Soft costs in solar getting worse not better

The National Renewable Energy Laboratory released two reports on Monday assessing soft costs as a percentage of the cost of a solar system in the U.S. Soft costs refer to everything outside the actual cost of the hardware, which has seen a drastic plunge in prices. Soft costs include financing, taxes, corporate fees, installation charges, permitting and marketing.

From a summary:

Surveys of solar system installers accounting for 93 megawatts of residential and commercial solar projects found that in the first six months of 2012, soft costs represented 64 percent of the total price paid for residential systems, up from 50 percent reported one year before.

For small commercial systems, soft costs accounted for 57 percent of total spending on solar systems, up from 44 percent a year earlier. Large commercial systems saw a similar shift, with soft costs accounting for 52 percent of all spending, up from 41 percent previously.

Overall, the NREL soft cost benchmark analysis found that nonhardware expenses account for $3.19 per watt for residential systems, $2.90 per watt for small commercial systems and $2.02 per watt for large commercial systems, using 2010 dollars. Those figures are much higher than the Energy Department has said are necessary to stimulate robust growth in the U.S. solar industry.

These figures indicate the depth of the problem and point to just how much more competitive solar could be right now. The DOE does have the Sunshot Initiative aimed at generating solutions for reducing soft costs. Because while solar panel prices may continue to edge down, they’re unlikely to come down in price at the rate they’ve fallen over the past couple years, and progress in making solar more price competitive will have to come from lowering soft costs.