- How does IKEAs renewable energy plan work?
- Compare it to the Wal-Mart approach.
- Find other examples of what major companies are doing to become “energy neutral.”
IKEA Assembles a Sustainability Program
Swedish Retailer Plans First Wind-Energy Investment in U.S.
By Andria Cheng
April 15, 2014 11:25 p.m. ET
Many retailers are expanding their use of renewable energy, but IKEA is taking a do-it-yourself approach.
Last week, the Swedish furniture and home-furnishings retailer told a congressional task force on climate change that it is making its first wind-energy investment in the U.S. The company said it is buying a 98-megawatt wind farm in Hoopeston, Ill., about 110 miles south of Chicago.
The Illinois wind farm, slated to include 49 wind turbines and be wholly owned by IKEA, is expected to be fully operational by the first half of 2015.
The wind farm isn’t intended to supply energy to any of IKEA’s 38 stores in North America. Rather, it is part of IKEA’s goal of becoming energy neutral—that is, not using any more energy than it’s able to produce.
The company will sell the generated energy back to the power grid, said IKEA’s chief financial officer for U.S. operations, Rob Olson, who is also acting president of the U.S. unit.
The Illinois wind field will supply energy equivalent to 1.3 times IKEA’s total U.S. electricity and other energy use, according to the company. Put another way, it will generate enough for the average energy needs of 34,000 American households annually, according to the company. It will catapult IKEA’s renewable-energy production to two-thirds of global energy consumption, from 37% currently, Mr. Olson said in an interview.
The project will be larger than wind farms IKEA has built in eight other countries, including Canada and Germany.
IKEA plans to delegate management to wind and solar developer Apex Clean Energy.
The retailer, which earlier this year characterized itself as the No. 2 private commercial owner/user of solar power in the U.S. (Wal-Mart, meanwhile, is said to be the No. 1 solar-power buyer), has committed itself to becoming energy-neutral by 2020, and the Illinois wind farm is the biggest energy project it has announced so far.
While declining to specify how much the project will cost, Mr. Olson said that wind-farm expenditures are included in the $2 billion the company has earmarked for energy projects between 2009 and 2015.
IKEA, whose sales have jumped more than 30% to nearly $40 billion over the past five years, also produces renewable energy with the 550,000 solar panels it owns globally. The company also produces geothermal energy.
The retailer has “mapped out and produced” a favorable return on investment, Mr. Olson said, adding that IKEA will continue to scout for wind-farm investment opportunities globally. “We don’t look at it as a short-term investment. The potential with wind energy is huge. We want to make sure we are doing our part to take care of the environment and to be energy independent. But it also makes economic sense,” he said.
Andrew Winston, founder of sustainability consultancy Winston Eco-Strategies, said IKEA is one of the few companies that invests in its own energy projects.
Wal-Mart has said it wants to derive 100% of its energy from renewable sources and drive annual production or purchase of 7 million megawatt-hours of renewable energy globally by 2020. That company, with about $480 billion in sales, said 24% of its total electricity supply comes from renewable sources, including 8% from company-driven projects. Wal-Mart said it primarily uses power-purchase agreements to buy renewable energy from developers. The company uses wind energy in markets including Mexico and Texas but doesn’t own any wind farms.
By contrast, IKEA owns 100% of the solar panels, geothermal-energy facilities and wind farms it uses.
Write to Andria Cheng at firstname.lastname@example.org