Why US Solar Soft Costs Are So High and What’s Being Done About It
The term “soft costs” doesn’t even have a universally accepted definition. What does it mean? We can say for sure it doesn’t mean hardware or mounting systems. Soft costs are usually intangible expenses, like marketing, labor, design, installation, and permitting.
So why are they so expensive?
One way to identify where and why the U.S. is lagging behind, is by comparing the country to the smartest kid in the solar energy class: Germany.
The Lawrence Berkeley National Laboratory (LBNL) did just that. After an in-depth study, analyzation, and much beard-scratching, they found the cost of a residential solar system in Germany was less than half of what it would be in the U.S. A typical German PV system cost $3.00/watt. For the same PV system and the same installation, the U.S. cost was $6.19/watt.
Germany’s doing better. But how? And why?
LBNL broke it down in an exhaustive series of charts and graphs. We’ll address some of the most (un)impressive here
(Un)Impressive fact #1: U.S. permitting requirements are dramatically inconsistent from city to city. Over 18,000 municipalities are doing things their own way. There’s no uniformity, and this unnecessary individualism negatively impacts the permitting process.
Why? It makes things difficult for solar installers working in multiple locations. They face longer processes, higher fees, multiple inspections by multiple parties, and piles of redundant paperwork. This hurts the contractor and consumer alike, as the consumer might call into question the efficiency of installing a solar system in the first place.
There are just too many (un)impressive facts to break down in such detail in an article of this scope. Here’s a relatively comprehensive list highlighting some of LBNL’s research conclusions:
#2 – Installation costs in the U.S. are about .59/watt. In Germany they’re .23/watt.
#3 – Marketing for customer acquisition in the U.S. costs about .34/watt. In Germany? .02/watt.
#4 – System design for customer acquisition in the U.S. costs .11/watt. In Germany it was .01/watt.
#5 – Other customer acquisition related expenses came to .24/watt in the U.S. In Germany they were .04/watt.
#6 – Sales tax in the U.S.? .21/watt. Sales tax in Germany? .00/watt.
#7 – Project development time in the U.S.? 126 days. In Germany it was 35 days.
The sad conclusion is that there are too many reasons the U.S. is losing the solar soft costs game. There’s no fix-all solution.
The happy truth is that doesn’t mean there’s no hope for the U.S. solar industry.
Solar industry professionals are known for their ingenuity. Many are taking the situation into their own hands. They’re going virtual, taking to the internet and online networking with the same verve that makes them want to harness the sun in the first place.
Going virtual can streamline the process and reduce costs in many circumstances. It gives professionals and their clients greater access to a wide variety of tools. It allows professionals in different parts of the country to collaborate with one another, and arrive at solutions that wouldn’t be possible without the Cloud, satellite technology, and online platforms.
One company making such strides is GreenLancer. GreenLancer’s offices are in Detroit, but they do their best work in the Cloud. Their virtual platform allows contractors and developers to log in and order from pre-defined services. These templates can be customized, and once the contractor’s project specifications are established, freelance green engineers from around the country bid to work on the project.
GreenLancer is permitted in all 50 states. They’re getting a lot of attention for the ease, quality, and security they provide to both contractors and engineers. The project development process is made easy by Cloud computing, which greatly helps curb costs and streamline things.
Networking through the net isn’t the only way solar industry vets are finding new means of success. Utilizing satellite technology, the Solar Site Design app makes analyzing site potential and financial feasibility simple and quick. The app is compatible with both iPhone and Android devices, and allows professionals on site to send satellite photos and project specs to remote experts, who can then provide accurate estimations for things like feasibility, pricing, and design.
The accessibility and flexibility created by GreenLancer and the Solar Site Design app, and companies like them, is great news for the U.S. solar industry. So while bureaucrats continue to hem, haw, and put up miles of red tape, solar professionals continue to collaborate, network, and innovate new ways to reduce soft costs and help make the U.S. a real competitor in the global market.
Article by Leslie Hedrick, appearing courtesy 2GreenEnergy.
photo: Arlington County.
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