Permitting and inspections are notoriously tedious tasks. In the rooftop solar industry, they’re also very costly — even though industry members say they don’t need to be.
To fix the issue, the Solar Energy Industries Association and The Solar Foundation today launched the Solar Automated Permit Processing initiative, which is designed to streamline permitting and slash the cost of installing solar on homes and businesses. The new endeavor comes as one of the largest solar industry conferences in North America, Solar Power International, kicks off this week in Anaheim, California.
"Reforming the solar and battery permitting process is one of the most significant steps our country can take to making solar more affordable for all,” said Lynn Jurich, CEO of Sunrun, in a statement. “There is a patchwork of inconsistent permitting procedures and standards across the U.S. and our customers pay the high costs of navigating this system. We have an opportunity to help the industry invest in a million more solar roofs over the next five years from the savings from making the permitting process faster, while ensuring safety and reliability."
Cumbersome and inconsistent permitting and inspection processes can add around three months to the build-out of a residential solar installation and around $7,000 in direct and indirect costs, or around $1.00 per watt.
That $1 is significant. Residential solar installation prices in the U.S. currently range between $3.00 and $3.50 per watt (in some locations prices are even lower, while Lawrence Berkeley National Laboratory just pegged median residential 2017 costs at $3.70 per watt). Soft costs, including customer acquisition, permitting, financing and installing rooftop solar, make up a disproportionate amount of the total solar price.
For comparison, average residential solar prices in Australia dipped to just $1.24 per watt in August. Andrew Birch, co-founder of Sungevity, who wrote about permitting issues in GTM earlier this year, noted that this isn’t a new problem. He recalls that permitting issues were addressed at Solar Power International 10 years ago, but the industry has failed to act on it.
“It wasn’t that people weren’t aware; there just wasn’t a coordinated process to solve it,” said Birch, in an interview.
After highlighting the permitting issue earlier this year, Birch engaged with other industry members to launch a workshop on permitting, which evolved into the SolarAPP initiative. With the federal solar Investment Tax Credit set to begin phasing out in 2019, Birch believes the U.S. rooftop solar industry has no choice but to make cutting red tape a priority.
The combination of high permitting costs and the ITC decline “destroys the economics” of small-scale residential and commercial solar installations in the U.S., he said.
“The vast majority of the overall cost is the soft cost,” he said. “So if you don’t address that, we won’t we able to survive as an industry with the ITC stepping down”
The new SolarAPP initiative improves the efficiency of going solar by cutting red tape with a rules-based, automated permitting and inspection process. The plan proposes the following reforms:
- A safety and skills training and certification program that allows residential and small commercial solar and battery storage installers to attest that their projects are compliant with applicable codes, laws and industry practices, thus eliminating the need for a traditional multi-step permitting process
- A simple, standardized online platform that will be provided to local governments at no cost, to “register” and automatically screen qualifying systems for local government authorities
- A list of established equipment standards and/or certified equipment for solar and storage projects installed through the proposed process
- The creation, or refinement, of system design standards for qualifying solar projects
- A model instantaneous permitting regime for home and small-commercial solar and battery storage systems installed by certified installers and contractors
- A program administrator to oversee and implement the plan, including providing technical assistance to state and local jurisdictions and utilities
In simple terms, the plan will allow solar installers to get accredited through a centrally managed online registration portal. So instead of working with a local authorities and private offices to vie for the right to install a solar system, accredited installers will just have to tick all of the right boxes.
SEIA will lead the necessary policy discussions at the city, state and federal levels to get this new system in place, said Birch. At the same time, The Solar Foundation, with other industry stakeholders, will set up the accreditation process with a list of certified products and an online portal for registering solar systems.
Several other countries already have processes such as this in place. For quality control, some countries conduct spot checks to ensure solar systems are being installed to code. If a company fails to comply, it loses its accreditation and can no longer do business. Birch said that the U.S. industry will likely pursue a similar approach.
But while this concept isn’t new, it’s likely to see some pushback.
For one thing, solar installers will want strong assurances that the online platform is being managed by an impartial entity. But that's a surmountable issue. The bigger challenge will likely be getting the plan past anti-solar groups, said Birch.
“There will be lots of people who don’t want more solar behind-the-meter or more solar period, who I’m sure will not want this to happen,” he said. “Those people will see that if you do get rid of permitting, you massively reduce the cost and see a huge uptick in penetration.”
“The more genuine conversation is around people who want solar on the grid, but who have concerns about quality management and safety management,” he continued. “There needs to be a thorough conversation about how safety and quality is improved by the fact you have a centrally managed certification process, instead of a completely disparate group of building offices…trying to individually manage the safety of solar and distributed energy.”
While quality is of utmost importance, permitting offices generally see the benefit of moving to an online permitting system. Part of the delay is that there aren’t enough people with the electrical and structural engineering skills required to validate the rooftop solar systems. A centralized plan frees up time, while inspectors can still play a role in spot-checking and validation, said Birch.
Ultimately, SolarAPP is a jobs program, Birch explained. The U.S. residential solar market stabilized this year, after experiencing a slump in 2017. According to Wood Mackenzie Power & Renewables, the decline was the result of customer-acquisition issues. If those issues persist, there will be less work for solar companies, supporting industries — and inspectors.
“When the ITC goes away, there will be a massive reduction in work,” said Birch. “So if we don’t do anything, those jobs are going away anyway.”