Permitting, zoning, financing, contracting, installation, hooking up to the grid, and maintenance — the so-called “soft” costs of powering a home, office or business with solar energy — account for as much as 40% of the total installed cost of a solar photovoltaic (PV) system, according to the Department of Energy’s Rooftop Solar Challenge.
Aiming to cut the red tape and streamline the solar PV system installation process, Solar Freedom Now (SFN), “a grass roots initiative to make solar power more affordable and accessible for all Americans,” on March 4 released, “A Roadmap for Reducing Solar Costs by 50%.” As SFN states in a press release, its “goal is to make 2013 the year of eliminating the paperwork and red tape that burdens solar installations.”
Solar PV Soft Costs & The Permitting Labyrinth
With solar PV hardware costs — the cost of producing solar PV cells and modules — plummeting some 70% from 2009–2012, the Obama Administration, state and local governments, industry participants, and solar energy advocates have all launched initiatives to bring down the soft costs of having solar PV systems installed.
Obtaining permission and approval to have a solar PV system installed in the US involves navigating through a hodgepodge of local, state, and federal government processes and agencies, solar energy advocates assert, SFN among them. Further complicating the process may be the need to gain local community approval.
That’s a familiar refrain and industry tactic, one that’s pretty much axiomatic for those opposing increased government regulation and bureaucratic bloat. That doesn’t mean such claims aren’t valid or obviate the need to consider such criticism in light of the overall nature and effects of the activities involved — in this instance, fostering the transition to a clean energy infrastructure and low-carbon society.
More than 1 in 3 solar PV installers avoid selling solar in an average of 3.5 areas due to associated permitting difficulties, according to a nationwide study of solar PV system permitting released by Clean Power Finance in December, 2012.
“The study, the largest of its kind to date, provides quantifiable evidence of the negative effects complex permitting regulations have on U.S. solar installers and also on the authorities having jurisdiction (AHJs), including municipalities and utilities, who oversee permitting processes.”
Furthermore, Clean Power Finance researchers found that permitting varies widely across the US, typically involving 2–5 distinct agencies, each with their own requirements and processes. While it typically takes just 14.25 hours for workers to install a home solar PV system, nearly 8 work weeks are required on average to navigate the permitting process. The report authors state:
“Because installers typically make a large upfront equipment purchase, permitting processes can tie up thousands of dollars for almost two months or force installers to use credit, both of which can impede installer profitability or force them to pass on additional costs to consumers.
“Clean Power Finance undertook the study as part of preparations for the launch of the National Solar Permitting Database, a free, online database of permitting requirements from across the US that is funded in part by a Clean Power Finance and in part by a Department of Energy SunShot Initiative.”
Rationalizing Regulation Across Local-State-Federal Levels
The “labyrinth” of federal, state, and local regulations and agencies governing activities all across the socioeconomic and environmental spheres are an inheritance from the US Founding Fathers, a compromise solution meant to assure strong local and state voice and representation by counterbalancing a centralized, federal government.
While this is meant to push authority and decision-making down to the local level, imbuing the US political system with diversity, strength, and resiliency, it also can result in a costly and confusing mix of overlapping, and at times redundant and conflicting, regulations and processes – in a word: inefficiency.
All the red tape makes having a solar PV system installed in the US an inefficient, costly, time-consuming, and frustrating process, according to solar PV advocates. Other representative democracies with federal systems of government, though smaller, have been able to streamline the bureaucratic process by rationalizing local, state, and federal regulatory structures.
German homeowners, for instance, pay only half as much as their US counterparts to have solar PV systems installed, Solar Freedom Now (SFN) notes, with research indicating that the large discrepancy “is due to the high ‘soft costs’ in the US – local permitting, complicated incentive documentation, exhaustive interconnection requirements, multiple inspection and all the extra time this red tape requires.”
“In order to lower the price of a solar system, it’s easier to find a way to cut red tape by 20% than to find another 20% in incentives or reduced equipment costs,” SFN co-founder Ron Kenedi asserts. “Eliminating the paperwork and red tape is the industry’s biggest cost saving opportunity.”
Moreover, this paper and procedural blizzard continues to expand despite best efforts to reduce the burden, according to SFN.
“Like a nationwide game of mutant ‘whack a mole’ – regulations and requirements are expanding. With 18,443 cities, 3,273 utilities and 50 states – all of which have some jurisdiction over rooftop solar systems – localized efforts to simplify solar installation paperwork are not scalable across the country. This paperwork is a brick wall impeding the solar industry’s cost reduction goals.”
The Solution: A Single National Policy Standard
What’s the solution? For starters, SFN recommends “the implementation of a single national policy that would grant homeowners the right to install a standardized, under 10 kW (kilowatt) system, using UL-listed components, following National Electrical Code standards, installed by a qualified contractor and subject to a single local inspection.”
“Who wouldn’t want to generate electricity on the roof of their own house? But the costs are kept artificially high because of all the ridiculous paperwork and red tape,” another SFN co-founder, Barry Cinnamon, commented.
“Cutting this red tape is a message that appeals to both sides of the political aisle, and will help the solar industry grow even faster without the need for additional incentives.”
I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.