Reducing Solar Soft Costs Means Tackling Labor

The United States is playing second accordion to Germany when it comes to bankrolling, innovating and deploying the solar infrastructure we need to better adapt to climate change. But we’re speeding up, according to the Rocky Mountain Institute’s new report Reducing Solar PV Soft Costs: A Focus On Installation Labor.

Funded by the Department of Energy’s SunShot Initiative and produced in collaboration with Georgia Tech Research Institute, RMI’s study crunched the numbers on U.S. and German solar photovoltaic installations and found inefficiencies in solar soft costs like labor, permitting, inspection, interconnection and customer acquisition that could bring installation costs down over 60 percent. That would bring America in range of Germany’s cheaper solar paragon, because you get what you pay for.

“While there are opportunities to reduce soft costs throughout the PV installation process in the U.S., installation labor costs represent one of the biggest near-term opportunities to help make solar more affordable nationwide,” Rocky Mountain Institute principal Dan Seif and Koben Calhoun, who co-authored the report with Jesse Morris, explained in an interview. “Unlike other soft costs, such as permitting and financial transactions, installers can start experimenting with ways to lower labor costs immediately.”

Compared to German competitors, America’s solar sector has historically priced its renewable energy future too high for mainstream adoption. That is increasingly changing as investment shifts from subsidization of the doomed fossil fool industry to renewable competitors. Americans are unfairly caught in the crossfire of these unsustainable turf wars as the open-sourced, inter-networked solar future they deserve is too slowly hatched.

“There has been too little cross-industry information sharing about best practices, like for instance, some of the practices our report brings to light,” Seif and Calhoun argued. “Institutional knowledge regarding efficiency gains and cost reduction is scattered and held close to the chest for competitive advantage. It’s like we all live in the age of Wikipedia, while the solar industry lives in the age of hardbound encyclopedias. In many cases, the bigger win for companies is openly learning from each other is a non-collusive, non-threatening way, rather than sticking to information silos.”

While Seif and Calhoun believe cost-reduction opportunities abide in installation labor and other soft spots, they acknowledge that it is more not less solar labor that is needed right now.

“Yes definitely, but with less labor per install,” Seif and Calhoun said. “To meet German installation cost levels, U.S. residential PV installation labor costs must come down by about two thirds. But states like North Carolina, New Mexico, Georgia, Ohio and Texas that were once hesitant to enable solar development now rank in the top 20 for install rates. It’s clear that solar is becoming a national priority, though, from a policy perspective, that momentum has come from the state government and state PUC level.”

Once national priorities catch up to state realities, the United States may be able to meet Germany on a greener field. To do that, we’ll need to be less conservative with our solar incentives, and less labyrinthine in our power infrastructure. “In the United States, PV developers have to navigate ~3,000 utilities and ~18,000 jurisdictions, each with separate rules regarding installation, interconnections, and generation payment rates,” explained Seif and Calhoun. “This fractured system has stymied innovations, as well as narrowed the participation of developers who can master complexity and overcome hurdles in attracting the right financing.”

“Our nation’s report card is not the best, but there’s a lot of activity in many regions to make improvements,” they explained. “The Rocky Mountain Institute is particularly excited about government, PUC, and utility action to bring smart pricing to the customer level, thereby appropriately rewarding the various values of distributed PV. This smart pricing at the distribution edge goes well beyond solar PV.”

Compared to where we were at the turn of the century, America’s explosive solar market is empowering Main Street and Wall Street alike. But climate change is bearing down upon us. We need to accelerate in a hurry, and pay what it costs to help the also-ran U.S. follow Germany’s national example on its way to a galvanizing gold rush.

The simplest answer for Germany’s solar dominance is that its “massive value proposition enabled capitalistic instincts, which drove rapid innovation,” Seif and Calhoun explained. “Germany’s high-priced feed-in-tariffs, which are much lower now than a couple of years ago, created a solar rush which drove competition and belt-tightening. So the spoils went more to the customer than the solar industry.”

This article appeared at Solar Energy