Us Market Barriers Permitting Et Al (7 13 11)


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A comprehensive look at the past, present, and future state of solar non-hardware soft cost reduction. "Cutting $500MM of Red-Tape by 2014"

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Us Market Barriers Permitting Et Al (7 13 11)

  1. 1. Overcoming US Market Barriers to PVPermitting, Interconnection and other soft costs in betweenIntersolar, 7/13/2011<br />Doug Payne, SolarTech Executive Director<br />
  2. 2. Our Board<br />Entire Value Chain<br />Systems Approach<br />Collaborative Consortium<br />Our InitiativesLocal best practices Scalable National impact<br />Performance`<br />Installation<br />Workforce<br />Permitting<br />Financing<br />Interconnect<br />
  3. 3. Process + Speed = Scale<br />SolarTech Mission– Local Gov’ts, Utilities, Customers, Banks, and Developers grow the market 3x faster through standardization to achieve economies of scale.<br />Customer Acquisition <br />& Finance<br />Permitting, Inspection, <br />Interconnection<br />Strategy<br /><ul><li>Standardize “Best in Class” processes in customer and project transactions, permitting/inspection interconnection</li></ul>Metrics<br /><ul><li># of Cities, Utilities, Customers, and Banks are using “Best in Class” tools
  4. 4. “Think Velocity”  Total project cycle time </li></ul>< 60days (Res)<br />< 90days (Comm)<br />
  5. 5. “To solve a problem, <br />one must first understand it”<br />
  6. 6. The Industry Pillars – Each play a critical role in achieving Market Evolution<br />Policy<br />Create Markets<br />Products<br />Innovation<br />Speed, Scale, Efficiency<br />Process<br />Process efficiencies enable scale<br />Get here<br />We are here<br />Relative % of market share<br />Rogers Diffusion of Innovation (1962)<br />5<br />
  7. 7. Permitting, Inspection, Interconnection: Everyone’s problem, no-one’s problem<br />6<br />1<br />Federal<br />National Electrical Code (NEC, article 690)<br />50+ x 3<br />State Building Codes (Electrical, Structural, Fire)<br />State<br />18,443 “AHJs” + 3,273 Utilities<br />City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees)<br />Local<br />AHJs = Authorities Having Jurisdiction<br />Forms, Fees, Rates, are ALL different<br />$<br />$<br />Impact extends beyond PV into solar thermal, EE, wind, biomass, etc.<br />
  8. 8. “The U.S. vs Germany comparison as an argument for reducing permitting/interconnection costs is flawed.<br />The root of these costs can be traced to the inherent structural differences in separation of jurisdictional authority at federal, state, and local government in place since Dec 15, 1791”<br />(10th Amendment to the US Constitution, Bill of Rights)<br />
  9. 9. The 21st Century US Permitting story…<br />The Market<br />2006<br />Macro-Policy runways<br />We’re so busy, what Permit costs?<br />2007<br />Macro-Policy reigns<br />Red-Tape starts to hurt<br />2008<br />Hey look at GDE!<br />Where did all this paper work come from?<br />2011<br />Message delivered<br />It’s all about execution<br />2009<br />Hard costs decline, <br />Process Matters<br />Be like “Them”<br />2010<br />Real market pain<br />3-5% lost gross margin<br />Fix it now!<br />The <br />Mess(age)<br />
  10. 10. 2010 Installed Capacity (SEIA / GTM)<br />So what?<br />Distributed PV market was 6-600+MW in 2010<br />Permitting, Inspection, Interconnection costs +/- $1.00 / W on average<br />$600MM of market friction<br />Feb ‘11 SolarTech survey<br />75 companies, 74% residential<br />
  11. 11. Opportunity Cost of Red-Tape to date(installed MW x $/W soft BoS cost)<br />
  12. 12. Lower Permitting / Inspection / Interconnection costs expand the Market, Creates Jobs faster<br />Addressable U.S. Rooftop Market for <br />Residential Customers(2)<br />Tipping point<br />$4.25 per Watt<br />More Jobs<br />Lower Cost<br />Avg. res. PV cost in Germany today<br />US Today<br />Source: ThinkEquity “Think Greentech” Feb 2010. Modified by SunRun (2)<br />The residential market sizing by ThinkEquity assumes that solar facilities are purchased by individual homeowners. We have modified the analysis to reflect additional federal subsidies worth $0.50/W from which commercial owners such as SunRunbenefit.<br />11<br />
  13. 13. “You don’t know where you’re going until you know where you’ve been”<br /> - Hitch<br />
  14. 14. 2011 “Current State – National Leadership”<br />1<br />National Electrical Code (NEC, article 690)<br />Federal<br />Balance of System Costs - up to $15 million over three years<br />Codes, Standards and Processes –<br />Software Design Tools and Databases <br />Regulatory and Utility Solutions<br />Rooftop Solar Challenge - up to $12.5 million<br /> (Local and regional government teams of local governments innovating across)<br />Standardizing permitting processes;<br />Updating planning and zoning codes;<br />Improving interconnection and net metering standards; and<br />Increasing access to financing<br />State Building Codes (Electrical, Structural, Fire)<br />50+ x 3<br />State<br />18,443 “AHJs” + 3,273 Utilities<br />City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees)<br />Local<br />AHJs = Authorities Having Jurisdiction<br />$<br />$<br />Forms, Fees, Rates, are ALL different<br />
  15. 15. 2011 “Current State of the States – Thought Leaders”<br /><ul><li>DOE’ - Solar Powering Your Community: A Guide for Local Governments.
  16. 16. Network for New Energy Choices 2010: Freeing the Grid –State Net Metering Policies,Interconnection Best Practices
  17. 17. SunRun - The Impact of Local Permitting on the Cost of Solar Power.
  18. 18. Colorado’sFair Permit Act (HB-1199)limits gov’t permit fees, plan review fees and other fees to install a solar system.
  19. 19. OregonSolar Installation Specialty Code (OSISC, 10/2010) “Checklist for Prescriptive Photovoltaic Installations”- Model code development, associated checklists
  20. 20. Vermont Energy Act of 2011 (H.56) - net metered solar power in Vermont, as well as implementing a pioneering permitting process for small solar systems (< 5 kW)
  21. 21. The Center for Sustainable Energy (CSE) - New York City’s Solar Energy Future – Solar Energy Policies and Barriers in NY City)</li></ul>1<br />National Electrical Code (NEC, article 690)<br />Federal<br />State Building Codes (Electrical, Structural, Fire)<br />50+ x 3<br />State<br />18,443 “AHJs” + 3,273 Utilities<br />City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees)<br />Local<br />AHJs = Authorities Having Jurisdiction<br />$<br />$<br />Forms, Fees, Rates, are ALL different<br />
  22. 22. 2011 “Current State of a State - CA”<br /><ul><li>The East Bay Green Corridor (EBGC)
  23. 23. Mayors of 8 cities (800,000+ residents), Lawrence Berkeley National Lab Director, Chancellor of the UC (Berkeley) - uniform solar energy permitting collaboration w/industry and utilities.
  24. 24. Sacramento’s Solar Access
  25. 25. Design guidelines, best practices, and education re. solar-friendly zoning, access rights
  26. 26. Solar Sonoma County
  27. 27. Solar ImplementationPlan across a52 members, nine jurisdictions and the county of Sonoma
  28. 28. City of San Diego / CCSE- Progressive fee review, cost-recovery in collaboration w/industry</li></ul>VoteSolar “Project Permit”<br />
  29. 29. “A little visioning exercise”<br />Vision. Action. Destiny.<br />
  30. 30. Customer Acquisition, Permitting, Inspection, and Interconnection costs are <10% of DG PV system costs. BoS Process cost reduction curves expand the market 3xby 2017Industry processes achieve scalability to deploy solar without incentives<br />17<br />“Solar 3.0”TM<br />A National Platform for <br />Process Innovation<br />
  31. 31. Process Efficiency = The last frontier<br />A<br />B<br />Solar1.0<br />Solar2.0<br />Solar3.0 TM<br />Policy (macro)<br />Fed Policy<br />RES/RPS<br />REC’s<br />SB1<br />CSI<br />AB32<br />Products<br />Technology Innovation<br />Maturity<br />Processes<br />Productivity<br />Scale<br />“Total Cost of Ownership”<br />“Best in Class” tools<br />Lower Costs<br />Reduced Risk<br />Faster Projects<br />Better Bottom Line<br />
  32. 32. A path towards “Solar3.0”TM<br />Phase 2<br />Business Innovation<br />Phase 1<br />Policy Innovation<br />Phase 3<br />Technical Innovation<br />
  33. 33. Phase 1 – Policy Innovation<br />Phase 1<br />Local Policy Innovation<br />Exists. Scale it.<br />Improve, then scale<br />New<br /><ul><li>Scale, standardize, and drive adoption of initial policysolutions (eg. VoteSolar Project Permit guidelines)
  34. 34. Scale adoption of SolarABCs Expedited Permit Standards work to 50% of US <2 yrs
  35. 35. Uniform inspection standards for authorities having jurisdiction (AHJ) (example Brooks Engineering checklist)
  36. 36. Adopt, Implement, Jointly develop standards at local level
  37. 37. A balanced approach to permitting fees
  38. 38. Processes for Commercialization, New Technologies</li></ul>20<br />
  39. 39. Phase 2 – Business Innovation<br />One-Stop-Shop for municipal rules, regulations, and building codes, including changes<br />Improve consistency in pass/fail criteria, guidance on requirements to ensure approval, industry held accountable. Set standards where:<br />Permitting Pass/Fail<br /> = Inspection Pass/Fail <br />= Interconnection Pass/Fail criteria<br /> Wherever possible, for std systems<br />Cost recovery “plus” model <br />Industry adheres to State or National standards<br />AHJs implement consistent requirements, and better visibility<br />Resource gaps covered through incremental fees above current level<br />Phase 2<br />Business Innovation<br />Exists. Scale it.<br />Improve, then scale<br />New<br />21<br />
  40. 40. Phase 3 and beyond… Technical Innovation<br /><ul><li>Online Portals – NEC code versions, Fees, etc can inform / drive Federal, State, Local policy
  41. 41. Use technology, enterprise S/W, IT to integrate Permitting, Inspection, Interconnection requirements into 1-step, pass/fail criteria
  42. 42. Automation to MOVE information
  43. 43. Software tools, applications, and systems based on open architectures across Cities, Utilities, Industry
  44. 44. Off the shelf solutions, on-line, paperless submittals</li></ul>Phase 3<br />Technical Innovation<br />Exists. Scale it.<br />Improve, then scale<br />New<br />22<br />22<br />
  45. 45.<br />Regional/Local Governments <br />Utilities <br />Industry <br />Technology <br />Finance<br />23<br />
  46. 46. CA Solar Challenge -“Google 20%’ers”<br />Technology Category – Create a platform for open access to aggregated information related to Permitting, Inspection, and Interconnection requirements at Local levels. Leverage technology to enable process automation through software tools, applications, and IT systems based on open architectures that share and move solar project information between industry, cities, and utilities during the project lifecycle.<br /><br />“Inspired by ”<br />24<br />
  47. 47. So how does this all fit together?<br />National<br />DOE / Challenge<br />The CA Solar Challenge<br />Where local governments, utilities, and industry work on real projects, with less paperwork, at lower prices, and at faster speeds. <br />25<br />
  48. 48. A National Roadmap for BoS ‘soft’ cost reduction<br /><ul><li>Collaboration through standardization
  49. 49. Scalable Permitting, Inspection, Interconnection processes
  50. 50. Accelerates Private/Public workflow driven cost reductions for PV
  51. 51. Best In Class tools, reduce cycle time and soft costs</li></ul>Non-Hdwr BOS <br />costs as % of <br />Installed Costs <br />2012<br />2013<br />2014<br />$27MM / 1,991 = $13,561 per City <br />~1.7% Cost Recovery to date<br /><20%<br /><30%<br /><10%<br />
  52. 52. Everyone Benefits<br />Cities & Counties<br />U.S. Solar Companies<br />Utilities<br />Create lasting, local jobs<br />Economic Development<br />A Greener Community<br />Revenue grows with volume & tax base<br /><ul><li>Customer service
  53. 53. Responsiveness
  54. 54. Inspire loyalty
  55. 55. Reduce administrative costs, less paperwork
  56. 56. Cut red tape by $0.50 / W
  57. 57. More lasting local jobs, faster
  58. 58. Validate best practices, costs
  59. 59. Increase market size</li></li></ul><li>Turn the page. A new story going forward.<br />Stop comparing US vs. Germany. <br />We’re not going to re-write the US constitution, at least not before <$1/Wpmods<br />The “Solar3.0 Story” TM<br />Chapter 1 - $27MM DOE catalystdrives down BoS soft costs, Challenges Cities <br />Chapter 2 - Jobs. Jobs. Jobs.<br />Chapter 3 – Leadership – DOE, Cities/States, Utilities, Industry (ALL of us!)<br />Chapter 4 – Education –,,<br />Chapter 5 – Tell the story, start using the tools, carry the message.<br />Chapter 6 - KISS principle – Ex: Start with homes <15kW / 13.44 Wp inv rating, <br /> <4 strings, code compliant comp roofs, NEC2008, <5lbs/sq ft<br />Chapter 7 – Love your NGO(s), State Campaigns, Local Advocates<br />Chapter 8 – Investment- Time, treasure, talent and US “Process Infrastructure”<br /> Standardization isn’t free. Market based solutions are needed NOW! <br />Chapter 9 – Innovation (PV+IT<C)<br />Chapter 10 – Wealth Creation (A $600M problem becomes a $Billion solution)<br />
  60. 60. The bottom line<br />US solar market is 18,000 little markets, get over it.<br />$600MM of market friction needs to simply go away<br />Assuming 1,570MW of Res PV by 2014 (Navigant, conservative est.)<br />Permitting is a $1,155MM headache even if it improves 10% / yr<br />$27MM of FY11 DOE funding is 10X less than needed<br />DC is in budget & political gridlock going into an election<br />Cities and States are not going to fund “standardization”<br />Market funded “Process / Delivery Systems” barely exist<br />Are we so enamored by the need for policy, and our thirst for technology, that we’re losing sight of funding our ability to deliver?<br />Is there enough innovation in this space to keep pace with demand?<br />
  61. 61. Thank you!<br />Doug Payne<br />Executive Director, SolarTech<br /><br /><br /><br />Other resources<br /><br /><br />
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