In the U.S. residential solar market, the “soft costs” associated with acquiring customers, designing an installation and hiring the labor to construct it typically account for the majority of a system’s price.
In 2019, those expenditure categories accounted for 68 percent of the average residential installation’s costs, according to Wood Mackenzie Power & Renewables. And they’re expected to rise in the next four years, even as hardware costs have followed a downward price trend.
Soft costs, and the factors that increase them, became an even more pernicious barrier as the coronavirus pandemic created additional challenges for solar companies this spring. With the offices of many authorities having jurisdiction (AHJs), which grant permits, closed due to lockdown orders, already-slow permitting in some areas ground to a complete halt.
This slowdown in permitting has renewed interest in an initiative led by the National Renewable Energy Laboratory and the Solar Foundation to develop automated permitting software that aims to speed the process at the local level. The partners unveiled the Solar Automated Permit Processing, or SolarAPP, effort in 2018. Now they’re working on an expedited timeline to roll it out to a solar industry worried about declining installations and demand.
While the industry has always been eager to speed permitting and reduce soft costs, the difficulty of getting work done during the pandemic has prompted more jurisdictions to consider changing their traditional permitting processes, according to those involved with the SolarAPP effort.
“Change is not necessarily easy,” said Richard Lawrence, a program director at the Solar Foundation who heads that organization’s work on the SolarAPP. “This has forced some change.”
With many states now loosening stay-at-home guidelines, the SolarAPP may not see a full rollout before permitting agencies can get back to work; the team developing the software is preparing to head into a pilot phase that will end in June. But with much uncertainty remaining around the possibility of later waves of the virus, the SolarAPP team says instant permitting can provide lasting innovation as the solar industry confronts a market changed by the virus outbreak.
The idea for SolarAPP arose in a meeting held in summer 2018, according to Lawrence, in which the Solar Foundation and other groups such as the Solar Energy Industries Association were discussing the challenges that soft costs create for rooftop solar developers in the U.S.
Though some AHJs have implemented digital processes that speed permitting, the process lacks uniformity. In general, Lawrence said obtaining a permit in the U.S. is more difficult than in countries such as Germany and Australia.
“We see soft costs resulting in significantly higher [overall project] costs here in the U.S. than we see in some of those other countries — twice as much, easily, in the United States versus many other developed countries,” said Lawrence.
The SolarAPP idea grew out of that meeting, and the Solar Foundation joined up with SEIA, NREL and industry players such as Sunrun and SunPower to work on it. The International Code Council and the International Association of Electrical Inspectors, two agencies that set international codes relevant to permitting, also joined as partners, along with cities such as Bakersfield, California and nonprofits such as the Rocky Mountain Institute.
In its final form, SolarAPP software will be available to AHJs at no charge (installers will have to pay a nominal fee of less than $50), providing instant permitting that should minimize the labor required to process rooftop solar applications. In addition to digitizing that work, the software will help AHJs standardize applications while offering some flexibility for specific local requirements.
Development of the software began in earnest this fall after NREL secured $695,000 from the Department of Energy for the effort. Partners threw in funds to match that sum, giving the SolarAPP development team nearly $1.4 million to get started.
Around the same time, the team streamlined its proposal to expedite what was to be a two-year development timeline by about six months.
When coronavirus began impacting timelines for solar projects in the U.S., Jeff Cook, a renewable energy policy and market analyst at NREL, said the lab worked to expedite the release of a beta version of the software.
Now that SolarAPP is ready for testing and a pilot, its coincident timing with the pandemic means even more jurisdictions want to participate than the team had expected. NREL is hoping to get a bump in funding from the federal government, which would match the above-expected contributions of other partners, to allow for a wider rollout to vet the product.
The team expects SolarAPP to be more widely available in the fall.
Cutting costs amid the coronavirus pandemic
The way the more than 20,000 AHJs across the U.S. currently process permits varies, which can lead to a wide range in timelines for approving applications, from days to weeks. That variation also leads to uncertainty for developers about what’s required for approval in one jurisdiction versus another. And because AHJs aren’t only permitting solar projects, some jurisdictions might not be well versed in processing that type of permit or may be slowed down by a rush of solar applications as more solar comes to a community.
“As more and more solar is being built in the area, the timelines can start to spread out as the staff there has to deal with that growing volume of work,” said Lawrence at the Solar Foundation. “Some [less experienced] jurisdictions may take longer if they haven’t seen a lot of solar before.”
The pandemic, which has hamstrung the work of many AHJs, has only made those differences in workflow more pronounced.
With many states shut down, some closed AHJ offices transitioned to digital processing tools or built up those they already relied on. Others began fielding payments by phone and accepting permit applications via physical dropbox, where paperwork is left untouched for two or three days before it’s handled. Still more halted permitting work altogether.
As states slowly begin reopening, the SolarAPP may be able to help those jurisdictions get back up to speed and process permits more efficiently.
Cook at NREL said the new software won’t cut out all solar-related permitting. But it should offload the more tedious work to allow AHJs to focus on difficult applications and other permits. While residential solar capacity has grown approximately fourteenfold in the last decade, commensurate expansions in AHJ staffing haven’t necessarily followed.
“Hopefully they’ll be able to do all of their work without having to try to find additional resources that can accommodate this massive influx of permits they’re getting from solar,” Cook told GTM. “We’re hoping this can be a plug-and-play solution.”
It should be an easier transition for AHJs that already use some type of permitting software. But Cook said that in the coming months the SolarAPP group plans to roll out software to AHJs now running a fully analog operation. Many have reached out to the group with interest in testing the software.
“We are trying to help jurisdictions wherever we can,” said Cook. “For those that have come to us, we are trying to find solutions for them that are kind of a duct-tape-and-bubblegum solution today, just to help them through, and then it’ll be a more robust solution as the months go by.”
Though installers will have to pay a small fee for each application processed through SolarAPP, the partners say that cost will be offset by thousands of dollars saved by streamlining applications and allowing construction to begin more quickly.
“At the end of the day, it also provides a value to installers or contractors in that it gives an instantly approved permit and it gives the contractor peace of mind or understanding that they know exactly what the permitting requirements are going to be,” said Cook.
Consumers should save too, about $7,000 for the “typical solar consumer,” according to the Solar Foundation. With the rooftop solar application ready for testing, the group is now working to add storage permitting processes to the software.