On the Cusp of a Boom, 'Soft Costs' Pose a Challenge for Solar

Solar energy is surging in the United States, but the biggest boost isn't coming from better hardware.  Instead, innovative business models and cutting red tape are the seeds that need to be planted for the solar energy sector to bloom.

The technology behind solar power continues to ramp up in performance and drop in price.  As it does so, the soft costs -- permitting, financing, installation -- are making up a bigger portion of the price tag for new projects.

The Department of Energy reported that soft costs now make up more than half the price tag of installed solar power, with residential solar bearing the largest burden of these expenses.

Rules for what you can put on your rooftop, inspection certificates and interconnection fees all vary among cities, counties and states, adding up to a huge headache for solar installers.

It's big part of why solar energy penetration in the United States has lagged behind countries like Germany, even though Germany gets far less sunlight on average.

"The paperwork burden and policy instability both drive up 'soft-costs' to the point where non-hardware costs make up an unreasonable portion of total costs in the U.S., especially for rooftop systems," said Justin Baca, senior director of research for the Solar Energy Industries Association, in an email.  "This is not the case in countries that have more streamlined regulatory environments."

Paring down soft costs, rather than simply hoping for a better solar panel, may then be the best bet for making photovoltaics competitive with coal and natural gas.

Read more at On the Cusp of a Boom, 'Soft Costs' Pose a Challenge for Solar