Why more U.S. companies are generating their own power

The number of on-site electricity generating units used by U.S. companies is soaring.

From technology companies like Google and Apple powering their data centers with solar panels and wind farms to retailers turning to rooftop solar and biogas to power their big box stores and distribution centers, the number of U.S. companies generating their own energy on-site is soaring.

According to Wall Street Journal, since 2006 the number of electricity-generating units at commercial and industrial locations has quadrupled from about 10,000 to 40,000. The strong growth can be explained partly by the falling prices of solar panels. Take Walmart, for example:

Since 2007, when the first solar arrays went up on its store roofs in California, the installed costs of Wal-Mart Stores Inc.’s solar systems have dropped from $6 or $8 per watt of capacity to about $3.50 per watt, said David Ozment, the company’s senior director of energy management. He said he expects the retailer to be paying as little for solar power as utility power “in less than three years,” opening the floodgates to solar expansion.

Even though on-site electricity generation accounts for about 5 percent of U.S. electricity production, a trend towards a more distributed electricity grid is challenging the current business model for utilities. And as prices continue to fall for solar panels and other energy sources it looks like utilities will be forced to innovate.

Read more: Wall Street Journal

Photo: Flickr/Walmart Corporate

This post was originally published on Smartplanet.com