In its winning bid for a $3 million U.S. DOE grant to create an online database of local permitting standards, a Clean Power Finance (CPF) analysis estimated it could cut the balance-of-system (BOS) non-hardware (i.e., soft) costs of installing a five-kilowatt (DC) residential rooftop solar system by more than $0.22 per watt.
“First-order effects” of a National Solar Permitting Database would get the initial $0.22 per watt through:
- $0.03 per watt from administrative cost cuts (filling out applications, scheduling inspections, inspection and interconnection wait times);
- $0.05 per watt from error, resubmissions, and rework cuts;
- $0.04 per watt from improved project flow (efficiently scheduled labor, decreased idled employees, decreased overtime);
- $0.04 per watt from improved cash flow (better inventory and project management, decreased credit use for supplier payment);
- $0.06 per watt from increased customer acquisition (fewer cancellations, more referrals, decreased sales personnel time on project flow).
There would also be, according to CPF’s analysis, “second-order effects” that, though harder to put a number on, would be “significant.” Online tools reduce barriers to entry for would-be installers, stimulating the competition that likely would cut costs from $200 to $3500, according to the CPF analysis, depending on the jurisdiction’s permitting regime, sun resource and pre-existing market.
Even less quantifiable, CPF’s analysis concluded, were the significant savings as: 1) manufacturers and distributors draw on the information in the database to better manage their supply chains; and 2) Authorities Having Jurisdiction (AHJs) use the database to reduce their own administrative costs and pass those savings on to installers and homeowners in the form of lower charges and fees.
The numbers are based on an analysis of its 1,350-installer customer base, on a Sunrun whitepaper which concluded the estimated cost of permitting for an average residential rooftop solar system was $0.50 per watt, and on other investigative efforts.
“Getting a permit is the one single choke-point in the process of getting a system done,” CPF CEO Nat Kreamer said. “But the permit review and payment process should be online and automated.”
“Every municipality does it slightly differently,” Kreamer said. It is “regulatory friction that is driving solar companies crazy today. It’s time consuming, it’s costly and it makes for a bad end-consumer experience.”
Consumers want solar to be easy and quick: “Buy today, get it installed tomorrow, start saving right away.” To do that, Kreamer explained, “we’re going to have to get the permitting barrier broken down. But we’re not going to get municipalities to change the rules. That’s where hope runs into reality.”
But, he said, “we can solve it with software.” All jurisdictions’ requirements can be assimilated into a single database. “You put in a ZIP code; it will tell you the permitting requirements; you upload your plans to the permitting authority, pay for it online and get an approval back.”
Such a streamlined permitting process prevents it from being a burden on overworked bureaucracies and prevents it from being “the rate-limiting step” that slows a solar installer’s business growth, reduces the installer’s volume and leads to higher installation costs and dissatisfied solar customers.
The DOE funding will help CPF avoid the first pitfall of such an ambition: inadequate resources. It will also, Kreamer believes, help it avoid the second pitfall: inadequate data. By drawing on previous efforts, Kreamer hopes to avoid the third pitfall: inadequate stakeholder buy-in.
The CPF database will draw on DOE’s earlier Solar America Cities program and its Solar America Board for Codes and Standards (Solar ABCs) program. It will improve on state efforts to streamline and standardize permitting like those of Colorado and Vermont, and municipal efforts like those of the cities of New Orleans and Portland. And it will draw lessons from previous software like OnGrid and Simply Civic.
Burnham Energy, a national service provider for solar installers, as well as AHJs from across the country, have acknowledged the value in an attack on soft costs by contributing data. Political advocates VoteSolar and the Governor’s Office of California are collaborating.
The industry is beginning to respond. Major players who have signed on include Paramount Solar, B.E. Solar, Sunwize Technologies and PvPermits. Real Goods (NASDAQ: RSOL) turned over data in 5,500 ZIP codes. Talks with REC Solar, Verengo, Vivint Solar, Sungevity, Next Step Living, SolarCity and others are ongoing.
Participation by the biggest installers will be crucial because they have access to local bureaucracies and information that incline them to leaving in place the competitive advantage they get from the current chaos.
Pushback could also come from AHJs habituated to imposing the costs of the present system on installers or homeowners and disinclined to incur the costs of change.
Utilities will also likely see little to gain by making their rate information transparent, CPF’s analysis for the DOE concluded. To make inroads on soft costs, the National Solar Permitting Database will catalogue utility requirements.
Tags: administrative cost, ahjs, applications, authorities having jurisdiction, b.e. solar, balance of system, barriers to entry, bos, burnham energy, california, cash flow, clean power finance, colorado, cpf, customer acquisition