Ikea's solar array stands out in modest state market - Finance ...

Posted: 5:21 pm Fri, January 13, 2012
By Mark?Anderson
Tags: Erin Madsen, Ikea, Joseph Roth, Mark Lennihan, Nathan Franzen, Tom Wentz

Solar panels line the roof of an Ikea store in Brooklyn, New York, in April 2011. The 19,000 square feet of panels generate 240,000 kWh of electricity for the store. (AP photo: Mark Lennihan)

Ikea?s announcement Thursday that it would build Minnesota?s largest solar array ? a 1.2-megawatt solar array on the roof of its Bloomington store ? puts a cap on a two-year period in which statewide solar installations more than doubled.

The installation is one of five the Sweden-based retailer plans to build, bringing to 37 the number of solar installations among its 44 United States locations.

But the development of solar energy systems in Minnesota still lags many other states, where high electric rates and/or regulatory advantages encourage investments in renewable energy.

Minnesota?s comparatively sluggish solar market is evident at Eden Prairie-based Westwood Professional Services Inc., which provides planning and solar installation for commercial customers from its nine offices around the country.

Westwood?s revenue from solar business doubled between 2010 and 2011, but only 5 percent of that came in Minnesota, said Nathan Franzen, director of Westwood?s solar services.

Part of the sluggish performance could be the result of Minnesota?s relatively low electric rates, which provide building owners with little financial incentive to invest in renewable electrical sources. Minnesotans paid $9.02 per kilowatt hour for electricity, well below the national average of $11.53, according to Eisenbach Consulting, an energy consultancy based in Tyler, Texas.

But Minnesota regulations also provide owners fewer opportunities to gain subsidies or to earn money by selling electricity to the grid from their rooftop installations.

?We have customers who have properties in other markets who are using their roof space for solar generation and recovering more value from their installation,? Franzen said. ?They look at this market, and it doesn?t make sense.?

Even so, the solar option simply may not have gained as much awareness among building owners. Tom Wentz, Jr., a senior vice president Minot, N.D.-based Investors Real Estate Trust, which owns commercial real estate in 13 Midwestern states, said solar investments aren?t on IRET?s agenda.

?We talk to consultants and our tenants about ways to control costs, and frankly, nobody has ever suggested solar installations as a step to take,? Wentz said. So far, IRET hasn?t installed roof-top solar energy systems on any of its buildings.

Minneapolis-based Target Corp. has installed solar arrays on the roofs of 24 of its stores, but none in Minneapolis or the Midwest. Spokeswoman Erin Madsen wrote in an email that Target limited those retrofits to stores in California, Hawaii and New Jersey, states ?where it makes the most sense.?

Most of Minnesota?s largest solar installations have been on public or utility buildings, according to the state Department of Commerce.

But Franzen of Westwood said Ikea?s huge new investment could spark more commercial investment. ?An announcement like that raises the awareness that commercial property owners have a significant asset that they?re not utilizing ? their roof and its ability to collect solar energy,? he said.

Ikea?s Bloomington solar array more than doubles the size of Minnesota?s previous largest installation, the 600-megawatt array on the Minneapolis Convention Center.

Ikea spokesman Joseph Roth said the company is committed to renewable energy but that its private company status helped it make its decision. ?We don?t have analysts and shareholders watching us every quarter, and that gives us a chance to make investments that have a slower payback,? he said.

The other Ikea locations scheduled for solar arrays are in Illinois (two), Michigan and Pennsylvania.

Roth wouldn?t disclose the cost of its Bloomington development, but Franzen said the price would probably be close to $3.5 million for a project of that size.

A Chicago-based company, SoCor Energy, will develop Ikea?s Bloomington system, but Roth said SoCor would use Twin Cities subcontractors on the installation. SoCor didn?t return a call requesting information about the installation.

This entry was posted on Friday, January 13th, 2012 at 5:21 pm and is filed under Energy. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

Source: http://finance-commerce.com/2012/01/ikea%E2%80%99s-solar-array-stands-out-in-modest-state-market/

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