With more than 2,200 stores across North America, the world's largest home improvement retailer is known as the DIY headquarters. But the company is also working hard to make some improvements of its own; namely, finding new ways to more cleanly power its facilities.
Like many large companies, internal competition for funding can be stiff. So when Home Depot established significant 2020 renewable energy targets back in 2015, the retailer's Energy Team set out to meet them in the most cost-efficient way possible.
By working with Edison Energy, the team identified onsite solar, community solar, and offsite wind as viable options to help more cleanly power facilities. Internally, they also identified fuel cells to include as part of the strategy. These projects were chosen based on pricing, development timelines, and execution risk.
The key to success was how these projects could be financed.
For rooftop solar and fuel cell projects, the Energy Team leveraged a type of financing called a third-party power purchase agreement (PPA). A PPA is an arrangement where a non-utility owner of a distributed generation system sited on the premises of a retail electric customer (like a solar array on a store roof) sells the electricity generated by the system to that retail electric customer, typically at a competitive price. They also pursued virtual PPAs, financial contracts (as opposed to contracts for power) to buy power typically from offsite, larger scale renewable sources – in Home Depot's case, wind.
These market options allow Home Depot to invest in renewable energy without needing any additional capital or internal resources to install and maintain the system. In this case, the company could buy power from a company that would handle all aspects of getting the project up and running, including financing the project.
Home Depot employs a "dual-track" approval process. This means that to get projects approved, the Energy Team needed buy-in from both the Operations and Finance Teams. They sought out support from multiple departments within each side of the company, like Financial Planning & Analysis and Treasury.
While the financing options detailed above meant they weren't seeking approval for capital, the team still needed to explain the PPA project structures and their implications, as well as technology types to get sign off. Internal presentations included projected benefits and costs and most importantly, projected savings.
- As of 2017, community solar projects resulted in 6.8 megawatts (MW) iof operational capacity, 8.2 MW under contract, and an immediate savings of approximately 20 percent compared to current rate tariff.
- As of 2017, offsite wind 62 MW of utility-scale wind transactions.
- Home Depot now deploys more than 15 MW of onsite solar at 50 stores across fives states and the District of Columbia.
- At 180 stores collectively, they've deployed 36 MW from fuel cells, producing 90 percent of the electricity used by a store on an annual basis.