Across the United States, there are nearly 20,000 local municipal and county governments served by a complex system of over 5,000 electric utilities. Each local government sets and enforces electrical, structural, and fire codes, while each utility sets rates and resource plans in conjunction with regulatory agencies. These elements all influence PV project development processes and physical system designs.
The complexity and lack of uniformity of this policy landscape poses significant challenges to any national effort aimed at growing viable markets for cost-effective solar electricity. Installers and financiers that work across so many individual jurisdictions must deal with highly variable legal and process requirements that add significant time and uncertainty to solar projects.
In fact, recent analysis indicates the overhead costs charged by installers to account for marketing, permitting, inspection, interconnection, financing, installation, and system design typically account for 30-40 percent of the total installed cost of a rooftop PV system. Read more about RMI’s research on solar balance of system costs.
To address these costs, the US Department of Energy recently announced the latest element of their SunShot initiative, the “Rooftop Solar Challenge to Induce Market Transformation.” Backed by $12.5 million in funding support, this challenge adds to the $15 million in funding already directed toward reducing market barriers and non-hardware balance of system costs through standardized codes, software design tools, and regulatory approaches.
DOE’s Rooftop Challenge funds regional teams of local governments, utilities, and solar industry stakeholders to take real steps to improve market conditions for rooftop solar, focusing on four main areas:
- Transparent, consistent, and expedient permitting and interconnection process
- Improved net metering and interconnection standards
- Alternative financing mechanisms and resolution of legal issues
- Removal of siting restrictions and incorporation of favorable code provisions
The challenge format is intended to reward innovative and locally applicable solutions to the biggest barriers to solar market development. At the same time, the requirement that participating teams must represent populations of at least 500,000 people is designed to improve regional consistency of processes, reducing the variability described above.
This program builds on RMI’s collaboration with DOE that began at RMI’s balance of system charrette (DOE was a key sponsor) and continued with DOE’s February 2011 workshop on solar process costs, which RMI facilitated. The latter directly informed the recently announced challenge.
“This is an exciting announcement, and consistent with RMI’s understanding of the critical scaling barriers for the solar industry,” said Ned Harvey, Chief Operating Officer at RMI.
If these programs are successful in encouraging local governments to streamline their approach to solar, this could accelerate the emergence of new local markets and promote ongoing cost reduction, propelling the US to regain a global leadership role in solar. RMI will be supporting these DOE efforts through ongoing partnerships with private businesses and stakeholder organizations.