As the federal government pushes to make solar energy cost competitive with coal, local governments are undercutting the effort by imposing high fees and red tape on business and consumers.

Source: www.buildyourownsolarpanels.org

“Consider thousands of local processes, fees and timelines,” says Rob Cahill, manager of business development for solar financier SunRun, pointing out that installing solar panels is still treated by city authorities like a complex home renovation. “It’s not surprising that a significant amount of (solar’s cost) is embedded in a local regulatory morass,” he says.

Cahill authored a recent report for his firm showing local government fees and processing can add an average of $2,516 to a residential rooftop solar installation—about 33 percent of what the homeowner would spend on solar panels.

These so-called soft costs are not only expensive for the industry, says Matthew Feinstein, solar research analyst at Lux Research. but hurt US competitiveness.

"Soft costs in Germany are half that in the US, it's incredible," he says.

Current installed costs for solar photovoltaic, PV, systems-the typical flat solar panels seen on rooftops-is $5.50/watt in the U.S., but $3.50/watt in Germany.

The local ruckus comes as the US Department of Energy pushes its SunShot program, a $27- million initiative to make solar energy as cheap as coal-fired power by 2020.

Launched earlier this month, SunShot aims to cut the total current costs of solar photovoltaic systems by 75 percent to $1 per watt, or 6 cents/kwh. Coal power costs about 5.5 cents/kwh currently.

Feinstein says that $1/watt goal would likely include 50 cents for the panels and 10 cents for the inverter needed to control the system—with the remaining 40 cents covering everything else, including additional hardware and fees.

The SunRun report estimates the permitting process alone currently costs 50 cents/watt.

With many cities facing budget shortfalls, Cahill admits that convincing governments to cut fees could be tough.

"When you come in with guns blazing, they say 'No, we need that money,'" he says.

But he adds the fee isn’t always the biggest issue for solar installers—it’s the time and hassle of permitting processes.

Application processes and approval wait-times for projects unfamiliar all add to labor and handling costs by installers, while slowing projects down.

"The issue is people tend to focus on the fee, but it's not the whole cost," he says.

Even though solar PV technology has been around for decades, the recent boom in solar projects means is testing the abilities of local inspectors..

About 75MW of solar panels were installed on US residential rooftops in 2008—almost double the 40MW put up in 2006.

Some cities, however, have made installing solar easier, quicker and cheaper, and they’re not all in the Sun Belt, as might be expected.

Philadelphia streamlined its solar-permitting process in mid-2010, says Kristin Sullivan, the City of Philadelphia's "Solar America City" program director.

She says the city calculates fees based on the cost of labor, "on everything but the cost of the panels" she says, which can be a costly line item, and thus drive up a percentage-based fee.

While she couldn't say how many installations have occurred since Philadelphia streamlined its process, she says there was a "large increase" in new solar energy systems in the city in 2009 that spurred the clean-up of their process.

Today, she says solar installers of systems producing under ten kilowatts—a typical home installation is three-to-four kilowatts—can get permitted by the city's electrical team instead of the larger buildings department.

"Not only do you get your review same-day, you could get your approval same-day," she says.

Before 2010, "you wouldn't even know for 20 days if you had completed your application (correctly)," she adds.

SunRun's Cahill suggests cities work with installers to come up with a checklist to handle most common solar installation issues.

"A lot of home improvement [permitting] is a checklist, 'Here are the five things to do,'" he says. "This standardized way [of permitting] is already developed, it's already done."

"It helps to have criteria out there so applicants know what to look for," says Kathryn Sedwick, chief plan check engineer for San Jose, California.

"If they come prepared, it makes it a lot quicker at the counter," she says, adding that the next step for her city could be a master file approach where a permit is issue for a "standard" rooftop solar installation that is then copied on many rooftops.

"Then it's not a case-by-case basis," she says. “[We] do it for swimming pools and sunrooms."

Given the political issues around renewable energy, Cahill admits cities can be skeptical.

Just evaluating these processes has opened up the solar industry to accusations of wanting special treatment, he says.

But the impact is measurable, he adds -- streamlining the permitting process could effectively provide a $1 billion annual subsidy to solar installers.

The current system “does hold back installers," he says. "It's keeping competition out of the solar market."

http://www.cnbc.com/id/41732845/

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