Red-tape on solar costing consumers thousands

Faith Merino · January 20, 2011 · Short URL:

A study released by SunRun finds that permitting processes are preventing solar power adoption

Anyone who’s ever had to wait in line at the DMV for two hours knows how inept the government can be when it comes to getting things done (this makes itself painfully evident when you get to the front counter only to find out that you are missing one critical piece of paperwork and will now need to go home and get it, come back to the DMV, and wait another two hours).  

For California business owners and entrepreneurs, dealing with government red tape is a daily grind that has been known to drive many out of the state altogether.  The businesses that probably get hit the hardest are those that have to do with energy and natural resources.  Bureaucratic bungling and regulatory red-tape doesn’t just wither businesses—it may also be impeding widescale adoption of more energy efficient technologies.  One study released Thursday by solar power company SunRun finds that permitting and inspection processes in setting up solar power systems are resulting in heavy costs to the consumer.

SunRun researchers gathered cost data for the study by interviewing operations teams at fifteen installers in their network, which spans seven states and represents 20% of the solar market.  What they found was that excessive fees, slow inspection processes, ludicrous manual application submissions, and wide variation in policies from city to city are costing the average consumer an additional $2,500 per installation, or an additional $0.50 per watt. 

“Every city and town has its own set of regulations and requirements for solar installations. Our research identifies inconsistencies in local permitting as one of the most critical roadblocks to a sustainable, subsidy-free solar industry,” said SunRun CEO and Co-founder Edward Fenster in a prepared statement.

Indeed, the study finds that if the permitting process were more streamlined and inconsistent policies and regulations were made more uniform, the U.S. government on the whole could save $1 billion over the course of five years.

By comparison, countries like Germany and Japan have much more efficient permitting processes, having eliminated permitting for residential solar power systems.  In fact, solar installation costs in Germany are about 40% lower than they are in the U.S., and in the last two years Germany has installed solar power systems in some one million homes while the total number of U.S. homes ever to install solar power systems has only reached 120,000.   

The study estimates that a standardization of policies and permitting processes would make solar installations affordable for 50% of U.S. households.

Habitat for Humanity, the non-profit organization that builds homes for working families living below the poverty line, began installing solar panels in the houses that it builds in recent years, but it manages to get around the costs through grants and partnerships.  PG&E recently announced a partnership with Habitat to front the full cost of solar panel installations in all of the Habitat homes built in Northern and Central California. 

But for independent businesses and startups, the cost of trying to install solar power systems can be crippling.  The study’s researchers noted the story of one installer who reported driving three hours to drop off a permit, only to find out that the jurisdiction was short on staff and had outsourced to an office just three blocks from the installer’s office.  Additionally, waiting for an inspection can take weeks—which translates to weeks in which nothing gets done.  And then, the actual inspection day might require one or more employees to sit around for hours simply waiting for an inspector to arrive (I can personally vouch for this.  A friend of mine who is a supervisor for a general contractor has whole days where he just sits and waits for an inspector to show up).

The study suggests that the Department of Energy standardize the permitting process by creating contests that reward jurisdictions for improving key solar states, funding national, state, and local advocates to encourage adoption, and create an online common application  tool along with a city-by-city compliance database. 

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