The United States Energy Department's National Renewable Energy Laboratory (NREL) has concluded a second detailed report on solar financing and other non-hardware costs also called "soft costs" involved in solar installations. They conclude that “soft costs” total 64% of the full price of residential solar energy systems.
This report goes further to explain how soft costs have become a major part of the upfront solar installation costs.
NREL Press Release Reads:
This report presents results from the second U.S. Department of Energy (DOE) sponsored, bottom-up data-collection and analysis of non-hardware balance-of-system costs—often referred to as “business process” or “soft” costs—for U.S. residential and commercial photovoltaic (PV) systems. Annual expenditure and labor-hour-productivity data are analyzed to benchmark 2012 soft costs related to (1) customer acquisition and system design and (2) permitting, inspection, and interconnection (PII). We also include an in-depth analysis of costs related to financing, overhead, and profit.
The second annual survey of U.S. PV installers was deployed from September 2012 to May 2013, focusing on customer acquisition and PII costs for the study period of January 1 to June 30, 2012. We gathered data from 55 residential PV installers, representing 4,260 residential installations and approximately 27 MW of residential capacity installed during the first half of 2012. We cleaned the data for outliers, yielding sample sizes ranging by cost category from 47 to 53. We also gathered data from 22 commercial PV installers, representing 269 commercial PV installations during the 6-month study period for a total of 66 MW of capacity.
According to our analysis, the soft costs accounted for a significant portion of total installed PV system prices in the first half of 2012: 64% of the total residential system price, 57% of the small (less than 250 kW) commercial system price, and 52% of the large (250 kW or larger) commercial system price.
In contrast to the first edition of this report, in this second edition we have unpacked the “other soft cost” category using a detailed “bottom-up” cost-accounting framework into five categories: transaction costs, indirect corporate costs, installer/developer profit, supply chain costs, and sales tax. Specifically, we model a third-party ownership structure, capturing the costs of doing business that have not been previously quantified, such as engineering, procurement, and construction (EPC), developer and finance department staff and overhead, professional/legal services, capital costs during construction, and other costs that may not be attributable to specific PV projects.
Credit:
NREL is the U.S. Department of Energy's primary national laboratory for renewable energy and energy efficiency research and development. NREL is operated for the Energy Department by the Alliance for Sustainable Energy, LLC.
Report + Press Release
