December 9, 2011
Reining In the ‘Soft Costs’ of Solar
Reducing the cost of installing solar power systems for homes and small commercial properties remains near the top of the Department of Energy’s to-do list. Early this year, Steven Chu, the energy secretary, unveiled the department’s SunShot Initiative, fashioned at least in spirit on the moon shot program, in which the Kennedy administration set out to put a man on the moon.
With SunShot, the Department of Energy has set a goal of reducing the cost of solar installations by 75 percent by the end of the decade. While this may not be a giant leap for mankind, the department hopes it will make solar power competitive with other forms of energy and as easy to install on your house or at your business as buying a set of tires for your car, Ramamoorthy Ramesh, the manager of the SunShot program and a materials scientist from the University of California at Berkeley, said in a telephone interview.
The department estimates that 40 to 50 percent of the total cost of owning and operating a rooftop solar power system today is administrative or “soft” costs, red-tape impediments like permitting, zoning, metering, financing and arranging a grid connection. That means consumers are now paying more to generate electricity from rooftop systems — an average of 18 cents a kilowatt-hour, according to the Department of Energy’s calculations — than they would for conventional energy purchased from a local utility.
The first salvo from the SunShot initiative came in June with the announcement of the Rooftop Solar Challenge, a competition for $12.5 million in grants for regional teams with the best ideas for streamlining the soft side of solar deployment. This month Dr. Chu announced the winners, 22 regional teams out of a field of 47.
Each team represented groups of jurisdictions with combined populations of at least 500,000 people, Dr. Ramesh said. For example, the team from Broward County, Fla., includes delegates from Florida Power & Light as well as 14 cities in the county and represents a population base of about 925,000 residents.
The teams submitted proposals for how they would reduce costs by untangling the various local codes and ordinances identified as impediments. (Team members included representatives from local utilities and government agencies with expertise in areas like finance, policy, and solar technology.) The winning proposals received grants ranging from $260,000 to $750,000 to put their plans into effect.
According to SunShot’s Web site, the Broward County team will use its $646,000 grant to try to remove local ordinances that create barriers to solar installations, to educate community associations about their obligations related to solar installations under Florida law, and to create an online tool to speed the process for permitting and interconnection while lowering costs.
Although the Rooftop challenge was cast as a competition, the Department of Energy has encouraged the teams to collaborate and share information, Dr. Ramesh said. At the start, each winning team submitted a baseline report indicating current costs in their areas. A year from now, the teams will report on their progress and what impact their actions have had on administrative costs.
From the data collected, the Department of Energy will develop best-practice guides to be shared openly with any interested parties. Through programs like the Rooftop Solar Challenge, the department hopes to bring the cost of solar-generated electricity down to 6 cents per kilowatt-hour or lower without the need for subsidies or other incentives by 2020. At this price point, the department hopes, solar power will account for 15 to 18 percent of the country’s electricity generation by 2030.
Given the focus on reducing the costs of solar panels and related hardware, the administrative costs are often overlooked, but hard costs and soft costs are linked, Dr. Ramesh said. Reducing soft costs will increase the number of installations, he said, “and as you have more deployment, you have more innovation, and this will invariably bring down hardware costs.”
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