The Potential Impact of PV Soft Costs George Washington University 4th Annual Solar Summit Robert Margolis Kristen Ardani April 12, 2012NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Outline• Why we should care about non- hardware “soft” costs for PV systems.• Benchmarking non-hardware costs in the U.S.• With rapid decline in hardware costs, reducing soft-cost is becoming increasingly important. 2
There is More to a System than Hardware 5) Monitor performance $$$ 4) Inspect and interconnect 3) Permit and install - 2) Finance your system1) Choose • In the U.S., the process of selecting an installerinstaller through commissioning and operating a PV system can add significant time and cost to project completion. • Inefficient supply chains, O&M, and delays can also increase cost. Need for streamlined processes. 3
Ex: Permitting, Inspection, Interconnection (PII) The Problem : Inconsistent PII requirements, delays, and lengthy wait times are costly. • 18,000+ local jurisdictions with different PV = permitting requirements. • 5,000+ utilities with interconnection standards and net metering programs. ≠ Permitting fees vary widely across the U.S. ex) for 5kW system: ≠ • Typical permit fees are $200-$450/install (as high as $2000/install). Currently in the U.S. PII typically range from $0.15/W to $0.25/W, and can be as high as $0.5/W depending on jurisdiction. Uniform processes 4
NREL Recently Benchmarked “Soft” Costs• Benchmarked 2010 non-hardware balance of system (soft- BoS) costs and integrated into bottom up PV system price model.• Distributed an online data collection tool to residential and commercial PV installers. • Data collection focused on annual/per install labor hours expended on specific tasks to capture time and cost of PV business process.• Data has been processed to estimate the cost/W for: • Installation • Permitting, Inspection, Interconnection • Customer acquisition • Financing 5
2011 Residential Total Installed PV System Price $8.00 Financing $7.00 Marketing and $6.35 Advertising $6.00 System Design NREL Data Collection $5.00 Customer Acquisition $U.S./Wp DC $4.00 Permitting, Inspection, Interconnection (PII) $3.00 Installation Labor $2.00 Profit on Materials (Materials Profit) $1.00 Profit on Installation Labor (Labor Profit) $0.00 Sales Tax (5%) Module, Inverter, Installation Materials (Hardware)• Total non-hardware BOS (including profit) $3.35/W; approx 54% of total price• NREL data collection non-hardware BOS $1.78/W; approx 53% of total non-hardware BOS 6
2011 Residential Non-Hardware Breakdown Installation Labor• Sample main point Permitting, Inspection, Interconnection Labor 2% 9% o Sample sub-bullet Permit fee ($431) 1% – Sample sub-bullet Customer Acquisition and System Design Sample sub-bullet 11% Non- Hardware Profit on Labor Hardware 5% 46% 54% $3/W $3.35/W Profit on Materials 15% Sales Tax 5% Financing 4% 7
Soft Costs: U.S. vs. Germany Residential Installed PV System Prices in the U.S. and Germany, 2011 • There is ~$2/W difference in installed system price between the U.S. and Germany. • Minimal and streamlined processes in Germany. • More developed supply- Soft Costs chains, distribution channels, Soft and competition in Germany. Costs • Quotes for PV systems in the U.S. continued to decline by ~$1.30/W between Q4 2010 and Q4 2011, mostly due to module cost declines.Source: NREL and LBNL 8