Wednesday, February 12, 2014

IKEA Leads in Renewable and Sustainable Energy Utilization

Worldwide furniture and home-decorating retail powerhouse IKEA might not be the first name you would associate with green energy.  But the Swedish corporation has the US' second largest investment in company-owned solar power, with solar panel arrays on 39 or its 44 US locations, representing 550,000 rooftop panels.  It has built 157 wind turbines, and even installed a geothermal heating and cooling system to supply its Kansas City location.  The company believes that as long as it has the capital to invest, owning its energy systems makes economic sense as well as being good for the environment.

Hunter Communications Original News Source:
Forbes

Link to article:

Excerpt: " IKEA owns as many renewable energy resources as some energy companies, with 157 wind turbines (96 of which are already operational), with a capacity rating of 345 megawatts. The company has also installed 550,000 solar panels, totaling 90 MW.

In the U.S., IKEA’s numbers are also pretty formidable, with an investment of $150 million in PV systems, making IKEA the second largest private commercial solar owner. Currently, 39 of their 44 locations are served by solar arrays, with four more installations planned in 2014 (including one on a new store). When completed, the combined capacity of IKEA’s solar portfolio will total 38 megawatts. The company is also working on a geothermal system to heat and cool a soon-to-be-constructed store near Kansas City.

I asked Howard about how IKEA thinks about risk in making this type of investment. After all, IKEA makes furniture and consumer goods. It’s not an energy company.
We think it’s a good long-term investment.  If you take wind or solar, of course there is a degree of risk, as there is in anything, but you can manage the risks. Where else can you invest capital with huge co-benefits and a good return with managable risks? We just need good long-term investments.
All of this makes for good press. It also makes good business sense, as the company is largely isolating itself from the volatilities of electric power markets – the most unpredictable markets on the planet. Essentially, IKEA is building out a long-term ‘green’ hedge, which –among other benefits – will allow them to much more accurately forecast future energy operating costs.

The company also realizes that the cheapest energy is that which is saved through low-cost efficiency measures. IKEA reports having saved $54 million in warehouse energy efficiency programs since 2010. These savings have resulted from a combination of lighting, HVAC, new energy management systems, upgraded boilers, and geothermal.

Howard’s approach to this area is noteworthy. In his view, there are always new opportunities.
I think that the advantage of new technology is that the low-hanging fruit grows back.  Efficiency investments that weren’t commercially viable then become feasible…It’s the same with renewables. We’ve been on a learning curve with renewable energy investments.  Solar PV is also progressing nicely on the cost curve, so we can go back to existing locations and find applications that weren’t cost effective before.  Rooftops are easy, but when panels and associated kit drop in price, then you can go to car-park solar opportunities that now become cost-effective.
How did this laser focus on sustainability come about?  It started with a commitment to culture and planning.
We have a nine person management team for IKEA group.  If you could see the passion, engagement and energy in the room, you would say ‘wow.’ We have a totally engaged management team.  We have a strategic landscape with sustainability as a visible cornerstone.  Then we have 11 guiding group strategies, of which one is sustainability, which runs like a green thread through the others.  We’ve been working with all competencies in the organization so that everybody understands what that means.
Howard is pretty clear that there is both a threat and an opportunity here.
Look, we have 3 billion people over the poverty line, coming in less than 20 years, who will have middle class living standards. We’ve got emissions that have to peak by 2020, and then we need a rapid decline in order to stabilize the climate. And we are building cities like never before. We have resource scarcity and climate change. So you have to say ‘this has to be a transformative agenda.’  Sustainability used to be a ‘nice to do,’ like planting trees, or doing incrementally less bad.  It’s about a mindset.  If you’re trying to reduce impacts here and there, that won’t do –it’s when you go all in that matters."
 (Note: Hunter Communications handles marketing for Burbank Town Center, home of IKEA Burbank.)

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