Ikea as Wind Farm Owner: It's Not the Eco-Marketing Trick You Think It Is
Ikea's purchase of six German wind farms from Spanish turbine maker Gamesa isn't your typical let's woo-the-eco-conscious-shopper scheme embraced by so many big box retailers these days. And it's more than a cautious step into renewables. This green energy buy -- along with Ikea's purchase last year of four French wind farms -- is a clanging alarm from management that renewable energy will be a part of the Swedish home furnisher's business model for the foreseeable future.
Question is, does buying renewable energy assets even make sense? For Ikea, it does. The multinational company has publicly committed to secure all of its electricity needs from renewable sources. That leaves it with the challenge of buying the most sensible and economic renewable energy assets for a particular region; and launching green energy plans for stores that fit that location.
Green initiatives aren't exactly breaking news. Big box retailers are constantly touting their improvements in energy efficiency or their campaigns to offer new recyclable products. Even Ikea has succumbed to the temptations of using green initiatives-as-marketing with its never-ending sustainability list.
Of course, buying actual renewable energy assets is a different, not to mention more significant, investment altogether. Ikea now owns 52 wind turbines, which includes its recent acquisition. The German wind farms are spread across four locations and have a combined capacity of more than 45 megawatts, enough to power around 17 Ikea stores.
Ikea, has smartly avoided complicating its wind farm operation. Management of the wind farms has been outsourced to operators and power is delivered to the electricity grids, not to the stores, according to the FT report. And Ikea has purchased wind farms in a location that makes sense: Germany, a country that has both a renewable energy policy that provides incentives through feed-in tariffs. Oh, and Germany also happens to be Ikea's biggest market.
So, how does Ikea fare elsewhere? There are some hits and misses, but overall Ikea is starting to figure out that's not just about snapping up assets or launching green campaigns at the retail level, but investing in projects that make sense for its location. For instance, Ikea's first two solar installations in the U.S. were at its Pittsburgh and Brooklyn, NY locations. Not exactly the sunniest of locales. But this spring, the company announced its next project would be at its Tempe, Ariz. store.
Ikea also has wisely found partners with expertise. Take its new suburban Denver store scheduled to open next year. Ikea teamed up with the U.S. Energy Department's National Renewable Energy Laboratory to showcase and study geothermal systems. Geothermal heat pumps can reduce energy consumption and emissions up to 72 percent compared to traditional electric heating and air-conditioning, according to the EPA.
Geothermal is a renewable power source Ikea already uses in Sweden. This will be the first Ikea store in the U.S. to be built with geothermal heating and cooling, a system that will take ambient 55-degree temps from underground and pump into its 415,000-square-foot, two-level retail location. Geothermal projects have high front-end costs, and Ikea is likely trying to learn from its partner the most economical and efficient way to install the system so it can be applied globally.