Kohl's Paints the Northeast Green

(MoneyWatch)  Kohl's Department Stores, which has already converted more than 25 of its 88 California locations to solar power, announced plans to convert more than 50 East Coast locations to solar power before year's end as well.

From recycling to cutting energy consumption by using energy-efficient lighting and equipment in stores, retailers have long sought to minimize their environmental footprints.

Kohl's joins a growing number of retailers that are looking to solar power as an alternative-energy resource. Its announcement is significant, for the moderately priced mass merchandiser is spearheading the first solar foray outside the Golden State. California is a popular destination for solar initiatives because the state's rebate program, combined with federal tax credits, can cover 50 to 60 percent of the cost of installing a solar-power system.

Solar installation isn't a small capital commitment. A typical store can have 88,000 square feet of retail space, while larger suburban stores can range from 125,000 square feet to 200,00 square feet. That adds up in terms of solar-equipment spending. A Target store in Stockton, Calif., recently installed solar panels in five electric grids, spanning roughly 50,000 square feet, or about 40 percent of the rooftop. A system that size would cost an estimated $3 million to $5 million, said Barry Cinnamon, CEO of Los Gatos, Calif.-based Akeena Solar, one of the nation's leading designers and installers of solar-energy systems.

Costco Wholesale is installing solar panels in its massive warehouse clubs. Six stores in California and Hawaii have the solar panels, and seven additional stores are set to get them this year, Chief Executive Jim Sinegal told shareholders at the company's annual meeting in February. (Costco operates 392 locations in 40 states and Puerto Rico.) The big box retailer estimates a cost of about $745,000 per store, averaging 125,000 square feet, and expects to break even with energy savings in three to five years.

Wal-Mart Stores advertises that it is also reducing its carbon footprint, moving aggressively on sustainability initiatives, including recycling and reducing greenhouse gas emissions by, for instance, improving fuel efficiency and exhaust issues in its private trucking fleet. But not all of its attempts to claim green bragging rights stand up to scrutiny.

The discount retailer, for instance, pledges to make its stores 20 percent more energy-efficient by 2013, cutting annual electricity use by 3.5 million megawatt-hours, and last year announced solar-power pilot projects at 22 locations throughout California and Hawaii. Save for four high efficiency stores that use 20 percent to 25 percent less energy than a typical Supercenter, however, Wal-Mart hasn't yet moved beyond "proof-of-concept" with solar power.

Wal-Mart spokesman John Simley told me that Wal-Mart recognizes the potential cost savings by going solar, but that it is still reviewing the potential return from all energy-efficiency improvements -- everything from improving its water use to installing skylights and motion-switched lighting to building wind turbines. Simley declined to say how much capital spending Wal-Mart is actually devoting to solar power and other alternative-energy initiatives.

(For an alternate take, see the 2007 article Can Wal-Mart Ever Be 'Green'?, in which energy researcher Stacy Mitchell concludes that while Wal-Mart's plans to become more energy efficient have some substance, big-box retailing remains intrinsically unsustainable on an environmental basis.)

With energy prices trending higher, Kohl's is moving forward with solar installations in New Jersey, Connecticut and Maryland that would make its distributed solar program becomes the world's largest among retailers. The solar stores on the East Coast will represent 80 percent of Kohl's 67 locations in these three states.

Kohl began initial construction for the East Coast solar conversions in January. On average, the total East Coast program is expected to offset 370 million pounds of carbon dioxide over the 20 year program and is equivalent to removing more than 36,200 cars from the road for one year. Kohl didn't return a call for comment on its solar-related capital expenditure or expected time to break-even.

The retailer has targeted 50 additional sites in California and hopes to add other states to its growing green roster by the fourth-quarter 2008, too, irrespective of weak retail conditions in its home and women's apparel segments.