Affordability of rooftop solar systems after relinquishing tax incentives: a consideration
In the rapidly growing solar industry, one issue has been consistently hindering progress: slow and cumbersome permitting processes. This issue, according to Barry Cinnamon, CEO of Northern California solar and battery installation firm Cinnamon Energy Systems, takes a significant toll on solar installers, stretching the time it takes to complete projects.
The cost of permitting is a major contributor to the high costs of solar installations in the United States. A typical solar installation in the U.S. can add roughly $1 per watt to the overall cost, which can significantly inflate the price of a solar system. For instance, a 7-kilowatt solar system with a 7 kilowatt-hour battery, a common setup, costs approximately $14,000 in Australia, but a staggering $36,000 in the U.S.
However, there is a glimmer of hope. The Solar Automated Permit Processing (SolarAPP) initiative, launched in 2018, aims to streamline permitting processes. This initiative has resulted in the development of SolarAPP+, an "instant permitting" software platform that is now used by over 160 cities and counties in the U.S. to process solar permits quickly.
Andrew Birch, a 25-year industry veteran, focuses on cutting "soft costs" in solar projects, which include factors like customer acquisition and project management, as well as permitting and interconnection processes. To this end, Birch co-founded and leads OpenSolar, a company that offers free solar project design and management software to installers, funded by equipment manufacturers and dealers.
Local authorities in several states, including California, Colorado, and Massachusetts, are already using the SolarAPP software tool to expedite the approval of solar and battery systems. This not only saves time but also reduces errors, ensuring a smoother and more efficient process for all parties involved.
Unfortunately, the new GOP megabill is set to increase installation costs by eliminating the decades-old tax credit for rooftop solar. After this year, households will lose access to tax credits for 30% of the cost of solar, batteries, and other home clean-energy equipment. This could further discourage homeowners from installing solar panels, especially given the already high costs associated with the industry.
Moreover, companies offering solar systems under third-party ownership models will face uncertain restrictions that could choke off that part of the market. The expense associated with batteries is becoming increasingly common due to the desire for backup power and new incentive structures prioritizing storage, especially in California.
Despite these challenges, the drive towards solar energy continues. The world's rooftop solar leader, Australia, has lower soft costs compared to the U.S., offering a model for efficient permitting and installation processes. As the industry evolves, it's clear that solar permitting reform is a significant target for reducing soft costs in solar projects, making solar energy more accessible and affordable for homeowners across the U.S.
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