Whole Foods’ Solar Project Points to Benefits of PPAs

Whole Foods Market’s ongoing project to put solar panels on the roofs of many of its stores and warehouses points to the benefits of Power Purchase Agreements (PPAs) in the commercial space, a new analysis says. The analysis also says Whole Foods may be a good model for other retailers to emulate as they look to add solar to their own operations.

Whole Foods’ rooftop solar program is “an innovative approach that will save money, save time and benefit the environment,” according to the analysis

The chain’s stores starting getting solar panels in the early 2000s, through individual projects led by onsite store managers and local solar developers. By the end of 2015, about 40 Whole Foods stores had solar panels.

Then, earlier this year, the company announced plans to add solar panels to about 100 of its stores and warehouses, through a corporate-led program that includes PPAs with NRG Energy and SolarCity. “The plan aims to increase the production of solar power and offset some need for traditional grid power while helping Whole Foods Market save money,” the company said in its March announcement of the program.

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The new program is expected to make Whole Foods one of the 25 biggest corporate users of solar power in the U.S. It is also being lauded as innovative and worthy of emulation by a new study performed by the Retail Industry Leaders Association (RILA) and the Solar Foundation, which concluded that Whole Foods’ approach “could be a valuable model for other retailers to consider.”

That’s because Whole Foods, like many nationwide retailers, rarely owns the buildings that its stores are located in. Because of that, to get permission to install solar arrays, Whole Foods has to get each individual landlord to agree to alter the lease — a process that RILA report notes “can be time-intensive and consequently expensive.”

To help get around that, about seven years ago, Whole Food “began to establish standard solar language in store leases, reserving the option to install, operate, maintain and remove solar power provided it isn’t visible from the ground,” the report says. That standardized lease language “helps to streamline project implementation since leases don’t have to be renegotiated later when solar is installed.”

It’s a model that other retailers should consider as well.

“Whole Foods Market was able to find sensible solutions to many common challenges retailers face when implementing solar and ultimately created a smart pathway for expansion,” says Erin Hiatt, senior manager for sustainability and compliance at RILA. ”With more and more businesses exploring solar as a highly cost effective way to expand renewable energy generation, Whole Foods Market offers a replicable approach for the industry.”

Indeed, other retailers may also want to follow the PPA model that Whole Foods is using for its current installations, including working with the same providers across the country. “By working with two vetted system providers, Whole Foods benefits from better terms, volume pricing, and consistent, field-testing hardware,” the report says.

All of Whole Foods’ new installations will be third-party-owned with PPAs, or with leases in locations where PPAs are not allowed. Using a PPA has its drawbacks, but Whole Foods found it a fair trade.

“While Whole Foods Market might realize greater returns through direct ownership, third-party ownership reduces capital investment and is generally easier to execute,” the RILA report says. “Given the inherent challenges in securing internal capital and scaling up, Whole Foods Market was drawn to the relative ease of third-party ownership through PPAs.”

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