U.S. big-box retailers are projected to have enough rooftop real estate to support the installation of solar panels that could meet the nation’s estimated renewable energy needs and realize the long-term potential for increased solar use.

The United States has the solar capacity to serve 23 million homes, but that output appears to be barely scratching the surface of its potential. The country could generate 78 times as much electricity as it consumed in 2020 if it utilized the solar potential of its biggest retail buildings, according to reports from the Solar Energy Industries Association and the Environment Texas research and advocacy group.

There are more than 100,000 big-box retailers across the nation, including stores, malls, supercenters and grocers, representing 7.2 billion square feet of rooftop space, most of which is unused, according to Environment Texas.

With a little more than 1% of commercial electricity demand served by on-site solar, there remains significant opportunity for potential growth in solar capacity, and clean energy goals from large Fortune 500 companies such as Walmart, Apple, Target and Amazon are expected to help push the sector to near-record levels this year, according to SEIA.

“We certainly see big-box retailers being open" to solar panels since they have a lot of space and flat roofs, said Ian Pierce, senior vice president for communications at Weitzman Group, a Dallas-based retail real estate brokerage. "As a landlord, you’re always looking for any type of reasonable savings.”

But installing solar panels can be expensive, and those costs have been compounded by recent supply chain constraints. Commercial solar projects cost 14.3% more in the fourth quarter than for the same time in 2020, according to Wood Mackenzie, an energy research and consulting firm. Other barriers to solar usage include variable weather such as winter months and cloudy days, potential zoning issues, and an inability to relocate solar panels to a new location when a business or individual moves.

Even so, the large upfront costs can be offset by long-term savings, said Pierce. Solar panels can reduce electricity bills and require minimal maintenance over their lifetime, which could be at least 20 years.

Wood Mackenzie decreased its near-term forecast of solar installations by 19% in large part because of continued supply chain constraints, price increases and interconnection challenges but still has a positive long-term outlook of U.S. solar installations.

Installing solar on the rooftops of major shopping centers and stores could go a long way in reducing or offsetting the carbon footprint of big-box retailers, analysts say, especially considering the greenhouse gas emissions and pollution that could be traced back to the energy the companies use to power their offices, stores, warehouses and supply chain operations.

Potential annual solar usage at big-box stores were highest in states like California, Florida, Georgia, Illinois, New York, North Carolina, Ohio, Pennsylvania, Texas and Virginia, according to the Environment Texas report.

“The flat, open, sunny roofs of giant grocery stores, retail stores and shopping malls are perfect locations for solar panels," the report stated. “Big box stores and shopping centers could replace half of their annual electricity use by fully building out their rooftop solar potential.”

Texas is one of five states listed in the report as having the greatest potential for emissions reduction, especially if big-box stores realize their full capacity for solar use. A full build-out of solar capacity at big-box stores could reduce 52 million metric tons of carbon dioxide annually — the equivalent of taking 11.3 million passenger vehicles off the road, according to the report.

But for some smaller retailers, solar panels don't make financial sense.

"For small tenants, most don't have the type of roof coverage that make solar cost effective," Pierce said. "We've seen big-box retailers concentrate on solar, with Target reaching more than 500 locations with rooftop solar. And it's not just stores; for their huge warehouses, a major retailer's million-square-foot warehouse roof can create a lot of power with solar."

E-commerce retailers are also jumping in on the action. Amazon notes on the sustainability section of its website that a rooftop solar system can generate as much as 80% of a single fulfillment facility's annual energy needs, "so that's at a point where it becomes cost-effective," Pierce said.

Ikea, the Sweden-based furniture retailer with several big-box locations across Texas, has committed to become “climate positive” by 2030. Part of Ikea’s business model includes use of solar panels. A company spokesperson stated 90% of Ikea’s U.S. stores have rooftop solar panels.

Walmart, meanwhile, committed to solar panels and eco-roofs as early as 2007. The big-box retailer based in Bentonville, Arkansas, completed 380 solar installations as of 2020, with contracts for another 98 solar energy projects in place.

Apple’s headquarters in Cupertino, California, has been powered by 100% renewable energy since 2017. The campus relies on on-site generation from 14 megawatts of rooftop solar panels. Additional power for the campus is provided by the California Flats solar farm in nearby Monterey County.

Cities also have the potential to develop utility-scale solar installations on open land or above parking lots, adding significantly to the clean energy they can provide to the grid that is also more reliable.

“Increasing solar energy capacity will be critical to reduce greenhouse gas emissions and create a more resilient and reliable energy system,” according to a separate report from Environment Texas called "Shining Cities 2022: The Top U.S. Cities for Solar Energy."

Many cities are already installing solar panels on public buildings and “working with utilities to upgrade the electric grid and offer their customers incentives to invest in solar energy systems.”

The city of Houston mandated a new policy this month, requiring all Houston-area homebuilders to either install solar on new construction or build houses that could incorporate panels later. Similar policies are in place in Austin, Texas, and Lewisville, Texas, a Dallas-Fort Worth suburb. Beyond Texas, California updated its building code in 2020 to require all new construction in the state to have solar as an electricity source.

“By setting big goals to grow solar here at home and helping more Texans see the benefits of solar for themselves, we are both setting an example for our peers to follow and ensuring a better future for our community,” said Houston Mayor Sylvester Turner in a statement.

Real Property & Energy Solutions, which provides renewable energy alternatives for property owners, recently installed one of the largest rooftop solar projects in Washington, D.C. The installation at a 54,000-square-foot industrial property in D.C.’s Brookland neighborhood features 2,100 solar panels generating enough energy to power 150 homes annually. The panels also offset 1.8 million pounds of carbon dioxide emissions per year.

This is Real Property & Energy Solutions’ first rooftop solar project. The challenge is trying to adapt its rooftop solar program to other neighborhoods or commercial and retail properties.

“The first thing you have to do is find a roof,” said Ryan Fauquier, director of building automation services at Real Property & Energy Solutions.

Once a location is identified, the building’s owner has to agree to go forward with solar panels. The real work starts once permission is secured. All parties involved must secure proper permitting, work with the utilities, and work with city officials.

A building’s age and design could be a stumbling block for solar panels. The rooftops of some buildings might not have the capacity to support the weight, though installation practices such as anchoring could be a workaround.

Another issue is future tenant use. A retailer, for example, might commit to a 10-year lease at a specific property and commit to rooftop solar panels there. When that tenant's lease is up and a new tenant occupies the space, the solar panels might not be part of the new company's business plan.

It could take a few years to see the net benefits of rooftop solar panels, Fauquier added. The size of the solar project, where it's located — Southwest versus Pacific Northwest, for example — and incentives also factor in to how long it takes to see tangible benefits, but retailers and commercial property landlords would eventually see a return on their investments.

"Generally it's a year one cash flow positive for the owner of the system," with incentives, Fauquier said. He added that if you don't have those incentives, oftentimes it'll take a few more years — 5 to 10 years — to get your" return on investment back with these systems, which generally last 20 to 25 years.