The solar market is a competitive space these days. How can solar companies stand out and make solar more affordable and accessible to a wider consumer base? One of the most noteworthy aspects of the service we offer to customers is the return on their investment in alternative energy technology. The better the ROI, the easier it is to convince solar adopters to take the leap, so any efforts to reduce costs are important.
Hard costs (which include technology and equipment, labor costs, and materials costs - also known as hardware costs) are fixed, so there isn’t a lot of wiggle room when it comes to pricing. Soft costs, however, are another story. These include a variety of areas like marketing and sales efforts, property assessments, engineering costs, and permitting. If a solar company can reduce these costs, they can pass the savings along to consumers and be more competitive without reducing the quality of their work.
Reducing Costs Without Reducing Quality
The good news for today’s solar adopters is that over the last decade the total cost of residential photovoltaic (PV) systems has declined by more than 65%. Hardware costs are responsible for that decline, however. In contrast, as the Solar Energy Industry Association (SEIA) notes, “the soft cost share of total residential system cost has risen from 58% of total system cost in 2014 to 65% today. A primary factor driving this increase is direct and indirect costs associated with permitting and inspection.”
How can we mitigate those costs? Both inspections and permitting are vital aspects of quality PV installations, so it’s important to reduce costs without reducing the quality of the service being provided.
The SolarAPP initiative is providing a technology-driven solution that seeks to lower the costs of permitting and inspections for solar companies and their clients. A collaborative effort led by the National Renewable Energy Laboratory, SolarAPP will “enable standardization of instant permitting processes, evaluate applications for safety and code compliance, (and) offer opportunities to incorporate energy storage.”
The SolarAPP Solution
The goal of the Solar Automated Permit Processing platform (SolarAPP) “is to make solar installation straight-forward and routine while maintaining the safety and reliability of systems.” By lowering the soft costs associated with permitting and inspections, solar providers and their consumers stand to save roughly $1.00 per watt on their solar installation costs, which averages out to around $7,000.00 for a typical residential PV system. There’s an added bonus for solar providers, as the delays caused by the permitting and inspection process contribute to customer loss and unfinished projects.
SolarAPP seeks to “standardized online permitting and interconnection tools; and (facilitate) local implementation of instantaneous permitting for eligible installers on qualifying (i.e., non-complex) solar projects.” This could help ease the decision for many Americans to add solar-plus-storage solutions to their homes.
In order for this process to work, SolarAPP developers are working to establish equipment standards and lists for solar projects, create design standards for qualifying projects, and develop a standardized online platform where solar developers can easily register projects with local permitting authorities and be processed according to local guidelines. Decreasing the costs and delays associated with permitting and inspections also removes a substantial cost barrier for many customers.
Addressing Other Soft Costs
Soft costs have been an industry focus for a decade now, and substantial steps forward include the Department of Energy’s SunShot initiative, which “seeks to make solar energy fully cost-competitive with traditional energy sources and accessible for all Americans.” As part of a five-pronged approach, SunShot “works with state and local governments to improve solar deployment processes, create solar industry training, support data analysis, expand access to capital and accelerate market growth.”
In addition to these efforts, solar providers themselves can make progress in reducing costs from an engineering perspective by using technology to create a more efficient design process and automate certain aspects of their marketing campaigns.
Soft Cost Reductions = Big Savings for Consumers
It should be noted that while concern over soft costs is primarily felt by solar providers, their customers are the beneficiaries of those efforts. By reducing soft costs, we are able to provide the same level of service, craftsmanship, and material quality while lowering the price of our services and increasing clients’ return on their solar investment.
At Solar Design Studio, one of our foremost concerns is to provide the best possible ROI for consumers without sacrificing the quality and longevity of our work. Our engineering practice has the expertise, experience, and access to design technologies platforms to deliver quality engineering, design, and construction documents that enable our clients to accelerate their project installations. We’re excited to see how efforts to reduce soft costs are able to help us create better value for our clients.
We’re glad to partner with solar installers on a consulting basis to discuss industry developments such as those surrounding soft costs. Or, if you have a residential, commercial, or industrial solar project and are looking for an experienced, reliable project partner, contact us today!