17 February 2020

IKEA green initiative brightens solar prospects

Swedish home furnishing giant IKEA is undertaking a massive facelift of some of its stores in China — and it’s not to create more retailing space or attract more customers.

Many of these sales outlets — usually multi-storey, warehouse-like buildings — are being renovated to transform their rooftops and facades, usually thousands of square meters in size, into solar farms.

Since 2012, the transformation has been steadily spreading across its China network. Its outlets in Beijing, Shanghai, Shenzhen, Ningbo, Dalian and Nanjing were among the first batch, China Business News reports.

Going green is IKEA’s new battle cry, and the campaign aims to reduce the company’s carbon emissions by 60 million tons a year. A closer look, however, will show that the real motive behind the laudable effort is to cut costs; its electricity bill has been soaring.  

Germany’s boycott of nuclear energy will result in an 18 percent hike in baseline power tariff from this year while South Korean authorities have agreed a 5.4 percent increase. Figures for China are not available as tariffs vary in different provinces, but the average charge for commercial and industrial users is 1.5-2 yuan (24-33 US cents) per kilowatt-hour. Local officials can adjust the tariff when there is a power supply shortage in the summer, and major electricity users like IKEA that face hefty bills for large-scale lighting and air-conditioning will have to turn to greener options either as a way to trim costs or as a contingency plan.

Under IKEA’s sustainability initiatives, all of its stores and logistics facilities will be self-sufficient by 2020 and the firm will invest nearly US$200 million in China alone before 2015 to realize the goal.

The company has chosen Hanergy Holding Group as its exclusive supplier of solar panels for the rooftops of its 15 stores across China.

Shenzhen Economic Daily notes that IKEA’s store in the southern city can now generate at least 50 kWh of electricity even on a rainy day and help the store save around 500,000 yuan in power expenses a year — and that’s just in the initial stage. The impact will be greater in the next few years after more panels are installed.

The stores in Beijing, Dalian, Tianjin and other areas are expected to generate more electricity as northern China is less likely to be affected by typhoons and monsoon rains.

Media reports say Hanergy has secured fat orders to ship panels overseas as IKEA’s green drive is also being implemented in other parts of the world.

Hanergy’s unique thin-film photovoltaic modules suit well IKEA’s needs since the rooftops of most of its stores are built with flexible water-proof and thermal insulation materials instead of rigid cement; glass panels cannot be properly installed on such a surfaces.

Hanergy Holding Group vice president Zhou Jiesan {周捷三} noted that what sealed the IKEA deal, on top of the supplier’s technical expertise and track record, was the firm’s connections which hastened the approvals and helped the Swedish firm obtain government sweeteners such as a 0.42 yuan per kWh subsidy from the Ministry of Housing and Urban-Rural Development, cutting IKEA’s estimated time of recouping investment by two years.

IKEA’s logistics center in Shanghai will soon become self-sufficient in electricity, and Hanergy lobbied the city grid operator for a “buyback” arrangement — surplus power can be sold to other users via the grid during the daytime and the center can then use the same amount of electricity free of charge for its operation at night.

Zhou also revealed that Hanergy will install rooftop solar panels for IKEA’s 350 suppliers in China.

Hanergy and IKEA’s alliance doesn’t stop at one-off deals. Last October, IKEA began selling in Britain Hanergy’s household solar systems, and the product will be available across the UK and then in Europe in the next two years. Prices of solar panels have fallen to an affordable 5,700 pounds (US$9,226) and a homeowner can recover the purchase cost in seven years through savings in electricity bills. IKEA will provide installation and maintenance services. Some 170 such systems were sold in the UK within four months since its release.

Other major retailers including Wal-Mart Stores Inc., Carrefour SA, Metro AG and even Apple Inc. are expected to follow IKEA’s green example, brightening the prospects of the solar sector.

– Contact the writer at [email protected]



EJ Insight writer