The total cost of solar has been declining for over a decade now. The major driving force in the past for this has been the cost of panels declining. Recently though, the decline in panel cost has slowed. Despite this, total installed cost in the United States has continued to decline. A new study by the Lawrence Berkeley National Laboratory (LBNL) shows that this decline was due to decreasing soft costs.
“Soft costs” is a general term, though. Where exactly are these costs coming from? A new report, also by LBNL, looks in depth at just one aspect of soft costs: permitting and local regulations. This is significant because an inefficient permitting process can significantly increase the cost of a solar system.
According to the study, permitting and regulations are becoming increasingly scrutinized for their contribution to the total cost of a solar installation. A typical process for installing a PV system may include “government departmental reviews (building, electrical, mechanical, plumbing, fire, structural, zoning, and esthetic), a permitting fee and site inspection, as well as interconnection-based reviews by the local utility.” These costs can vary greatly depending on the local municipality.
Due to this wide variety, efforts are under way to document procedures in local jurisdictions as well as streamline them to reduce costs. The Department of Energy’s Rooftop Solar Challenge is one such initiative, which funds local and state governments, installers, and nongovernmental organizations to reduce administrative costs. Vote Solar has also created an initiative that gives scores based on city-level permitting requirements. These are just two examples of a variety of projects all attempting to streamline the permitting process.
When we look at actual numbers, past estimates have varied widely in estimating the average cost for permitting and regulation. The LBNL study seeks to find a more accurate average cost, as well as how varied that cost is by location. LBNL looked at 13,904 PV installations across 73 cities and 6 states, providing a wider dataset than past studies.
The study found that differences in permitting procedures can lead to a difference of $.18/W between the most-onerous and most-favorable procedures. This comes to a cost difference of $700 for a typical 5 kW installation, not a small number. When the study added additional local regulatory procedures, and not just permitting, price differences grew to $0.64-0.93/W or a cost difference of $2500!
By looking at how our more efficient localities are handling permitting and regulating processes, we can work to narrow this discrepancy and bring costs down. The next step would have to be on a larger scale, however. If we look at countries like Germany, their costs are still significantly lower than in the U.S. Our next logical step will be to look at how they have accomplished this, and then to apply that knowledge to further reduce our costs.