Department of Energy

Finding Solutions to Solar's Soft Cost Dilemma

January 8, 2013

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Brian Webster installs rooftop solar panels on a home in Englewood, Colorado. The Energy Department is working to streamline rooftop solar installations so that its faster, easier and cheaper for Americans to go solar. | Photo courtesy of Dennis Schroeder, NREL.

Brian Webster installs rooftop solar panels on a home in Englewood, Colorado. The Energy Department is working to streamline rooftop solar installations so that its faster, easier and cheaper for Americans to go solar. | Photo courtesy of Dennis Schroeder, NREL.

Interested in going solar? In many ways, this is an ideal time to explore the possibility. The U.S. solar industry is stronger than ever with 2012 annual growth expected to top 70 percent over 2011. Prices for solar hardware -- including modules and inverters -- continue to plummet to historic lows. Still, among all these impressive gains -- a stubborn barrier remains. To truly realize the potential of solar energy in America, we must address the soft costs.

So, what exactly are the soft costs? I’m referring to all the permitting, interconnection and inspection requirements that ramp-up the price of solar installations. In many cases, soft costs account for as much as 40 percent of the total cost of a single installation. Even more troubling, inconsistencies in soft costs requirements -- from town to town and utility to utility -- make it difficult for solar installers to enter new markets.

A new study from Energy Department grant awardee Clean Power Finance found that more than 35 percent of solar installers avoid selling in certain areas because of permitting difficulties. This limits the adoption of solar in otherwise viable markets -- needlessly constraining a robust and growing industry. (I encourage you to take a look at more of the study’s revealing findings here.)

Soft costs are a very real obstacle to the widespread adoption of solar -- but they are not insurmountable. At the Energy Department, we’re investing in projects that are making headway. With our Rooftop Solar Challenge -- launched last February as part of the SunShot Initiative -- we’re empowering communities (22 teams in total) across the U.S. to devise innovative solutions to streamlining solar installation.

After much hard work, the teams are achieving success. In Broward County, Florida -- residents will be able to get a solar energy system permit in just half an hour. In San Francisco -- applications for solar installations 4 kilowatts or less can be submitted and paid for online. Elsewhere, teams are leading the widespread adoption of simplified, standardized permitting and interconnection processes -- making it faster, easier and cheaper to go solar. And while more than 45 million Americans are benefitting from Rooftop Solar Challenge results, it is only the beginning.  

With these promising results in tow, we recently launched Rooftop Solar Challenge II. This second round focuses on scaling up the most effective approaches, while driving new innovations that successfully address soft costs barriers. We are well on our way, and will continue to push until the obstacles related to soft costs are a thing of the past.