In a somewhat unexpected move IKEA has announced its next business venture: democratizing sustainability. The Sweden-based affordable furniture giant recently announced the rollout of Strömma, a subscription-based phone application that allows customers to buy 100 percent renewable energy for their everyday power needs. While the initial rollout is limited to households in Sweden, it is anticipated that international expansion would soon follow upon the pilot program’s success. In fact, IKEA parent company Ingka Group expects that the service will be working in the rest of their markets by 2025.
Unlike your standard agreement with a traditional power company, where home energy consumption is tracked as it is used, the process with Strömma has customers purchasing solar panels along with the subscription. These power purchase agreements allow customers to rent the solar infrastructure in addition to the energy stream, rather than being forced to foot the costs of installing their panels. There isn’t any fear of buying more power than one would need, either, as Strömma allows customers to take any excess solar power they generate and sell it back to IKEA. In theory, users could even turn a profit, depending on energy consumption. Considering home energy use associated with their appliances makes up as much as 20 percent of IKEA’s total carbon footprint, Strömma should be suitable for the company in both a business and environmental sense.
IKEA isn’t the only company to have the idea of leasing renewable energy to everyday customers. The concept of leasing solar panels and power, known as a power purchase agreement, has been a relatively common business practice for power companies in recent years as solar technology becomes more accessible for businesses to install in homes. Under these agreements, customers rent solar panels from the provider, who then fixes the panels to the customer’s rooftop or elsewhere on the property. This allows individuals who cannot afford the up-front costs of permanent installation to still live reap the benefits of solar power.
Rocket, like IKEA, is another corporation making an unexpected journey into the world of clean energy sales. The mortgage company, founded by Cleveland Cavaliers owner Dan Gilbert, uses its patented technology to give financing opportunities for their customers interested in adding solar panels to their homes. It is unclear how this package will compare to Strömma, and whether Rocket plans on offering energy leases to customers without a mortgage, but a few things are clear– Strömma sets itself apart by allowing customers to sell back an energy surplus. Rocket is expected to roll out their service to American customers. Strömma will also be offering renewable power generated by wind.
While the Strömma venture seems out-of-character for a furniture company at first glance, IKEA has taken a variety of sustainability initiatives in recent years. Beginning in 2013, the company started selling solar panels in the United Kingdom and has since expanded that program to another ten international markets. The company is famously working on completing their Climate Positive pledge, in which they seek to halve their absolute greenhouse gas (GHG) output by the end of the decade. To achieve this, IKEA has initiated several programs centered on sustainability, including working for 100% renewable energy along their entire 1600-supplier chain. Beyond this, the company strives to have a 70% reduction in GHG emissions per shipment of materials by 2030. It has a 20-year partnership with the World Wildlife Fund with a focus on improving biodiversity worldwide.