Home Depot’s Wind Power Products Add to Renewables Line Up

by Trefis Team
+8.87%
Upside
128
Market
140
Trefis
HD
Home Depot
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Home Depot (NYSE:HD), the world’s largest home improvement retailer, is expanding its wind power solutions for homes by carrying Southwest Windpower’s small wind turbine in its stores in six states across the U.S. [1] This move comes after Home Depot’s partnerships with other suppliers of  renewable energy products for homes such as Sunforce, BP Solar and Phono Solar. [2] Home Depot competes with players like Lowe’s (NYSE:LOW), Builders FirstSource (NASDAQ:BLDR), Sherwin Williams (NYSE:SHW) and Sears (NASDAQ:SHLD).

Alternative Energy and Green Technology Initiatives

We estimate building materials, lumber and millwork division contributes approximately 21% of our $36.57 price estimate for Home Depot’s stock — a 5% premium over the market price.

Home Depot offers an extensive range of alternative energy and green technology solutions that include solar home products, LED lighting products, efficient appliances and insulation products. Federal and State measures to develop renewable sources as well as greater awareness to enhance energy efficiency in homes are prime factors driving sales in these segments.

Last year, Home Depot received a significant boost through Senate’s energy measures, which allocated $5 billion in rebates for home owners who upgraded to energy-efficient insulation, windows and heating and cooling equipment. [3] The incentives included up to $8,000 in rebates, in addition to lower energy bills, for customers who invested in these measures.

This year President Obama announced additional efforts for a 20% increase in the energy efficiency of commercial buildings by 2020. [4] In addition, states across the U.S. are offering various incentives such as tax credits to encourage the adoption of solar and wind power products.

These products would fall under electrical and power products that are included in Home Depot’s plumbing, electrical and kitchen division, which we break out as a separate driver of our forecast.

Wind Power Products for Homes

Home Depot is presently offering Southwest Windpower’s turbine in California, Idaho, Nevada, Texas, Utah and Wyoming. The equipment should be installed on land with a suitable wind resource [5] and will allow owners to feed electricity back to the grid to help customers offset electricity costs. The Southwest turbine is rated at 2.4 kilowatts and can generate up to 450 kilowatt hours a month and comes with software to track the performance of the turbines in real time. [1] [6]

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Notes:
  1. Southwest Windpower product hits Home Depot, Phoenix Business Journal [] []
  2. Alternative Energy Solutions, Home Depot []
  3. Pickens, Home Depot Win in Senate’s Energy Measure, Business Week []
  4. Better Buildings, US Department of Energy []
  5. Estimating Your Wind Resource, EERE []
  6. Home Depot’s latest small wind deal, CNet []
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