The ‘Costs’ of Permitting Solar Installations

The rapid cost declines for photovoltaic (PV) solar energy systems have provided a large boost for the solar industry in the last few years. However, with this rapid cost decline, non-hardware costs, also known as soft costs, are accounting for an increasingly larger share of total system costs. The U.S. Department of Energy (DOE) is supporting efforts around the nation to help understand these soft costs, including the often costly and time-consuming local permitting process. A recent study from Lawrence Berkeley National Laboratory (LBNL) examines the effect of city-level permitting processes on residential PV installation prices, and development times across cities in California.

The Impact of City-level Permitting Processes on Residential Photovoltaic Installation Prices and Development Times: An Empirical Analysis of Solar Systems in California Cities highlights the importance of an efficient solar permitting process and how it leads to reduced total installed system prices and shorter project development times. The results suggest that cities with the most favorable scores, based on data from the DOE’s Rooftop Solar Challenge Program, have reduced average residential PV prices by $0.27-$0.77/ W (4%-12% of median PV prices in California), compared to cities with the most tedious (lower scored) permitting process. Similarly, cities with favorable scores shortened PV system development times by an average of 24 days (25% of the median development times), compared to their counterparts with more onerous requirements.

The authors used various databases to gather data on PV installation costs, development costs, and other city-level variables, such as median household income and education level. The primary data source, DOE’s Rooftop Solar Challenge Program, included city-level permitting process ‘scores’ from over 290 jurisdictions nationwide, derived from a questionnaire relating to these cities’ overall permitting processes. While the analysis only included residential systems smaller than 10kW, two main scenarios were examined: customer-owned and third party operated (TPO) systems and customer-only owned systems.

Predicted solar installation prices using permitting scores, all else being equal - From LBNL Report, "The Impact of City-level Permitting Processes on Residential Photovoltaic Installation Prices and Development Times: An Empirical Analysis of Solar Systems in California Cities"

Predicted solar installation prices using permitting scores, all else being equal – From LBNL Report, “The Impact of City-level Permitting Processes on Residential Photovoltaic Installation Prices and Development Times: An Empirical Analysis of Solar Systems in California Cities”

As seen above, under the customer-owned / TPO system, regression outputs illustrated that, all else being equal, “improving the permitting process by 100 points (using the DOE’s 250-point scale) appears to lower the average installation price by around $0.20/W”. For customer-only owned systems, the same increase of 100 points lowered average installation prices by about $0.30-$0.50/W.

Additional analyses from the report suggest that better permitting practices also lead to condensed development times: a 100 point improvement, all else being equal, can speed development time by about 10%.

This research provides additional insight into the significance of streamlining the permitting process, and complements the many programs and resources available to aid local jurisdictions around the nation with the permitting process. IREC and the Vote Solar Initiative provide a great list of best permitting practices for local jurisdictions. Most importantly, however, this research adds value to existing attempts to evaluate permitting impacts on the national or regional scale, which “can mask the more-substantial impacts that occur at a local level across individual cities”

A number of other great informational products produced by the Solar Outreach Partnership team are available for free download from the Resources page on our website. Furthermore, The Solar Foundation and other members of the Solar Outreach Partnership are eager to help your community address its permitting practices through our complimentary Technical Assistance program.

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