As the distributed solar market continues to grow, simplifying the application and interconnection process for systems is becoming increasingly important for installers, utilities and regulators in the U.S.
The solar market is expected to more than double in the coming years, from 475,000 solar energy systems interconnected at the end of 2013 to a projected 1 million by the end of 2017. According to a recent survey by the Solar Electric Power Association (SEPA), as utilities work to meet this growing demand, they face the common challenges of keeping customers up-to-date on the status of their application, ensuring application accuracy and completeness, and reporting to regulators.
Of the 64 utilities in 25 states across the country that completed the SEPA survey, only 15 percent have optimized their systems to process high numbers of interconnections in short periods of time. A total of 17 percent of respondents are currently able to process interconnection applications online. Of that 17 percent, the majority can complete the approvals twice as fast as those that still require customers to fill out paperwork -- in an average of two weeks versus four weeks.
“By streamlining, utilities may be able to lower their internal resource needs [dedicated to the interconnection process], which will save both time and money on the utilities’ part,” said Becky Campbell, senior research manager at SEPA.
“From the industry's perspective, streamlining the interconnection process can help speed up the overall growth of solar and help installers lower the cost of customer acquisition," she added. "So instead of focusing on spending time on these processes, they can be out trying to attract new customers.”
The hardware costs of installing solar have rapidly declined in recent years, while “soft costs” -- solar inspection, interconnection, permitting, etc. -- have become the largest cost factor in most residential installations. A Department of Energy report from 2012 found that bottlenecks in the permitting process can cost consumers up to $2,500 on a 5-kilowatt rooftop solar system. According to the Lawrence Berkeley National Lab, streamlining the permitting process could cut development time by roughly one month and shave off $1,000 or more on residential solar installations.
Moving to an online platform to process interconnection applications is one step that will help utilities, the solar industry and customers save time and money. It will also improve transparency, which has proven to be one of customers’ biggest gripes with the solar installation process.
“Customers need to know what is required of them and when and how far along they are in the process at any point in time,” said Miriam Makhyoun, research manager at SEPA.
“We spoke to several utility managers who have experienced a situation in which a project was already built before the application was submitted to the utility,” she said. “This is one example of misunderstanding between the utility, the customer and the project developer that can be improved by transparency and ease of process under clear guidelines.”
Keeping customers informed is likely to reduce the number of calls and direct inquiries a utility must address. It will also ease customer concerns that their application has been sucked into a bureaucratic black hole. Most states require interconnection applications to be approved before the solar array can be physically connected to the grid. Delays create a financial concern for customers who have already invested in and perhaps installed a solar system, only to have to wait for approval before the system will start generating power.
A prior SEPA study also found that the solar market is highly concentrated. Less than 5 percent of the utilities surveyed are processing 78 percent of the interconnection applications. As such, if a small number of utilities streamline their interconnection operations, it could result in a significant improvement to the market as a whole.
Large utilities that process upward of 500 interconnection applications per year have the most to gain from swapping out paperwork for an online system. Online platforms allow customers to easily return to their application and make corrections if necessary, which is likely to cut down on processing times.
Larger utilities are also often responsible for filing reports with public utility commissions. By taking the interconnection process online, utilities can build in reporting mechanisms that allow for easy data analysis, so it's less challenging and time-consuming to prepare reports for their regulators. Among utilities already using online services, some have designed their own software in-house, while others have purchased products off the shelf.
For smaller utilities, it’s a toss-up between online or in-person applications being the most expedient, said Makhyoun. Web platforms are flexible, but meeting in person improves the accuracy of an application, because customers and industry experts can work out issues in real time.
With the solar market booming, utilities are starting to proactively tackle the challenges of streamlining and automating their interconnection processes. “There are a handful of utilities that have figured this out, and they are doing it really well, and for all of the rest, there’s still a really large learning curve and there’s room for lots of improvement,” said Campbell.