The Solar Energy Industries Association and The Solar Foundation Aim to Bring Down U.S. Solar Soft Costs

So-called “soft costs” continue to account for a rising proportion of total installed solar energy systems costs in the U.S. That has led the U.S. Solar Energy Industries Association (SEIA) and The Solar Foundation (TSF) to launch the Solar Automated Permit Processing (SolarAPP) initiative.

The soft costs associated with installing a residential or non-residential solar photovoltaic (PV) system in the U.S. continued to decline in 2017, contributing to a decline in overall installed systems costs. The U.S. national median cost of installing a residential solar PV system came in at US$3.7 per Watt in 2017, down US$0.2/W or 6 per cent from 2016. The corresponding, national median cost for small, non-residential systems installations less than 500 kilowatts (kW) was US$3.1/W, down US$0.4/W or 11 percent, while the national median installed cost of installing a large, non-residential system was US$2.2/W, down US$0.1/W, or 5 percent, according to Lawrence Berkeley National Laboratory’s latest, annual “Tracking the Sun” report.

Nonetheless, it’s still more expensive to equip your home, business or tax-exempt organization with a solar energy system in the U.S. than it is in other major national markets. The soft costs of installing a solar PV system – customer acquisition, permitting, inspection, interconnection to the electric grid, installation, taxation and system financing – are a major reason why, Berkeley Lab highlights in its report.

Infographic: U.S. Solar Soft Costs Breakdown
Image: courtesy of U.S. Department of Energy

“Reforming the solar and battery permitting process is one of the most significant steps our country can take to making solar more affordable for all,” Sunrun CEO Lynn Jurich commented upon the launch of the SolarAPP initiative. “There is a patchwork of inconsistent permitting procedures and standards across the U.S. and our customers pay the high costs of navigating this system. We have an opportunity to help the industry invest in a million more solar roofs over the next 5 years from the savings by making the permitting process faster, while ensuring safety and reliability for all.”

Soft costs and international solar energy installation cost comparisons

Falling solar PV module prices account for approximately 46 percent of the decline in U.S. installed residential and non-residential solar PV system costs over the long-term – an average, annual percentage decline of 6 percent for residential, 8 percent for small, non-residential and 11 percent for large, non-residential systems from 2000 through 2017, according to Berkeley Lab’s 2018 Tracking the Sun report. Reductions in inverter prices account for another 12 percent. Other “balance of system” and soft costs account for the remaining 42 percent.

Installed Price, Module Price Index, Inverter Price Index, and Residual Costs over Time for Residential PV Systems
Installed Price, Module Price Index, Inverter Price Index, and Residual Costs over Time for Residential PV Systems | Click here to view the full-size chart. | Source: Berkeley Lab’s 2018 Tracking the Sun report

Just over 40 percent of the long-term decline in balance-of-system and soft costs, could be attributed to growth in residential system sizes and module efficiencies, the former being more dominant than the latter, the report authors note. Furthermore, the reduction in aggregate hardware costs for residential PV from 2016-2017 equates to about half of the decline in national median installed price for residential PV systems. “That implies that the remainder is associated with falling soft costs,” Berkeley Lab’s report authors point out.

That said, soft costs can account for as much as 64 percent of the total cost of installing solar PV systems in the U.S., according to the U.S. Dept. of Energy. Continuing declines in solar soft costs will be essential in order to sustain the downward trend in U.S. total installed solar PV systems costs, Tracking the Sun’s authors highlight.

“Given the limits to further reductions in module and other hardware component prices, continued reductions in soft costs will be essential to driving further deep reductions in installed prices. Unlike module prices and other hardware component costs, which are primarily established through global and national markets, soft costs may be more readily affected by local policies — including deployment programs aimed at increasing demand (and thereby increasing competition and efficiency among installers) as well as more-targeted efforts, such as training and education programs,” they write.

Comparison of Installed Prices in 2017 across Countries (Pre-Sales Tax/VAT)
Comparison of Installed Prices in 2017 across Countries (Pre-Sales Tax/VAT) | Click here to view the full-size chart. | Source: Berkeley Lab’s 2018 Tracking the Sun report

Making apples-to-apples comparisons across national borders poses a thorny problem, but studies conducted by Berkeley Lab and others have shown that soft costs, in particular, tend to be higher in the U.S. than in most other markets, Tracking the Sun’s authors point out. Installing a system in Australia typically cost the equivalent of around US$1.8/W in 2017 – half the national median price in the US, for example, according to the study. Installed costs were even lower in Germany, where the 2017, all-in cost of installing a residential or non-residential solar PV system was US$1.5/W.

SolarAPP: A bid to streamline solar soft cost procedures and processes nationwide

Regulatory and other government agencies at the state and federal levels have been working to streamline the various bureaucratic processes and documentation associated with having a residential or non-residential solar PV system installed in the U.S. SEIA and TSF aim to give these initiatives a boost with the SolarAPP initiative.

According to SEIA, the permitting and inspection process adds about US$1.00W per watt – approximately US$7,000 in direct and indirect costs – to a typical residential solar energy system installation. An automated, rules-based, national standard permitting and inspection process, SolarAPP is intended to significantly reduce solar soft costs by streamlining these processes.

SolarAPP features the following solar soft-cost reforms:

  • A safety and skills training and certification program that allows residential and small commercial solar and battery storage installers to attest that their projects are compliant with applicable codes, laws, and industry practices, thus eliminating the need for a traditional multi-step permitting process;
  • A simple, standardized online platform that will be provided to local governments at no cost, to “register” and automatically screen qualifying systems for local government authorities;
  • A list of established equipment standards and/or certified equipment for solar and storage projects installed through the proposed process;
  • The creation, or refinement, of system design standards for qualifying solar projects;
  • A model instantaneous permitting regime for home and small-commercial solar and battery storage systems installed by certified installers and contractors;
  • A program administrator to oversee and implement the plan, including providing technical assistance to state and local jurisdictions and utilities.

“The goal is to make solar permitting more straightforward, and more routine, while at the same time maintaining the safety and reliability that U.S. solar projects are known for. SolarAPP will cut unnecessary red tape, while saving Americans thousands of dollars. By making the process of going solar more efficient, both our companies and their customers win,” said SEIA’s president and CEO Abigail Ross Hopper.

“An automated solar permitting process will reduce unnecessary costs and give Americans more freedom to choose how they meet their energy needs,” added Andrea Luecke, president and executive director at The Solar Foundation. “With this plan, we have a clear path forward to make solar installations even more affordable and widespread.”

Taking a pragmatic approach

SolarAPP’s takes on greater significance amid a backdrop of decreasing U.S. government and utility solar energy incentives and increasing international trade tensions, more specifically the Trump administration’s imposition of a global duty on imports of silicon-solar PV cells and modules.

“Cash incentives (i.e., rebates and performance-based incentives) provided through state and utility PV incentive programs have fallen substantially since their peak a decade ago, and have been largely phased-out in many key markets,” Tracking the Sun’s report authors point out. “Among the five largest residential state PV markets in our sample, for example, the long-term decline in cash incentives has offset between 67 percent and 100 percent of the corresponding drop in installed prices.”

SEIA and TSF are taking a pragmatic approach in working to see SolarAPP through to fruition, explained Justin Baca, SEIA’s vice president of Markets and Research.

Our goal is to get as many authorities having jurisdiction (AHJs) on board as possible using the same standardized and streamlined system. The goal is to provide a thoughtful and easy way for AHJs that have burdensome, or no, systems in place to adopt a vetted system that improves efficiency and lowers costs while maintaining safety and reliability for all stakeholders.

— Baca told Solar Magazine.

The two solar industry organizations have been working with SEIA member companies that represent a majority of the U.S. distributed generation (DG) market, according to Baca. Industry response to SolarAPP has been overwhelmingly positive since SEIA and TSF launched the initiative at the 2018 SPI (Solar Power International) conference and exhibition in Anaheim, California Sept. 24 week.

“Everyone knows this system can be improved. We currently have engagement from all of the major national residential developers, as well as several major suppliers, including manufacturers of racking systems and modules. Through their vast experience working with different AHJs throughout the country, we’re able to glean from them what works and what doesn’t. That is critical. Also critical is that all these companies are members of SEIA and, therefore, are supporting the effort financially,” Baca said in an interview.

Reducing solar soft costs of central importance

Solar Magazine: Solar Industry News and Insights

Baca explained that SEIA isn’t looking to compete with industry participants that already provide the tools and types of services incorporated in SolarAPP. “We want to build off of what currently exists wherever possible and practical,” he said. “The goal is to recognize, enhance and demonstrate the competency and professionalism of contractors to build trust with other stakeholders who are key to success.”

“The Solar Foundation has extensive experience working with local governments to streamline the permitting process and other local procedures, making it faster and more affordable to install solar,” TSF Director of Strategic Initiatives and Partnerships Philip Haddix told Solar Magazine. Haddix cited TSF’s SolSmart program as an example.

TSF has recognized more than 200 U.S. municipalities and counties for their accomplishments regarding reducing obstacles to solar energy development via the SolSmart program, Haddix pointed out. “We now plan to use our experience and technical expertise as a leader of SolarAPP,” he said.

“This [SolarAPP] is of central importance to both The Solar Foundation and SEIA and we plan to dedicate significant resources and staff time. At The Solar Foundation, numerous staff have been involved at some level. Going forward and over the long run, we expect four employees will be spending a significant portion of their time on the SolarApp initiative,” Haddix said.

“We’re all working extra hours because we see this effort as vital to delivering quality, affordable solar in the U.S., but we need more resources,” added SEIA’s Baca. “Companies interested in seeing success here need to make sure they’re members of SEIA (the national trade association for the solar industry) in addition to their SEIA state affiliate and that they register their interest in this campaign,” Baca said.

TSF is confident SolarAPP’s goals will be achieved. “Through our work on other programs such as SolSmart, we know that many local governments are already setting the example by adopting streamlined, low-cost permitting approaches for solar projects,” Haddix said.

We’re now calling for a standardized permitting approach at the federal, state, and local levels. We’re confident that this will reduce permitting times and dramatically lower costs, without sacrificing either safety or reliability. We will begin with outreach to a small number of jurisdictions and then expand, with the eventual goal of getting most jurisdictions on board.

* Cover image: PennFuture


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