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

1. Overcoming US Market Barriers to PVPermitting, Interconnection and other soft costs in betweenIntersolar, 7/13/2011 Doug Payne, SolarTech Executive Director

2. Our Board Entire Value Chain Systems Approach Collaborative Consortium Our InitiativesLocal best practices Scalable National impact Performance` Installation Workforce Permitting Financing Interconnect

4. “Think Velocity”  Total project cycle time < 60days (Res) < 90days (Comm)

5. “To solve a problem, one must first understand it”

6. The Industry Pillars – Each play a critical role in achieving Market Evolution Policy Create Markets Products Innovation Speed, Scale, Efficiency Process Process efficiencies enable scale Get here We are here Relative % of market share Rogers Diffusion of Innovation (1962) 5

7. Permitting, Inspection, Interconnection: Everyone’s problem, no-one’s problem 6 1 Federal National Electrical Code (NEC, article 690) 50+ x 3 State Building Codes (Electrical, Structural, Fire) State 18,443 “AHJs” + 3,273 Utilities City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees) Local AHJs = Authorities Having Jurisdiction Forms, Fees, Rates, are ALL different $ $ Impact extends beyond PV into solar thermal, EE, wind, biomass, etc.

8. “The U.S. vs Germany comparison as an argument for reducing permitting/interconnection costs is flawed. 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” (10th Amendment to the US Constitution, Bill of Rights)

9. The 21st Century US Permitting story… The Market 2006 Macro-Policy runways We’re so busy, what Permit costs? 2007 Macro-Policy reigns Red-Tape starts to hurt 2008 Hey look at GDE! Where did all this paper work come from? 2011 Message delivered It’s all about execution 2009 Hard costs decline, Process Matters Be like “Them” 2010 Real market pain 3-5% lost gross margin Fix it now! The Mess(age)

10. 2010 Installed Capacity (SEIA / GTM) So what? Distributed PV market was 6-600+MW in 2010 Permitting, Inspection, Interconnection costs +/- $1.00 / W on average $600MM of market friction Feb ‘11 SolarTech survey 75 companies, 74% residential

11. Opportunity Cost of Red-Tape to date(installed MW x $/W soft BoS cost)

12. Lower Permitting / Inspection / Interconnection costs expand the Market, Creates Jobs faster Addressable U.S. Rooftop Market for Residential Customers(2) Tipping point $4.25 per Watt More Jobs Lower Cost Avg. res. PV cost in Germany today US Today Source: ThinkEquity “Think Greentech” Feb 2010. Modified by SunRun (2) 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. 11

13. “You don’t know where you’re going until you know where you’ve been” - Hitch

14. 2011 “Current State – National Leadership” 1 National Electrical Code (NEC, article 690) Federal Balance of System Costs - up to $15 million over three years Codes, Standards and Processes – Software Design Tools and Databases Regulatory and Utility Solutions Rooftop Solar Challenge - up to $12.5 million (Local and regional government teams of local governments innovating across) Standardizing permitting processes; Updating planning and zoning codes; Improving interconnection and net metering standards; and Increasing access to financing State Building Codes (Electrical, Structural, Fire) 50+ x 3 State 18,443 “AHJs” + 3,273 Utilities City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees) Local AHJs = Authorities Having Jurisdiction $ $ Forms, Fees, Rates, are ALL different

16. Network for New Energy Choices 2010: Freeing the Grid –State Net Metering Policies,Interconnection Best Practices

17. SunRun - The Impact of Local Permitting on the Cost of Solar Power.

18. Colorado’sFair Permit Act (HB-1199)limits gov’t permit fees, plan review fees and other fees to install a solar system.

19. OregonSolar Installation Specialty Code (OSISC, 10/2010) “Checklist for Prescriptive Photovoltaic Installations”- Model code development, associated checklists

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. The Center for Sustainable Energy (CSE) - New York City’s Solar Energy Future – Solar Energy Policies and Barriers in NY City)1 National Electrical Code (NEC, article 690) Federal State Building Codes (Electrical, Structural, Fire) 50+ x 3 State 18,443 “AHJs” + 3,273 Utilities City Building Codes, Policies, FERC (Electrical, Structural, Fire, Fees) Local AHJs = Authorities Having Jurisdiction $ $ Forms, Fees, Rates, are ALL different

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. Sacramento’s Solar Access

25. Design guidelines, best practices, and education re. solar-friendly zoning, access rights

26. Solar Sonoma County

27. Solar ImplementationPlan across a52 members, nine jurisdictions and the county of Sonoma

28. City of San Diego / CCSE- Progressive fee review, cost-recovery in collaboration w/industryVoteSolar “Project Permit”

29. “A little visioning exercise” Vision. Action. Destiny.

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 17 “Solar 3.0”TM A National Platform for Process Innovation

31. Process Efficiency = The last frontier A B Solar1.0 Solar2.0 Solar3.0 TM Policy (macro) Fed Policy RES/RPS REC’s SB1 CSI AB32 Products Technology Innovation Maturity Processes Productivity Scale “Total Cost of Ownership” “Best in Class” tools Lower Costs Reduced Risk Faster Projects Better Bottom Line

32. A path towards “Solar3.0”TM Phase 2 Business Innovation Phase 1 Policy Innovation Phase 3 Technical Innovation

34. Scale adoption of SolarABCs Expedited Permit Standards work to 50% of US <2 yrs

35. Uniform inspection standards for authorities having jurisdiction (AHJ) (example Brooks Engineering checklist)

36. Adopt, Implement, Jointly develop standards at local level

37. A balanced approach to permitting fees

38. Processes for Commercialization, New Technologies20

39. Phase 2 – Business Innovation One-Stop-Shop for municipal rules, regulations, and building codes, including changes Improve consistency in pass/fail criteria, guidance on requirements to ensure approval, industry held accountable. Set standards where: Permitting Pass/Fail = Inspection Pass/Fail = Interconnection Pass/Fail criteria Wherever possible, for std systems Cost recovery “plus” model Industry adheres to State or National standards AHJs implement consistent requirements, and better visibility Resource gaps covered through incremental fees above current level Phase 2 Business Innovation Exists. Scale it. Improve, then scale New 21

41. Use technology, enterprise S/W, IT to integrate Permitting, Inspection, Interconnection requirements into 1-step, pass/fail criteria

42. Automation to MOVE information

43. Software tools, applications, and systems based on open architectures across Cities, Utilities, Industry

44. Off the shelf solutions, on-line, paperless submittalsPhase 3 Technical Innovation Exists. Scale it. Improve, then scale New 22 22

45. www.solartech.org/thechallenge Regional/Local Governments Utilities Industry Technology Finance 23

46. CA Solar Challenge -“Google 20%’ers” 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. https://sites.google.com/site/solperpublic/ “Inspired by ” 24

47. So how does this all fit together? National DOE / Challenge The CA Solar Challenge Where local governments, utilities, and industry work on real projects, with less paperwork, at lower prices, and at faster speeds. 25

49. Scalable Permitting, Inspection, Interconnection processes

50. Accelerates Private/Public workflow driven cost reductions for PV

51. Best In Class tools, reduce cycle time and soft costsNon-Hdwr BOS costs as % of Installed Costs 2012 2013 2014 $27MM / 1,991 = $13,561 per City ~1.7% Cost Recovery to date <20% <30% <10%

53. Responsiveness

54. Inspire loyalty

55. Reduce administrative costs, less paperwork

56. Cut red tape by $0.50 / W

57. More lasting local jobs, faster

58. Validate best practices, costs

60. The bottom line US solar market is 18,000 little markets, get over it. $600MM of market friction needs to simply go away Assuming 1,570MW of Res PV by 2014 (Navigant, conservative est.) Permitting is a $1,155MM headache even if it improves 10% / yr $27MM of FY11 DOE funding is 10X less than needed DC is in budget & political gridlock going into an election Cities and States are not going to fund “standardization” Market funded “Process / Delivery Systems” barely exist 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? Is there enough innovation in this space to keep pace with demand?

61. Thank you! Doug Payne Executive Director, SolarTech www.solartech.org www.solartech.org/thechallenge permitting@solartech.org Other resources http://www.solarabcs.org/about/publications/reports/expedited-permit/ http://votesolar.org/city-initiatives/project-permit/