Cheaper solar is not just about the price of panels
Solar panels are getting cheaper all the time, but the industry is also chipping away at some other, more surprising, costs.
Mon, Sep 16 2013 at 5:20 PM
The day that solar will finally be cost-competitive with fossil fuels is getting nearer all the time.
Usually, when we talk about "grid parity," the focus tends to be on the cost and lifespan of solar panels themselves. From increased efficiency of solar cells to self-healing solar cells made from cheaper materials, there are plenty of promising developments on that front. Just take a look at how quickly costs have come down in recent years.
What many people forget, however, is that the solar panels themselves make up just a small percentage of the overall cost of installation. From labor to permitting to connecting to the grid, there are a myriad of other "soft costs" involved in solar power — and many of those soft costs can be brought down considerably.
Here are some ideas on how to do it.
From wiring to racking systems, there are plenty of materials that go into a solar installation besides the solar panel itself. So there's been considerable effort put into bringing those material costs down. However, many insiders say those savings are maxed out already. In fact David Boynton, solar operations director at Southern Energy Management, cautions against pushing the price of other materials down too far:
Material prices in the solar industry have been beaten down to bare bones, so the only real way to save on materials is to eliminate equipment or use inferior materials. A good example would be to use aluminum wire instead of copper. We have a hard line on this one, in that we won't use aluminum to save money — for performance and safety, copper is mandatory. We'll lose bids because we don't bid aluminum, but so be it. We'll educate the customer to the best of our ability, but at the end of the day, you can lead a horse to water, but you can't make them drink.
There is also a push toward integrating racking systems with the panels themselves. As Boynton explains, this strategy may result in considerable savings without the need to compromise on quality:
"We are about to start a job that utilizes the Panel Claw Grizzly Bear, a product intended for flat roof installations. Racking systems for this type of installation typically require aluminum/steel racking and then some sort of ballast like cement block. This is labor- and material-intensive. The Panel Claw product has the ballast as the racking component. When you attach the solar panels to the Panel Claw assembly, the attachment hardware creates the same bond that the extra lay in lug & copper wire of other racking systems creates. The amount of labor and material savings without sacrificing any safety or system performance is significant.
When a broad cross-section of the electronics industry settled on standards for the Universal Serial Bus (USB), it kicked off a huge growth in peripheral electronics and computing devices that became available to the public — driving the costs down through increased competition and greater sales growth in the process. SolarTech, an industry association focused on growing the photovoltaic market in the U.S., believes that a similar focus on standardization could significantly drive down costs for the industry. But what to standardize?
The size and shape of panels for one thing. In a post about solar standardization over at Renewable Energy World, David McFealy and Doug Eaking explain why this is so important:
Hertz and Avis don’t compete on the quality of their rental agreements. The same can be said of module geometries. Energy consumers simply want (demand) low-cost energy ($/kW-hr), and if this means a solar PV system investment, then the lowest cost for overall system and ongoing maintenance is required for competitiveness. Standardization on 60- and 72-cell module dimensions will take cost out of the installation of solar PV without compromising integrity or reducing profitability, and offer many unobvious benefits as well as the obvious ones.
Among the less obvious benefits, say McFealy and Eaking, would be the elimination of the need to create a different set of calculations for each array, a process that one designer described as "reinventing snowflakes."
Like cars or major household appliances, solar power systems are a relatively large investment for most households — meaning many people will look for financing to make it possible. Making credit more affordable, and easier to access, will help bring down the soft costs of solar for many homes and businesses. Part of this challenge may involve specialist green-focused financial institutions like Britain's Triodos Bank, and part of it will no doubt involve educating and familiarizing mainstream banks and lenders with the true costs and risks involved in solar installations. As detailed in a post about soft costs of solar over at ThinkProgress, several initiatives are underway to move this forward — including reliable quality ratings for solar arrays — which could be used by lenders to better assess a specific project. Of course, unlike a car or a fridge, a solar array will effectively begin generating income as soon as it is installed, helping offset the cost of any loan. Boynton explains that these advances in financing options are making a big difference to potential customers, especially in states where incentives don't yet make solar leasing deals feasible just yet:
Financing has really taken hold in N.C. You can get deals where you take your tax credits before you have to pay a dime, take those tax savings and apply them to the principle of your loan. You then get low rates for 10 to 15 years, allowing you to slow pay the difference. This has made our presentations to customers much more palatable.
The Vote Solar Initiative estimates that permitting can add as much as $1,000 in costs to a typical residential install, but those costs, and the specifics of the process can vary greatly from one community to the next. Here's how Vote Solar explains it:
With over 18,000 municipalities across the U.S. setting their own solar permitting processes, getting a permit can either be a walk in the park, with simple and clear requirements, on-line procedures, and reasonable fees — or require multiple trips and a lot of standing in line. Time is money. Making this process straightforward and simple is a relatively easy way for policymakers to help reduce the cost of going solar.
Luckily, there's considerable opportunity hidden in the current mess of regulations and processes. By mapping out the solar permitting processes across the country, Vote Solar is both creating a resource for homeowners and installers to better understand the rules in their area, and they are also developing an understanding of best practice — which can then be used to develop truly solar-friendly communities with straightforward rules and regulations. Unfortunately, in the meantime, many solar companies have actually seen their permitting costs rise, as Boynton explains:
A major pain point for most installers is that permitting has gotten harder and harder and costlier and costlier. 5 years ago, an electrical license and $50 got you onto a job. Typically permitting costs for us are closer to $1,000 per job (stamped electrical and structural drawings by professional engineers don't come cheap). It is great that the systems that go in have undergone rigorous scrutiny, but the reality of it is that we are paying to educate the insurance and local inspections departments on what we do. For a company of our size, we have well established protocols and relationships which make this work possible, but for the smaller installers, it has run them straight out of business.
We're not quite at that point where every new home is going to have solar panels, but that doesn't mean home builders can't do their part. The U.S. Environmental Protection Agency (EPA) has developed a set of Renewable Energy Ready Home specifications, which will guide the construction industry on how to design homes so that it is easier and cheaper for home owners to install solar panels at a later date. From wiring to structural elements, there are numerous opportunities to make later installation much less of a headache. Some home builders are even offering solar as standard, leaving homeowners to opt out if they don't want it. Because installers get to plan a number of identical installations in the same location, this type of deal drives down the soft costs related to planning, design, marketing and transportation and labor too.
Marketing and sales
There was a time when solar companies would need to make a site visit to determine if an installation was viable. In a world of Google Earth, that's no longer the case. Companies like Sungevity, which supplies solar to homeowners at no upfront cost, are using satellite imaging to eradicate the need for a site visit. They are also partnering with companies like Lowes to reduce much of their sales and marketing costs, providing price quotes directly at the hardware store through virtual assessments of a home's viability for solar. In fact SustainableBusiness.com claims that customer acquisition costs have come down by more than half in recent years.
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