Walgreen Testing Energy-Saving Ideas For Its Stores (NYSE:WAG)

walgreensThe Walgreen Company keeps seeing the consumption of power at its stores inching up. To explore options to significantly reduce its electricity use, the company is building an experimental “net zero energy store” just north of Chicago. The company is hoping that the experiment will uncover a way for its stores to produce more energy than they consume.

Menno Enters, Walgreen director of energy and sustainability, said, “We’re just like most American homes where we have become more reliant on servers, computers and monitors. We need to reduce our electricity consumption.” While the company cannot significantly reduce its electricity use in all stores immediately, it is taking steps in the right direction to curb energy usage in the future. At the store under construction in Evanston, Ill., the alternative energy equipment installed includes more than 800 solar panels on the roof, two 35-foot wind turbines and a geothermal energy system beneath the foundation of the store.

Estimates from the building planners and engineers hired by Walgreen state that the net zero store will use about 200,000 kilowatt-hours of electricity annually while generating about 256,000 kilowatt-hours during the same period. The net zero experiment is part of the company’s overall sustainability plan to reduce energy use by at least 20 percent by 2020 across its more than 8,000 stores. The goal is also the target of the Department of Energy’s “Better Buildings Challenge” initiative, established in 2011 by President Obama.

Mr. Enters said, “There are a lot of other retailers that consume less energy per square foot — when you think of a clothing store — but Walgreen does sell it all, so it makes a net zero store much more challenging to pull off. If Walgreen can do this, a lot of other retailers can do this.” Walgreen has recently expanded its sales items to include fresh salads, Redbox DVD rentals and digital photo scanners, among other products. The cost of building the new store will be about twice that of a typical new store, however, executives expect to recoup the extra costs from reductions in the store’s energy use, tax credits and rebates from utility companies.