RMI charts pathway for reducing PV soft costs

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PV ‘soft’ costs account for more than 50% of total installed residential costs and over 40% of commercial costs. RMI has released a report that examines how to substantially reduce these ‘soft’ costs over the next eight years.

Rocky Mountain Institute (RMI) and the National Renewable Energy Laboratory (NREL) have released a report that examines how to substantially reduce PV ‘soft’ costs over the next eight years. Non-hardware costs, so called ‘soft’ costs, have become a major driver of U.S. solar PV system prices, accounting for more than 50% of total installed residential costs and over 40% of commercial costs. The report, named Non-Hardware ‘Soft’ Cost-Reduction Roadmap for Residential and Small Commercial Solar Photovoltaics 2013-2020, has been funded by the U.S. Department of Energy’s (DOE) SunShot Initiative.

According to the report, in 2010, PV soft costs in the U.S. totaled $3.32/W for 5kW residential systems and $2.64/W for small commercial systems (250 kW and less), representing approximately 50% of the total installed residential PV system price ($6.60/W) and 44% of the total installed small commercial system price ($5.96/W). The SunShot Initiative aims to reduce the installed-system price contribution of total soft costs to approximately $0.65/W for residential systems and $0.44/W for commercial systems by 2020, with total installed system prices of $1.50/W and $1.25/W, respectively. 

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RMI’s report charts a pathway to achieve SunShot soft cost targets by detailing the efforts required to reduce these costs in four ‘soft’ cost areas: (1) Customer acquisition; (2) permitting, inspection, and interconnection; (3) installation labor; and (4) financing. According to the report, residential installation labor is facing the most uncertain near-term path toward roadmap targets.

Jon Creyts, program director at Rocky Mountain Institute, commented: “Even in light of drastic solar panel cost reductions over the past four decades, rooftop solar systems in the U.S. still are not economically competitive for the vast majority of commercial and residential customers. Soft cost reductions represent a major challenge and opportunity for stimulating SunShot-level PV deployment in the United States.”

The roadmap leverages proven methodologies adapted from the semiconductor and silicon PV technology industries, and offers comprehensive findings based on market analysis and interviews with solar industry soft cost experts –including financiers, analysts, utility representatives, residential and commercial PV installers, software engineers, and industry organizations– to identify specific possibilities to reduce costs. 

The report is the first of a series that will track soft-cost reductions and quantify the impacts of innovations. Future work will elaborate and refine soft-cost benchmarks, cost-reduction strategies, and the distinctions among the country’s geographically diverse PV markets with the goal of tracking and helping enable progress toward the SunShot cost-reduction targets of $0.65/W for residential systems and $0.44/W for commercial systems by 2020

“RMI’s vision of an affordable, equitable, low-carbon, and reliable electricity system relies heavily on electricity produced from distributed solar PV,” said Dan Seif, a principal at RMI and a co-author of the report. “To make the pace of change required by this vision a reality, these soft costs, in both cost per watt and cost of capital, need to come down – fast.”

NREL and RMI are facilitating an industry-driven road mapping initiative, utilizing ‘working groups’ to lower PV soft costs and overcome market barriers. The kickoff meeting will be held immediately prior to Solar Power International on October 21, 2013 in Chicago, IL.

RMI’s entire report can be viewed here