he growth of the US solar energy industry is impressive, Calhoun and Morris write, but so-called 'soft costs' keep solar prices high in the US, compared to countries like Germany, a champion of solar development.
He growth of the US solar energy industry is impressive, Calhoun and Morris write, but so-called 'soft costs' keep solar prices high in the US, compared to countries like Germany, a champion of solar development.
This growth is impressive, but if the U.S. is to transition to the
low-carbon, resilient, and sustainable electricity system of the future
outlined in RMI’s Reinventing Fire, we need to install four times more solar capacity annually than we’re currently doing, for the next forty-odd years,
with most of the installs coming in the distributed market (residential
and commercial rooftops). If we’re going to do that, we need to make
distributed solar cheaper, and do so quickly.
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PV soft costs now dominate the equation
Between
2008 and 2012, the price of sub-10-kilowatt (mainly residential)
rooftop systems decreased 37 percent. However, over 80 percent of that
cost decline is attributed to decreasing solar PV module costs. With
module and other hardware prices expected to level off in the coming
years (and in the near term, actually increase),
further market growth will be highly dependent on additional reductions
in the remaining “Balance of System” costs, otherwise known as “soft
costs.”
Soft costs account for 50–70 percent of the total cost of
a rooftop solar system in the U.S. today. These soft costs include
installation labor; permitting, inspection, and interconnection;
customer acquisition; and other costs (margin,
financing costs, and additional fixed administrative and other
transactional cost). Setting aside those “other” costs, soft costs for
U.S. residential systems are around $1.22 per watt of PV, while German
soft costs average $0.33 per watt. That’s one heck of a spread. How does
Germany do it, and how can U.S. installers approach or even surpass
those numbers?
Simple BoS project searches for answers
RMI and other groups such as the U.S. DOE, National Renewable Energy Lab oratory(NREL), Lawrence Berkeley National Laboratory
(LBNL), Clean Power Finance, and the Vote Solar Initiative have done
great work on the issue over the past several years through benchmarking
and other analysis on these various soft costs. However, such data
remains relatively sparse in comparison to hardware market analysis. The
U.S. solar industry has known that German installers are able to
install rooftop solar systems at less than half our cost. But we haven’t been able to discern, at the detailed level of specific worker actions, why. Until now.
RMI, in partnership with Georgia Tech Research Institute (GTRI), launched a PV installation labor data collection and analysis effort under the SIMPLE BoS project, which culminated today in the release of Reducing Solar PV Soft Costs: A Focus on Installation Labor.
Drawing upon first-hand observations, this report is the first publicly
available detailed breakdown of the primary drivers of installation
labor cost between German and U.S. residential installs.
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The
SIMPLE BoS team implemented a time-and-motion methodology for
evaluating the PV installation process, collecting data on PV
installations in both countries.
Ample opportunities to reduce installation costs
The
results indicated that U.S. installers participating in the SIMPLE BoS
project incur median installation costs of $0.49/W, compared to a
benchmarked median cost of $0.18/W for participating German installers.
Figure 2 (see left) shows the comparative costs of each component of the
PV installation process in the U.S. and Germany, respectively, looking
at four categories of installation-related costs: racking &
mounting, pre-install, electrical, and non-production.
In addition
to providing cost details on the PV installation process, our report
outlines several enabling factors from German and leading U.S.
installers that can be disseminated throughout the U.S. market. These
opportunities range widely in complexity and impact, from redesigning
the base installation process and preparing rails on the ground, to
implementing a one-day installation process and PV-ready electrical
circuits. We’ve shown in Figure 2 (see left) the potential impact in $/W
of these solutions and how difficult it would likely be to implement
them widely the U.S.
In addition to highlighting specific
opportunities for cost reduction in the U.S., our report also draws upon
collected data and analysis to outline one potential pathway for U.S.
installers to reduce installation labor costs by up to 64%—potentially
undercutting German installation labor costs when relative differences
in wages are taken into account. This pathway will not be realized
overnight. It requires serious product innovation, uniform adoption of
best practices, and a move to one-day installations from the average
3–5-day installation process that’s common for U.S. installers today.
We hope this report and all follow-on work under the SIMPLE BoS project will
help the U.S. industry continue to reduce solar PV costs and enable the
widespread, cost-effective deployment of residential solar PV systems.
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