Swedish global furniture company IKEA is bring solar energy to not only its buildings, its products, but also to its massive network of suppliers. Could IKEA have a clever solar model that could be replicated with other global brands?
Swedish furniture and interiors giant IKEA will partner, in a “strategic co-operation” agreement, with China’s alternative energy firm Hanergy Holding Group to install solar photovoltaic panels on all IKEA-owned buildings, including stores, warehouses and offices, in China over the next three years. IKEA suppliers are also getting on the solar bandwagon.
Beijing-based Hanergy, one of China’s largest privately owned solar companies, has been made responsible for the engineering, procurement construction and installation of the solar panels for IKEA in China. But it could be part of a much bigger trend among global brands if IKEA's solar programme is met with success and replicated by others with global proerty portfolios and large supplier networks.
Hanergy has a production capacity in excess of 2GW of amorphous-silicon thin film. In 2011 the company received a US$4.7bn credit line from the China Development Bank and has used this, according to Jason Chow, a vice president in the company’s photovoltaic industry group, to boost capacity by acquiring its domestic rival Apollo Solar and then, more recently, having completed a deal with the German solar company Q-Cells to buy their subsidiary, Solibro, which manufactures thin-film solar panels using CIGS technology.
IKEA: renewable energy all the way
The plan is part of IKEA’s goal to only use renewable energy to power its buildings. IKEA’s chief sustainability Steve Howard claims that, once installed, the solar panels, with a total output of 383MW, will provide 10% to 15% of all the electricity needed to run IKEA’s China stores and 100% of the electricity needed to operate IKEA’s network of distribution centres in China. This should, it is estimated, save approximately 6,000 tons of carbon dioxide emissions per annum.
IKEA is also planning to offer Hanergy PV panels, as well as all installation costs being covered, to every one of IKEA’s suppliers in China (the total number of suppliers in China is unknown, but IKEA has reported working with 1,500 suppliers in 50 countries globally). Li Hejun, chairman and CEO of Hanergy, told the Chinese media that 67 of IKEA’s Chinese suppliers had already signed up for the scheme to receive the solar panels.
The cost of the solar project in China has not been announced but it is part of a global €470m investment in renewable energy by IKEA over the next three years. The roll out of PV panels in China is part of IKEA’s global switch to renewable sources.
Howard claims that over 50 per cent of the energy needed to power IKEA’s buildings globally currently comes from renewables, primarily solar panels, but also wind. In total there are now over a quarter of a million solar panels on IKEA buildings (while the company also owns and operates 80 wind turbines).
Global solar objectives
In other parts of the world IKEA has been growing its solar sustainability programme largely in the USA. IKEA has 17 solar energy systems operational in the US with 20 more underway; two new solar system at major IKEA distribution in the eastern US will be completed this summer in Maryland and New Jersey.
With these systems online IKEA's total US solar generating capacity will in total represent 38MW. On the East coast of the US, IKEA has been working with solar power distributor and integrator Inovateus Solar.
However, across the country IKEA has used different solar companies in different regions including Gloria Solar and E-Ton Solar Group in Arizona, but opted for REC Solar in California, etc.
Given the average size of IKEA stores and distribution centres (the average IKEA store size is over 25,000 square meters) it is perhaps not surprising that the company’s solar installations are among the largest commercial rooftop solar installations in America. The same will be true in China as the programme rolls out and installations come online.
As well as stores and distribution centres IKEA has begun to increase the number of solar powered products sold in its stores, too. In 2008, IKEA created IKEA GreenTech, a €50m venture capital fund based in Sweden. The aim of the fund was to invest in companies focussed on solar panels, alternative light sources, product materials, energy efficiency, and water saving and purification with the longer term aim of commercialising green technologies for sale in IKEA stores.
Tapping the IKEA customer
The first success was the Sunnan solar-powered lamp, which is sold in IKEA stores worldwide and has been extremely popular. Priced at US$19.99, it includes a “Buy One Give One” – for every Sunnan lamp purchased IKEA and UNICEF give one to a child in a refugee camp or village in Africa with no electricity.
Since the Sunnan IKEA has also launched a range of solar powered lights designed to be used outside and in gardens called Solvinden (in 2012 at least, the names change every year). In 2012 IKEA’s solar powered products range moved beyond lighting and included a new solar-powered serving bowl (US$12.99) with LEDs embedded in the bottom, also under the Solvinden name.
IKEA plans for its solar programme to be truly global – a massive project given IKEA’s 332 stores in 38 countries. And IKEA is still expanding – IKEA’s CEO Mikael Ohlsson recently announced plans for more stores in China and a move into India and South Korea in the near future.
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