations. And it's not the only major retailer that's seeing the economic benefits of going solar...

Take a look:

walsolar

Combined, these companies' installations generate about $47.3 million worth of electricity each year and provide enough juice to power 46,500 average American homes.

Wal-Mart and Costco (NASDAQ: COST) alone now have more solar installed on their store rooftops than all of the solar capacity deployed in the state of Florida — and the top ten companies in this list have individually deployed more solar energy than most electric utilities in the United States.

Bullish

We all know solar growth rates remain strong, and with commercial installations really starting to bolster much of this growth, it's definitely a good time to be a solar installer.

I also think it's a good time for SolarCity, which will soon go public. The stars are really starting to align for this one.

Just last week SolarCity announced it had scored its first utility contract. Considering this is a company that's building a burgeoning empire based on residential installations and solar leasing programs, this is actually a pretty big deal, as this indicates the company can also compete with the big dogs in the utility-scale market.

The recent deal is for a 12 megawatt project for the Kauai Island Utility Cooperative. One of the smallest and most rural islands of Hawaii, Kauai is getting very aggressive with its efforts to move away from diesel-powered generation to solar and wind.

After all, this...

kauaisolar

is much more appealing than this:

kauaidiesel

That diesel-fired power plant above powers about 75 percent of the island today. It's one of the reasons it costs a small fortune to keep the lights on if you live there.

In any event, I continue to believe the SolarCity IPO will be one that gets an extraordinary amount of attention...

And it could be one of the few solar stocks to actually shine in 2013.

To a new way of life and a new generation of wealth...

Jeff Siegel Signature

Jeff Siegel

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Jeff is the managing editor of Energy and Capital and contributing analyst for the Energy Investor, an independent investment research service focusing primarily on stocks in the oil & gas, modern energy and infrastructure markets.  He has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling book, Investing in Renewable Energy: Making Money on Green Chip Stocks. For more on Jeff, go to his editor's page.


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