Plan for $0.44/W Commercial Solar ‘Soft Costs’ Released

by | Sep 30, 2013

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NRELThe Energy Department‘s National Renewable Energy Laboratory has released research that charts a path to achieving non-hardware cost targets of $0.44 per watt for commercial solar systems by 2020.

In 2010, US photovoltaic soft costs totaled $2.64 per watt for small commercial systems (250 kW and smaller), representing around 44 of the total installed small commercial system price, the report says

Non-hardware costs – also referred to as soft, balance of system, or business process costs – include permitting, inspection, interconnection, overhead, installation labor, customer acquisition, and financing, according to Non-Hardware (‘Soft’) Cost-Reduction Roadmap for Residential and Small Commercial Solar Photovoltaics, 2013–2020. The report also highlights that certain processes often categorized as soft costs, such as permitting and interconnection, may not appear significant when measured in terms of dollars-per-watt, but are costly in that they pose significant market barriers which slow photovoltaic deployment.

The report covers strategies to overcoming market barriers and decreasing costs across four key areas: customer acquisition; permitting, inspection, and interconnection; installation labor; and financing.

Overall, customer acquisition in the commercial market has a relatively certain path, although reaching the 2020 target hinges on the highly uncertain market penetration of improved site assessment and design cost-reduction opportunities, in addition to advanced customer acquisition tools that couple well with “market-expanding innovative finance,” NREL says.

The commercial financing path requires the highly uncertain implementation of an undefined host-finance cost reduction opportunities, such as special rooftop property rights or easements or energy service agreements, as well as “highly uncertain” expansions of green bond programs and commercial property assessed clean energy financing, the report says.

As part of its SunShot Initiative, which hopes to make solar energy competitive with other forms of energy without subsidy by the end of the decade, the Energy Department launched a competition earlier this month aimed at making it faster, easier, and cheaper to install rooftop solar energy systems.

The SunShot Prize makes a total of $10 million in cash awards available to the first three teams that repeatedly demonstrate that non-hardware costs, or price to plug in, can be as low as $1 per watt for small-scale photovoltaic systems on American homes and businesses. This target represents a decrease in the “soft costs” of solar energy systems—including permitting, licensing, connecting to the grid and other non-hardware costs—by more than 65 percent.

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