According to a new report published by the Department of Energy’s Lawrence Berkeley National Laboratory, installed prices of commercial and residential solar PV systems fell by about 6-14% between 2011 and 2012. The report shows that this drop in price stems from the reduced cost of PV modules. The remainder of the cost, therefore, is tied to the “soft costs” associated with solar PV installations. Soft costs include panel-mounting hardware, labor, taxes, permitting and zoning, and fees.
These soft costs also help explain why solar remains more expensive in the US than in other countries such as Germany Australia, and Italy. Germany, for example, hosts a single national market for solar with standardized processes and regulations. The US, however, has a fragmented regulatory system requiring complex policies, permitting, and zoning. These time-consuming and cumbersome requirements divert resources from solar installers and discourage them from expanding into new jurisdictions.
So how can green banks help? If one considers the cost of capital to qualify as a “soft cost,” green banks can effectively lower the soft costs associated with solar PV by making capital more accessible and affordable to installers. Furthermore, if the availability of inexpensive capital is able to attract enough investors and installers to expand the solar PV market, the policy, permitting, and zoning processes associated with solar installations should become better understood and less laborious.
“Tracking the Sun VI” – Galen Barbose, Naim Darghouth, Samantha Weaver, and Ryan Wiser, July 2013.
“World Solar Prices Will Keep Dropping, but US Costs Will Stay Relatively High,” Henry Gass, August 15, 2013.