Solar Energy Friendly Communities Help Mitigate Soft Costs
- July 30, 2013
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Despite the solar industry’s best efforts, solar power remains unavailable to hundreds of communities across the country. The simple question is: Why?
The answer lies in two words: soft costs.
The soft costs of solar installations refer to the costs of customer acquisition, which includes permitting, inspection, interconnection, third party-financing and other indirect costs. According to research by Clean Power Finance, more than one-in-three installers avoid selling solar in an average of 3.5 jurisdictions because of the time associated with completing these projects as a result of the soft costs.
According to a National Renewable Energy Laboratory (NREL) report, these soft costs account for 50-60% of the price of going solar. Solar installers may have to go through a long, drawn-out process with high fees, multiple inspections, heaps of unnecessary paperwork and more before they can even begin to install the solar system. In fact, according to further research by Clean Power Finance, an average installation requires nearly eight weeks to be processed by all relevant jurisdictions, while staff hours required in order to install the solar is just over 14 hours on average.
The issues lie in an extremely poor method of organization across the board. In the U.S., over 18,000 municipalities are setting their own requirements for permitting, which results in requirements that are dramatically inconsistent in every city. The Department of Energy has decided that streamlining the various processes across the nation would bring down the cost of solar, and thus, enable solar power to enter many more communities than are currently being provided for.
“These soft costs present significant opportunities for further cost reductions and labor-productivity gains,” said NREL Solar Technology Markets and Policy Analyst Kristen Ardani.
Solar Friendly Communities (SFC) and Clean Power Finance are two groups that have taken up the DOE’s challenge and shown initiative in improving the organization of municipalities.
SFC is a project funded by the DOE’s SunShot Initiative, and led by the Colorado SEIA. Its long-term goal is to reduce the cost of solar energy enough so it can be price competitive without subsidies. Communities that apply to be declared a Solar Friendly Community are assessed out of a total of 1600 “solar points” assigned for adopting various policies. Based on their scores, communities are awarded SFC ranks – 700 points warrants the bronze award, 900 points for silver, 1100 for gold, and 1400 for platinum. Once declared a Solar Friendly Community, communities are offered a package including an SFC logo for web use, an award to a selected leader at a public ceremony and publicly announced recognition.
As a result of policies adopted, including posting requirements online, offering low-cost, same-day permits, streamlining inspections and providing a variety of educational material about solar energy to its residents, Denver was recognized as the first SFC in 2012. Since then, many local cities in Colorado have followed—and this is just the beginning. SFC hopes that associations in other states will follow suit and motivate municipalities in their regions to improve organization and streamline their policies.
Another DOE funded group under the SunShot Initiative, created to improve the organization of municipalities to further cost reductions and labor-productivity gains, is the Solar Permitting Database by Clean Power Finance. The free database organizes and simplifies solar permitting processes by compiling information in a single location. The website includes 1,800 jurisdictions, which covers roughly 80% of the U.S. residential solar market.
Solarpermit.org is a crowd-sourced platform, in which the information is provided by various entities. Currently, there are over 400 registered users from over 50 companies in different branches of the industry. The website contains municipality contact information, hours of operation, permit fees, online forms, average permit turnaround time, common application errors and more.
According to Corey Greiger of Soligent, there is a clear correlation between installation companies that use solarpermit.org and higher performers. With solarpermit.org, companies are able to expand their knowledge of the various permitting rules in every location, which will shorten the permit turnaround times and motivate installers to enter communities that traditionally have been absent of solar infrastructure.
Ultimately, reducing soft costs is critical to expanding the solar market. The cost reduction potential with a streamlined process will pull many more customers over the finish line. More municipalities should be working with the SFC and Solarpermit.org to streamline the prohibiting permit process.
Photo Credit: Community Solar Energy Project/shutterstock