To reduce the cost of solar, look to everything but the hardware

“Soft costs.” That term was repeated on stage, in workshops and in the hallways of the U.S. government-organized SunShot Summit this week in Anaheim, California. More than 800 of the world’s most dedicated researchers, business execs and policy makers attend the event to focus on how to reduce the costs of solar in the U.S. dramatically by 2020.

Disneyland might be just a few blocks from the Summit, but these folks are hunkered down in an over-air-conditioned hotel talking about things like the limits of solar cell band gap, robotic panel trackers and the nuances of power grid integration. Their version of riding Splash Mountain is a workshop on net metering.

Soft costs include everything that has to do with installing solar panels on rooftops (and large solar projects in the desert, for that matter) except for installing the actual solar hardware — things like permitting, financing, taxes, marketing and customer acquisition, labor and supply chain costs. When it comes to installing solar panels on the rooftops of homes across the U.S., soft costs made up a whopping 64 percent of the total cost of the system, according to a report out late last year from the National Renewable Energy Lab (relying on data from 2012).


That means there are a variety of ways to incrementally reduce the costs of solar rooftops in the short term without inventing new technologies or delivering breakthroughs in materials. It’s more about streamlining the processes, using data to make everything more efficient and building networks that reduce the time (and thus the money) needed to get solar systems installed.

In the SunShot Program — which is modeled on the Department of Energy’s early-stage high-risk ARPA-E grant program — reducing soft costs is just one of five areas that is the subject of funding and focus. But SunShot director Minh Le called it perhaps “the toughest job” out of the five areas, partly because it’s about “human behavior.”

For entrepreneurs and investors, though — particularly in Silicon Valley — the soft costs could provide the most opportunity for innovation. Material science breakthroughs take forever and are extremely difficult. Leveraging computer science and mimicking more efficient systems, on the other hand, seem like low-hanging fruit.

Apple's solar farm

Apple’s solar farm

Elaine Ulrich runs SunShot’s soft cost program (officially called the Balance of Systems program). She was a former senior aide to Gabrielle Giffords (including during the time period of that tragic event), and has a Ph.D in optical science from University of Arizona.

During a talk at the Summit on Tuesday, Ulrich said her group is heads-down investing time and money in “data, tools and skills” to reduce solar soft costs. “Data is key,” she emphasized, “but it’s about connecting data with people.”

Each of the five SunShot departments launches a variety of “solicitations” — calls for university labs, national labs and companies to submit their projects and ideas to receive funding or other incentives. The Soft Costs division has worked on solicitations like a solar instructor training network, an incubator program and a project to use analytics to analyze solar case studies from conception to deployment.

On Tuesday the SunShot program announced a new contest around soft costs, called SunShot Catalyst, that offers between $500,000 and $1 million to groups that use “automation, algorithms, data and software,” to solve solar problems. A lot of startups out there are already doing this, so SunShot Catalyst shouldn’t have any trouble getting submissions. The SunShot Summit is also highlighting a solar web and app hackathon starting Wednesday night.

Soft costs around financing solar projects could be one of the most important areas for cost reduction. Neww financing business models for residential solar rooftops have already unleashed a market in the U.S. and made the innovators rich in the process. But financing large solar panel utility-scale projects — like the ones SunPower and First Solar build — are still more expensive than many other types of energy generation projects. The CTO of First Solar, Raffi Garabedian, said that he thinks bringing down the cost of financing utility-scale solar panel projects could be the most important result of the SunShot program.

In the long run, the solar industry will need to make solar panels themselves more efficient and cheaper, and breakthroughs with next-generation panels like CIGS will rovide some of those needs. But in the short term, to help meet the goals of the SunShot program — to get solar projects to the grid parity cost of 6 cents per kilowatt hour by 2020 — the program only has six years to reduce solar costs, and a big chunk of those reductions will come from the soft costs.