The Rocky Mountain Institute (RMI) and the National Renewable Energy Laboratory (NREL) announced a new report on Sept. 25 that shows a roadmap of how to reduce the soft costs of solar over the next eight years.
The report, “Non-Hardware 'Soft' Cost-Reduction Roadmap for Residential and Small Commercial Solar Photovoltaics, 2013-2020,” shows the route for bringing the soft costs of residential solar electric systems down from $3.32 per watt for a 5-kilowatt residential system and $2.64 per watt for a commercial system, the figures the report found were the average soft costs of solar in 2010. The roadmap would bring the soft costs down to 65 cents per watt for residential systems and 44 cents per watt for commercial systems by 2020. The report said that the soft costs of residential solar already represent more than 50 percent of the total installed cost of an array and over 40 percent of a commercial array.
“Even in light of drastic solar panel cost reductions over the past four decades, rooftop solar systems in the U.S. still are not economically competitive for the vast majority of commercial and residential customers,” said Jon Creyts, RMI program director. “Soft cost reductions represent a major challenge and opportunity for stimulating SunShot-level PV deployment in the United States.”
“RMI’s vision of an affordable, equitable, low-carbon, and reliable electricity system relies heavily on electricity produced from distributed solar PV,” said Dan Seif, a principal at RMI and a co-author of the report. “To make the pace of change required by this vision a reality, these soft costs, in both cost per watt and cost of capital, need to come down—fast.”
The report looks at potential soft, balance of system, or business process cost reductions in: customer acquisition, permitting, inspection and interconnection, installation labor, overhead expenses and financing. Of all the potential soft-cost reductions, the one with the least certain cost reduction pathway is the cost of residential installation labor. Permitting and interconnection are also identified in the report because they can take time to complete that can slow installation.
The easiest way to reduce soft costs of solar is through using software tools to reduce the amount of time onsite during a solar installer’s customer acquisition, according to the report. “Financing has the next-most-certain cost-reduction pathway; the primary challenge is enabling low cost of capital and otherwise desirable homeowner financing (i.e., homeowner maintains equity, so is not a “third party”),” the report stated.
"Regardless of the specific path taken to achieve the SunShot targets, the concerted efforts of numerous photovoltaic (PV) market stakeholders will be required," NREL Solar Technology Markets and Policy Analyst Kristen Ardani said. "This report illustrates how the required participation of each type varies substantially by soft-cost-reduction category while noting that roles and responsibilities will be complementary and evolve over time."
The report, according to RMI and NREL, is the first of a series of reports tracking soft-cost reductions. They will also quantify the impacts of innovations.
The report was funded through the Department of Energy’s SunShot Initiative, which is aiming to reduce the installed costs of residential solar to $1 a watt by 2020. "This report represents the first quantitative, national roadmap that targets soft-cost-reduction opportunities," said Minh Le, director of DOE's Solar Energy Technologies Office. "This roadmap and future refinements are necessary to determine the path forward to reduce the largest cost in residential solar installations. We need to be persistent in identifying the levers of change and where the big challenges persist."