Largest Survey of Solar Installers Demonstrates Real-World Impacts of Permitting Red Tape
SAN FRANCISCO--(BUSINESS WIRE)--Clean Power Finance today unveiled a nationwide study of solar permitting and the obstacle it poses to the widespread adoption of residential solar. The study, the largest of its kind to date, provides quantifiable evidence of the negative effects complex permitting regulations have on U.S. solar installers and also on the authorities having jurisdiction (AHJs), including municipalities and utilities, who oversee permitting processes.
Clean Power Finance undertook the study as part of preparations for the National Solar Permitting Database (NSPD), a free, online database of permitting requirements from across the U.S. that is funded in part by Clean Power Finance and in part by a Department of Energy SunShot Initiative grant. The study's objective is to establish baseline metrics prior to the deployment of the NSPD that can be compared to metrics taken after the NSPD is fully implemented, and to provide direction to the industry about areas for improvement.
"Strong initial interest in the National Solar Permitting Database makes it clear that people want to address permitting obstacles but aren't quite sure where to start," said James Tong, senior director at Clean Power Finance and project lead. "This study provides valuable data that will help identify areas for improvement and cooperation that will bring down costs for everyone and advance the adoption of solar."
The study reveals an overall lack of sophistication on the part of AHJs and solar installers, as well as inefficiencies on both sides. Key findings include:
More than 1 in 3 installers avoid selling solar in an average of 3.5 areas because of associated permitting difficulties. Permitting processes are limiting the adoption of solar in otherwise viable solar markets, constraining a robust and growing industry. Additionally, installer unwillingness to expand to new territories may allow incumbent installers to capitalize on the lack of competition and develop virtual monopolies, leading to market inefficiencies and potentially higher costs for consumers.
Permitting varies widely and usually involves 2 (and up to 5) distinct agencies, each with different processes. The more entities involved in the permitting process, the more likely there are to be mixed messages and/or different rules that result in delays and increased costs for installers and more paperwork for AHJs.
11 percent of installations encounter a situation where requirements for solar permitting have not even been set. This indicates that AHJ policies and processes have not kept pace with the burgeoning solar market, and that more cooperation and transparency regarding permitting regulations may solve many existing problems.
AHJs require, on average, nearly 8 work weeks to complete their tasks. Staff times for installers, however, average just 14.25 hours. Because installers typically make a large upfront equipment purchase, permitting processes can tie up thousands of dollars for almost two months or force installers to use credit, both of which can impede installer profitability or force them to pass on additional costs to consumers.
Patrick Redgate is president and CEO of Ameco Solar Inc., a Southern California-based solar installation company, and is also on the Board of Directors for CalSEIA and on CalSEIA's Ethics and Permitting committees. In response to the study findings, Mr. Redgate said, "The study puts real numbers to what all installers have been feeling: permitting is an albatross around the industry's neck. Clearly, not all cities are bad, but we need to call out the ones that are particularly problematic."
The study also involved interviews with AHJs in the same 12 states as the installers. Conversations with the AHJs provided a number of insights into their operations and frustrations with the permitting process:
• AHJs report that installer errors and incomplete or inconsistent paperwork create extra work and delays for their staff.
• AHJs often operate in sub-optimal conditions that include strained budgets, lack of resources and high staff turnover; furthermore, in some areas where solar installations are less common, AHJ staff is simply unaware of existing practices or that problems even exist for installers.
• Even if AHJs understand solar and want to work with installers, there is currently no channel by which they can communicate to installers about updates or process improvements.
"We're working with multiple city governments to make the permitting processes easier. It's a challenge to get everyone on the same page; even the installers don't necessarily agree on what needs to be done," said Amy Heart, the solar program manager for the City of Milwaukee who has been tackling permitting issues as part of Grow Solar Wisconsin under the auspices of the Department of Energy's Rooftop Solar Challenge.
The study was conducted in the summer of 2012 and surveyed 273 residential installers with an average of 6.7 years of solar industry experience, gathering data on 546 installations spanning the 12 states—Calif., N.J., Hawaii, Pa., Colo., N.Y., Mass., Ariz., Texas, Ore., Md. and N.M.—that comprise more than 90% of the U.S. residential solar market. Although the study focused on residential solar permitting, 85% of respondents are also engaged in commercial installations.
Kristen Ardani, Solar Technology Markets and Policy Analyst at the National Renewable Energy Laboratory (NREL), has been leading an effort to quantify the soft costs of solar: "To date, data collection and analysis in the area of PV non-hardware costs, including permitting, has been limited. Clean Power Finance's study and the National Solar Permitting Database provide the transparency into PV permitting requirements necessary to drive cost reductions."
The study revealed several trends not directly associated with permitting processes that also have significant ramifications for the growth of the solar industry, including the fact that nearly half of residential solar installations are not priced for individual consumers, but use a flat $/Watt rate. These trends, as well as the permitting findings, will be fleshed out in future whitepapers that will be published periodically over the next year on NSPD website.
A PowerPoint presentation illustrating the full findings of the report and its methodology and offering policy implications and areas for further study can be found on the NSPD website at www.solarpermit.org. Thoughts and feedback on the study and its findings are welcome and may be submitted via the NSPD website.
About Clean Power Finance
Clean Power Finance is driving the mass-market adoption of residential solar by building an online business-to-business marketplace to connect the solar industry and the capital markets. Clean Power Finance provides solar professionals, including marketers, installers, manufacturers and distributors, with access to a variety of non-exclusive, white-label residential finance products and an easy-to-use solar sales quoting and design tool. The company's transparent pricing makes it easy for financial firms and lenders to invest in residential solar projects that provide reliable rates of return. Founded in 2007, Clean Power Finance is venture backed by Kleiner Perkins Caulfield & Byers (KPCB), Google Ventures, Claremont Creek Ventures, Clean Pacific Ventures and Sand Hill Angels. To learn more about how Clean Power Finance can accelerate the growth of solar businesses, please visit www.cleanpowerfinance.com.