Solar power installations involve substantial sums of money, lots of electricity, and placement on homes and commercial buildings. This means that installation projects are drawing increasing attention from several types of governmental agencies: financial regulators, building inspectors, fire marshals, zoning and design review boards, and probably others, as well.
Today, interactions with these groups can be frustrating for array designers, installers, financiers, owners and operators, largely because this is new territory for government. It’s akin to car ownership or electrification in the early 1900s -- no one had figured out who was in charge, or how much oversight was needed to maintain public trust, safety and aesthetic standards. Times like that are ripe for confusion, especially since technology tends to move faster than public agencies.
This is an important topic for solar -- the costs of permitting, inspection, interconnection costs and other “bureaucratic” items can run to nearly a dollar per watt today. Reducing these costs, while maintaining appropriate controls, will be a step toward grid parity, and also toward fully integrating this important renewable energy source into society.
If we can address these issues in a concerted manner, we should be able to cut compliance costs by 50 percent or more over the next few years -- and also create a framework that sets proper expectations and protections for the financial, technical, and operational sides of the solar community.
To break the discussion into manageable pieces, I’m going to follow the lead of the industry group SolarTech, which has identified three areas for improvement through innovation: policy, business, and technology.
From a policy perspective, solar’s two biggest issues are, arguably, safety and grid integrity. We don’t want people getting hurt or buildings being destroyed by solar technology, and we don’t want the nation's electrical infrastructure made unstable by millions of new distributed generation sources.
On the safety side, we’re making progress, with the National Electrical Code addressing solar issues, but this is an area where technology outpaces code development. Moreover, many decisions get made by local building inspectors. While the vast majority of these people are professional and scrupulous, their decision-making process is unavoidably ad hoc, and therefore not subject to formal review, reporting, or evolution. And faced with unfamiliar technology, particularly one that involves large quantities of electricity, it's understandable that they would err on the side of conservatism.
We'd like to see municipalities have a systematic means of learning from one another, including a central database of decisions whose wisdom could be made available to all. While final decisions need to be made locally, there also needs to be a way to avert the worst-case scenario of a nearly complete installation being denied a permit due to differing code interpretations.
On grid integrity, things are a bit easier, as there is a relatively small number of utility companies. But their existing infrastructure is geared to buying wholesale and selling retail. Solar, like other grid-tied renewable sources, requires purchasing from a growing number of individual "small scale" providers, with power-generation capabilities that are "unreliable" relative to other sources. Utilities are being asked to add more and more of these distributed generation systems to their grids, with each request tugging on manpower resources that are already stretched thin ensuring reliable power for all.
We need to identify a framework for a better partnership where the utilities can recognize the value of the investment being made in their infrastructure by the public in the name of energy independence. We need to start a conversation about how to provide clear guidelines so that these investments and installations can be done in a way that does not simply escalate cost and uncertainty for all concerned. Making the process more cumbersome thwarts progress and does nothing to help achieve our collective goal of energy independence.
In its earliest days, the solar sector focused on residential-scale installations for people who cared more about off-grid living or positive environmental impact than balance sheets -- and “financing” was someone writing a check. Today, solar transactions are complicated beasts, involving multiple investors, discount rates, tax credits, lockup periods, and an alphabet soup of FITs, PPAs, ITCs, RPSs and RECs. Each one of these acronyms represents some entity (a person, company, agency, etc.) with procedures and regulations that need to be met for them to bless your solar project. In some cases, that blessing comes in the form of a check, in other cases as permission to operate, but in all cases it comes with a cost.
Across the board, uncertainty is the mother of destruction. It increases the perception of risk, and drives up costs for financing and insurance -- and that feeds directly into the LCOE calculation.
This, therefore, is a plea for business innovation that improves transparency and accountability. Just as members of the solar community collaborate on technical standards, we should also collaborate on business standards and best practices. Finding common pre-competitive ground will help calibrate expectations all the way up and down the value chain, and make incremental reductions in risk perception and cost. Engineers shouldn't be the only ones working to drive down solar’s LCOE -- executives, lawyers, and accountants need to as well.
To date, technical innovation in the solar sector has mostly focused on efficiency, LCOE, and other first-order matters. But with growing demand for simpler installations that can easily pass muster with regulators and inspectors, technologies will evolve to meet that demand.
One good example: traditional series-string wiring architectures, in which the array's power-bus voltage varies with the amount of sunlight hitting the panels and how the panels interact with one another. This voltage fluctuation causes bus-current fluctuation and the potential for heating and power loss if cabling is undersized. As a result, system designers must scale array wiring for the worst-case scenario, even though it seldom (if ever) occurs, in order to maintain acceptable safety margins and get approval from regulators and inspectors. As new technologies make system operations more predictable, these design problems will disappear, and the inspection and approval process will be simplified.
By the same token, greater standardization and single-sourcing of entire array systems will simplify consumer decisions and make inspectors' jobs easier. There will be less concern about proper system integration, and fewer opportunities for improper or sub-standard components to sneak in. Failure analysis will become more straightforward as a result of more-predictable system operations.
The steady process of addressing and eliminating these roadblocks may seem unglamorous, but the fact is that it works. Cost reductions in this area are just as important as incremental improvements in cell conversion rates and inverter efficiencies.
Looking ahead, we fully expect matured solar energy technology to take its rightful place as a safe, effective part of society -- with clear standards, strict accountability, and a wide range of benefits.
Michael Lamb is the vice president of business development at eIQ Energy.
Note: This post is an adaptation of an eIQ Energy blog series. The full Bureaucracy Blog Series can be found at http://eiqenergy.com/blog/