National Bo S Process Cost Webinar

National “Balance of System Cost” Reduction
Roadmap

Permitting, Inspection, Interconnection
Tuesday January 11th, 2011

Making Solar Happen. Since 2006.

Introductions
• Doug Payne Executive Director, SolarTech Co-founder,

Webinar Panel Moderator

• Tom McCalmont CEO McCalmont Engineering

Co-Founder, Board Chair of SolarTech

• Angiolo Laviziano CEO Mainstream Energy / REC Solar

• Ned Harvey COO Rocky Mountain Institute

• Greg Sellers President, Burnham Energy

Doug Payne Tom Angiolo Ned Harvey Greg Sellers
McCalmont Laviziano

About SolarTech

Scalable, Local best EERE

practices, National
impact Performance

CPUC
Collaborative Installation Workforce

Consortium
State level Fed level

Integrated
Permitting
Systematic methods CPUC
Financing

EERE
Interconnect
Solar
America
SVLG
Cities
Solar
America
CPUC : California Public Utility Commission Cities
EERE : Energy Efficiency & Renewable Energy
IREC : Interstate Renewable Energy Council
SEPA : Solar Electric Power Association
SVLG : Silicon Valley Leadership Group
UL: Underwriters Laboratories
NABCEP: N.A. Board of Certified Energy Practitioners

Making Solar Happen

Framing today’s discussion

Non-Hardware costs now account for over
50% of PV system costs.

Current BoS Process cost curves put $1/W
by 2017 DOE goal(s) at risk

Industry processes lack scalability to meet
US / DOE goals

4

Non-Hardware costs are now > 50%
(SolarABCs, DOE, Navigant)

BoS slope
must get
steeper
<2 yrs


Permitting, Inspection, Interconnection:
Everyone’s problem, no-one’s problem

Federal National Electrical Code
(NEC, article 690)
1
State State Building Codes
50+ x 3 (Electrical, Structural, Fire)

City Building Codes, Policies,
Local 18,443 “AHJs” + 3,273 Utilities FERC (Electrical, Structural, Fire,
Fees)
AHJs = Authorities Having Jurisdiction

$ $ Forms, Fees, Rates, are
ALL different

Impact extends beyond PV into solar thermal, EE, wind, biomass, etc.

6
Proprietary & Confidential
All Rights Reserved www.solartech.org Making Solar Happen. Since 2006.

DOE is aware of the issues, we need to make it real (data)


Accurate?
DOE baseline costs ($/Wp) Ranges?
11/2010 Baseline - $5.08, NREL. Categories?
Permitting work, Inspection, Interconnection is under system design,
mgmt, and marketing

Not included / unknown:
Permit dropouts Permitting delays Multiple trips
Inspection failures Interconnection dropouts Interconnection delays


Industry Perspectives - Discussion

9

Solving the Permitting &
Inspection Challenge
• Innovation industries in the U.S. achieved scale demand
driven and without many dependencies.
– Computers people wanted desktop calculating power
– Cell phones people wanted personal communications
– Internet people wanted readily searchable information
• Energy/renewables depend on Old World industries.
– Utilities – 125 years old
– Building codes & permits – 3,800 years old
– Government – 195,000 years old
• These dependencies create barriers to achieving massive
scale quickly.
• We need to invest in a Manhattan Project to dramatically
improve processes so renewable energy can achieve scale.

• Our understanding of the situation in the solar industry
– Achieving scale in manufacturing and installation is the critical path
for driving costs down.
• RMI believes
– There are few if any real long-lasting technology challenges to
achieving Massive Scale in the US Solar industry that won't on their
own move faster than the process and regulatory challenges.
• We should
– Develop a logical model we can use which ties all the major steps
required to get to the $1/watt installed to scale and then focus our
discussion on the critical barriers to achieving massive scale in the
solar industry as process related.


There are two possibilities to decrease BOS cost
• BOS Design Cost – These were dealt with in the $1/Watt workshop.
– Design cost are decreasing steadily.
– Example: Since 2007 design cost for residential mounting structures has come down ~25%
from about $0.22/Watt to around $0.16-0.17/Watt today. Additional savings due to labor
efficiency gains.
– Market forces ensure product and cost innovation

• BOS Process Cost – Focus of SolarTech delegation
– Permitting, interconnection, inspections, etc. which have an impact on material cost as well
as administrative expenses
– Almost completely neglected during the $1/Watt workshop.
– Example: Permitting costs for residential PV have remained relatively stagnant at $.08/watt
on average, with the majority falling between $.05/watt and $.10/watt. For commercial-scale
PV cost have stayed at $.05/watt with the majority falling between $.05 - $.12 /Watt.
– Reducing cost is a time-consuming function of working with numerous (and often financially-
pressed) local government agencies to enable change or re-interpretation of rules and
regulations
– System challenge, making progress very slow without a federal policy champion

• Some examples of BOS process cost that mock $1/ w roadmap dream:
Rules can be Excessive
• EG FEMA flood zone issues in the Sacramento area.
– a. Summary: new rule adopted that prohibits any home remodel or addition (including solar) if said
improvement value is greater than 50% of the home’s value (home only, not property).
– b. Sungevity systems valued by generic “non LADWP” appraisal at $7,800 per KW DC and unique in lease terms
vs. purchase.
– Consequence – Any system size above 4KW sold will likely be rejected by local planning department in light of new
rule. Depends on homes value against value of PV system per appraisal terms. Therefore the solar capital is OSA!

Rules are Inconsistent
• EG CA Fire Marshall guidelines.
– a. Not uniformly adopted in CA let alone Western States.
– b. Lack of standardization requires significant data base management to keep up with local changes to adopted
guidelines. As a result we’re spending 3x as much on these back office labor costs than installation labor.

Rules can be Crazy-making
• EG Home Owner violations, where PV permit held hostage
– El Cerrito CA/ Tiburon CA are famous for this. Upon final PV inspection AHJ requires anything from fire alarms,
service mast securement, water heater earthquake strapping etc be brought up to code by solar contractor.


• Challenge:
– Building in most solar regions has slowed to a crawl
– Cities have significantly reduced plan review and inspection staff
– Remaining staff less able to process and inspect solar projects

• Solution 1: Allow installers to use third party plan
checkers and inspectors for small PV
– Allows market choice as way to expedite plan review and inspections
– Enables consistent deployment of Solar ABCS level best practices
– Encourages more consistent and verifiable permitting and inspections
– Saves cities money while enabling them to tout their “solar leadership”
– Gives DOE leadership role w/out usurping local control

• Solution 2: Develop Uniform Online Permitting
– “Forces” the right solution
– Reduces city staff time
– Improves overall quality of solar design/installation


US Dept of Energy / EERE
Solar Energy Technology Program

Industry Led “Balance of System Process Cost” Roundtable

Proposed Solution Paths

The Solar Industry is unable to manage this
amount of information on its own.
DOE programs can seed industry solutions
City Building Codes, Policies,
18,443 “AHJs” + 3,273 Utilities FERC (Electrical, Structural,
Local Fire, Fees)

Forms, Fees,
$$
Rates, are
ALL different
Permitting /Inspection Interconnection
Start
NEC code? Bldg Officials Fees
here Fees? Paper Interconnect
Bldg code? Files Grid capacity
Structural? Partial websites Single lines
Fire? Archives Switch gear
Planning? Undocumented UL ratings DOE Can Help:
Other? Varied forms
• RFIs / FOAs
• Support / inform
broader policies


Permitting/Inspection/Interconnection Roadmap
Element Phase 1 Phase 2 Phase 3A Phase 3B Phase3C
Education Streamline Streamline Integrated Solar 3.0
/Awareness (Paper based) (Online) (P, Insp, Int)
National SolarABCs SolarABCs DOE DOE DOE
VoteSolar VoteSolar SolarTech SolarTech SolarTech
State SACCO SACCO SolarTech SolarTech SolarTech
SolarABCs SolarABCs
Regional Industry/NGO Industry/NGO Multiple Multiple Multiple
Partnerships Partnerships

Local DOE / SACCO DOE / SACCO Multiple Multiple Multiple
effort Effort
Industry/NGO Industry/NGO
Partnerships Partnerships
•Recommendations
•Industry, NGOs, and DOE work together to align National, State, Regional and
Local best practices.
•A multi-phase roadmap (directive) from Dept of Energy to guide efforts
•Measure progress - # of Cities, Counties, States per phase over time

Solution Paths (details)
• Phase 1 – Policy Innovation
• Scale, standardize, and drive adoption of initial policy solutions
ie. VoteSolar Project Permit
• Scale adoption of SolarABCs templates to 50% of US market <2 yrs
• Document uniform inspection standards for authorities having jurisdiction (AHJ),
engage at local level to jointly develop stds
• A balanced approach to permitting fees
• 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
– Cost recovery “plus” model – Conformance to submittal guidelines in exchange for
higher reliability processes, consistent requirements, and better visibility
• Phase 3 and beyond - Technical Innovation
• Off the shelf solutions, on-line, paperless,
• Online Portals to inform / drive Federal, State, Local policy
• Integrate Permitting, Inspection, Interconnection requirements, pass/fail criteria
• Automation through the application of able software tools, applications, and systems
based on open architectures across Cities, Utilities, and Industry
18

Costs, Benefits, Impacts, Priorities
• SolarTech and RMIs work indicate BoS Soft Costs - "Current Non-Hardware BoS
Process costs account for up to $0.98 / W" ?
• Is this High, Low, within +/- 5%, other?
• For your business, approx. what % of the following can be directly attributed to delays in
the Permitting, Inspection, or Interconnection processes or variability of these processes:
• Engineering overhead, sunk time
• Inventory, idle crews, trucks, etc
• Mobilization or Wait time forcing internal cost absorption
• Milestone risks – ITC, MACRS, rebate payment, rebate carrying cost
• Legal / financial risk due to liquidated damages caused by project delays
• Opportunity Cost (Consumer impact, lower sales, etc)
• Can you prioritize the following possilbe solutions from Lowest to Highest (Urgent)?
• A central entity or clearing house of municipal rules, regulations, and building codes –
a one stop-shop including up to date changes on legislation
• Document uniform inspection standards for authorities having jurisdiction (AHJ) –
Engage with local government to jointly develop standards
• Off the shelf solutions, on-line, paperless, with a strong incentive for increased
consistency in requirements, forms, coordination on a regional level
• Scale adoption of SolarABCs templates to 50% of the US market <2 yrs
• Consistency in pass/fail criteria and reqts to ensure safe, predictable approvals
19

Industry Value Proposition
•Scalable, open access to Permitting, Inspection, Interconnection
information drives out 50-60% of process related costs
•Enables Private/Public workflow driven cost reductions for PV

5-7 years is Too Late

1-3 years 3-5 years 5-7 years

• 50% less paper • 75% less paper • Paperless
• 40% faster • 75% faster • Support $1/Wp
projects projects adoption curves
• Distributed PV • Add Solar Hot • Add other RE,
Water, EE, Wind Vehicle to Grid

BoS Non-Hdwr
costs
(Distributed PV)

(Permitting,
Inspection,
$0.98 / W $0.56 / W $0.43/ W
Interconnection,
SG&A)


Time for a Paradigm Shift
2005 – 2010 2011 – 2015
“Cost” “Speed”

$/W 1GW

Watts.P.H.

Next Steps
• Get Engaged
• Review solution(s) presented
• Complete survey no later than 1/21
http://www.surveymonkey.com/s/MV7QJGP
– Accuracy of BoS Soft Costs estimates
– Prioritize the various "Solution Paths“ presented today

• Get Involved
• Sign-On to “DOE Letter” (email to follow) 1/28
• “National BoS Process Cost Webinar” - Results 2/22
• Collaborate on solutions March 29, 30
2011 Solar Leadership Summit
www.solartech.org

SolarTech gratefully acknowledges
• Our panel, and “DC Need for Speed Delegation” in
supporting this National BoS Process cost reduction
effort

• Outreach partners for this National BoS Process cost
reduction effort

23

Thank You!
Doug Payne
Executive Director, SolarTech
www.solartech.org
permitting@solartech.org

Please join and support SolarTech
www.solartech.org

Resources
• Permitting
• SolarTech http://solartech.org/initiatives/permitting
• SolarABCs http://solarabcs.org/
• Vote Solar http://votesolar.org/city-initiatives/project-permit/
• Bay Area C.C. http://svlg.net/campaigns/bacc/
• BoS Process Research, Rocky Mtn. Institute www.rmi.org
• Cost learning curve www.navigant.org


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