Soft-Costs Now Biggest Part of Residential Solar Installation Pie (pictures)
Solar hardware costs have never been cheaper, but as new government studies shows the so-called “soft-costs” of a residential solar installation have mostly remained stable. As a result, soft costs now make up the largest expense during residential solar installations.
These studies were commissioned by the U.S. Energy Department’s National Renewal Energy Laboratory (NREL),and were released Dec. 2. According to the NREL research interviews included 55 residential photovoltaic (PV) installers, representing about 27 megawatts of capacity, installed during the first half of 2012.
The NREL compared data from 2010, and 2012. According to the findings of the study soft-costs represented 64 percent of the total price for residential systems. That figure was 50 percent in 2010.
What are these soft-costs? They are, essentially, everything that isn’t solar hardware. For residential systems the biggest soft-costs are: supply chain costs ($0.61 per watt), installation labor ($0.55/W), customer acquisition ($0.48/W), and what were described as “indirect” corporate costs, such as office management and accounting. This last group ate up $0.47/W. Additional soft-costs included permitting, inspection, subsidy applications, and system design.
Though these costs are a majority of all residential solar installation costs it should be noted that the total soft-costs of a residential solar installation have gone down a touch from 2010 to 2012, from $3.30/W in 2010, to $3.19/W in 2012, or 3.3 percent. This means soft-costs are a bigger piece of today’s solar installation pie, but the pie piece itself is just a bit smaller than two years ago.
Why are soft-costs holding fast? Tina Casey, a senior reporter at Cleantechnica.com, phrased it this way: “The new studies … may simply indicate that soft costs have remained harder to budge when the cost of solar cells is dropping.”
The NREL also studied the cost of third party ownership of solar systems. This may sound complicated but what it means is that some home owners and businesses simply lease a solar system from a vendor rather than purchase one. This also has a cost, of course, adding $0.78/W to residential systems.
The NREL cautions that it can be hard to read too much into these figures, as far as market impact goes. “It is difficult to know for certain how many projects are deterred in this way each year,” the studies’ authors wrote, “but the issue underscores the importance of considering market barriers and other market factors, rather than limiting soft-cost analysis to installed costs.”
(Image via the National Renewal Enegy Laboratory)