Can Wal-Mart save the world?

Diagonally from upper right: Wal-Mart, Wegman's,
Sam's Club, Wilkes-Barre Township, PA

In a comment on my "Fields of Light" entry, Joy wrote this:

Am I the only person in America who remembers when RONALD REAGAN REMOVED THE SOLAR PANELS FROM THE WHITE HOUSE ROOF??? Yes, children, once upon a time this country ENCOURAGED the idea of alternative energy thru tax credits for installing solar panels, etc. Reagan, demi-god of the Republicans, is responsible for DISCOURAGING that sort of wacky idea. His administration was the period when this country took a serious wrong turn, and his Administrations lack of foresight is why we are now beholden to other countries for our energy. Just think how cheap alternative energy sources would be right now, had we continued down the path of developing them 20 yrs ago.

and later followed up with this:

I just did a search for "Reagan removes solar panels from White House" to be sure I hadn't just imagined Reagan's treachery. "A bright vision of solar power emerged in the 1970's, as a patriotic response to the oil embargo. Jimmy Carter's energy plan included a goal of powering 20% of the nation with renewables by the year 2000. The president even put solar panels on the White House. The threat of solar tightened chests in the oil companies, as any free, clean, unlimited fuel source can be sure to do. At this point the oil and gas companies were ready to play hardball. They formed political action committees that contributed almost 3 million dollars to House and Senate candidates with "strong pro-industry voting." In California, Pacific Gas and Electric/Southern California Edison fought hard against the publics rights to own and use solar water heaters. By the late 70's Exxon, Mobil, Arco, Amoco and other oil companies had bought out many of the solar companies and the PV cell patents. Then, none other than former spokesperson for General Electric, Ronald Reagan, was elected president. The Carter solar tax credits ended, the $684 million investment Carter had requested was cut to $83 million, budgets were cut, studies squashed, and researchers fired. Then, adding insult to injury, Reagan removed the solar panels from the White House roof. Denis Hayes, organizer of the first Earth Day and former Department of Energy staffer from the Reagan era says, "It was a clear, calculated campaign by the DOE in the years of the Reagan administration to crush the solar energy program of the federal government, driving many of the most talented people out of the field". Our current president, former oil company executive George W. Bush, supports drilling the Arctic National Wildlife Preserve, supports development of nuclear power, and opposes the Kyoto Protocol." (snipped from http://towardfreedom.com/home/content/view/886/69/)

I mourn for the loss of "The Future" we COULD be living in now, had the nation stuck to its environmentally-friendly energy goals.

Could the country's leading retailer lead us to where Jimmy Carter once tried to get us, on a path Ronald Reagan took us off and no President since has chosen to put us back on?

I have no great love for Wal-Mart. Frankly, I don't even like to shop there, though I find myself doing so more and more often as the contracting economy causes me to value prices over principles. But like it or not, they are the leading retailer in the United States, and they sell a lot of merchandise. And they have a hell of a lot of stores. A hell of a lot of big, flat, boxy stores.

In "Fields of Light" I suggested a future where every big-box store in the nation might feature a roof (and a parking lot) covered in photovoltaic cells*, converting the vast quantities of wasted sunlight that fall onto the roofs (and parking lots) of these buildings into electricity. Now, I'll be the first to admit that that's a tall order. Risky. Expensive. Aside from an eventual return on the investment in the form of lower energy bills - possibly even revenue from the sale of excess generated electricity to the utility companies - what benefit would a retailer stand to get out of this?

Well, goodwill**, for one. Retailers have a certain amount of goodwill from the communities where they locate: they provide jobs, they provide goods and services, they give people places to shop. And people like to shop. But they also compete with existing retailers, and sometimes drive them out of business with lower prices that smaller, locally-based retailers cannot match. Wal-Mart is notorious for this.

Many companies are actively trying to revise their images to appear to be more environmentally friendly. Sometimes this is more than simply image-polishing. Sometimes retailers are trying to make a real change - for sound business reasons in addition to the image angle. I believe that, at least as of a few years ago, Wal-Mart is one of those companies. So a company that is actually doing something that is good for the environment, and is doing it in an obvious way, will score points with consumers in a way that other businesses will not.

Secondly, any retailer who covers the roofs of their stores with solar panels will be leading by example. And if this is spun properly, they will not only be leading other companies, but they can also be leading consumers who will say "Well, geez, if they can make their electric meters spin backwards, maybe I can too!" Wal-Mart primarily sells household goods, not building supplies. But they can branch out, or sell through their Sam's Club warehouse stores.

But solar panels are expensive! And bulky! Well, this is where Wal-Mart gets to use their powers for good instead of evil.

A lot of people think Wal-Mart is evil because of the way it displaces existing retail jobs and replaces them with lower-paying ones at their stores. And that's true, as far as I know. But their real evil comes from what they do to suppliers. Wal-Mart drives its suppliers to supply their products at the price Wal-Mart dictates. Meet that price or your products don't go on the shelves, don't get sold by Wal-Mart. Fair enough. But often, that price is well below what a manufacturer spends to actually produce the product...domestically. So the only way to meet Wal-Mart's price point is to outsource to overseas manufacturers, where manufacturing costs are much lower - resulting in the loss of American manufacturing jobs. (And a consequent reduction in the number of consumers who can afford to buy goods at anything more than the absolute lowest prices.) And sometimes even that isn't enough. And then manufacturers have to cut corners to trim costs wherever they can - often resulting in a reduction in quality. And then the competition - other retailers, other manufacturers - has to follow suit, slashing prices, and costs, and expenses, wherever and whenever they can. Or they go out of business.

Evil. Or business as usual. Depends on your point of view. In a different time, a different place, no one retailer had that amount of control over the price points of goods that it sold. Things have changed. Wal-Mart is big. If you're not selling your product there, you'd better be comfortable with wherever you are selling it. And you can bet that eventually Wal-Mart will offer a cheaper alternative.

Wal-Mart can harness this incredible power to drive down the cost of photovoltaic cells.

Think about it. If Wal-Mart were to decide to cover the roof of every one of its retail stores with photovoltaic cells, how many solar panels would that be? My back-of-the-envelope calculation, starting out with an unknown number of retail stores ('cause I'm too lazy to look it up), an unknown number of square feet on each roof (ditto), unknown electrical demands for a typical Wal-Mart (again, lazy) and unknown electrical generation capacity for each solar panel (lazy lazy), comes up with an answer of "a lot."

Would Wal-Mart pay a lot for those photovoltaic panels? Hell, no. They would use their buying power and their considerable leverage to twist photovoltaic manufacturers to produce panels that are as inexpensive over the long term as possible. The carrot on this stick: whoever could manufacture the panels that would go on the roofs of Wal-Mart stores would get to manufacture the panels that would be sold to consumers through Wal-Mart. (Until a better deal came along, that is.)

But could Wal-Mart manufacture a demand where none exists? Well, yes. That's what marketing does. But this might be getting a boost in the near future anyway, as electrical rate deregulation will quickly cause consumer prices for electricity to spiral to stratospheric heights. And suddenly photovoltaics, which at this point produce electricity that, per unit, is more expensive than other sources, will look like a very good deal.

In summary, Wal-Mart is ideally suited to lead the way toward a revolution in consumer photovoltaic usage.

• It is a leading retailer. Where it goes, other retailers may follow, and what products they utilize, consumers may more readily accept.


• It has the power to drive down prices of photovoltaic cells and have versions made for both their own use and consumer use.


• With its large number of retail stores, it has the footprint to make a real difference.


• A visible commitment to the environment will generate vast quantities of goodwill and attendant opportunities for increased sales and strategic partnerships.


• Finally, Wal-Mart would be modeling a product that it would also be selling to consumers. So not only would Wal-Mart be reaping the benefits of solar-generated electricity, it would also be reaping profits from the sales of photovoltaic systems to consumers.

Maybe.

I just spent the day hanging clothes on the clothesline to dry, transplanting strawberry plants to my house across town, and mowing my mom's lawn with a manual (reel) mower. And all the while I watched a steady parade of gas (or diesel)-guzzling pickup trucks and SUVs drive by. Just how high does the price of gas (and diesel) have to get to convince these drivers to park these behemoths? I'm thinking, much higher than it is now.

Three decades ago Jimmy Carter declared a goal at least as ambitious as Kennedy's goal of having a man on the Moon by the end of the 1960s: to have 20% of the nation powered with renewables by the end of the millennium. Twenty-two years ago Ronald Reagan drove a stake into the heart of that plan. Since then we have continued along a stupid path of increasing dependency on fossil fuels, an addiction that is driving the current occupant of the White House to move to open up wildlife refuges to oil drilling in an effort to wring out some fraction of the oil our nation demands. The solar panels came off the roof of the White House in 1986. We turned away from the path that led towards increased utilization of renewable sources of energy. No one has put us back on that path yet.

Can Wal-Mart do it?

*I'm focusing primarily on photovoltaics, because I have more experience with them. I have little knowledge of the use of solar panels for directly heating water. Both kinds of solar panels were used on the roof of the White House.

**I am using this term in the colloquial sense, not necessarily in line with the technical definition used by Economists.

Postscript: I worked in the photovoltaic industry from March 1990 through August 1991. My knowledge of the state of the art is a little rusty. To learn more about what's going on in photovoltaics today, a good jumping-off point is Edgar A. Gunther's blog GUNTHER Portfolio: Photovoltaics, Solar Energy, Energy Policy, and Diversions.