Insights A Tipping Point for the Solar PV Market
by Chris Doyle
The solar PV industry provides a great opportunity for creating jobs, saving energy, and putting money back into local economies. But the industry faces many barriers to growth including implementation costs, permitting inefficiencies, lack of broad understanding about its economic and environmental benefits, and the absence of national standards and best practices to guide growth.
These and other issues important to maximizing the potential of solar PV were examined at the SolarTech 2012 Solar Leadership Summit in San Jose, California. SolarTech is a non-profit industry association that focuses on bringing industry and the public sector together to drive growth for the solar PV market at the state and local level. In addition to examining current market barriers, the summit explored practical solutions designed to reduce soft costs associated with implementation, lower prices for consumers, and increase capital flowing into the industry which provides buildings with a substantial, green energy source. This year’s summit was properly coined as “2012 – A Tipping Point” describing the unique state of the industry which is expected to quadruple in the next five years across the country.
This article examines the basic concepts of solar PV and strategies for supporting broader implementation focusing particularly on accelerating progress and efficiency in permitting and inspecting residential and small commercial Solar PV installations. It is based on IBTS's participation in the Solar Tech Summit as an industry expert and its knowledge of solar PV and building inspection processes.
What is Solar PV?
Solar Photovoltaic (PV) is a method of generating electrical power by converting solar radiation into electricity. Solar panels which contain PV material are commonly installed on the ground or rooftops of commercial and residential buildings where they absorb solar radiation and convert the energy into usable electricity for the building on which they sit.
The energy is not a constant flow due to the fact that the availability of sunlight does not conveniently coincide with the energy demand of the building. Therefore, a very small amount of electricity can be stored on-site while the remaining is sent back to the electrical lines as a type of credit, commonly referred to as "net metering." Most utility providers allow net metering as a replacement for the electricity which they purchase/or produce through a power plant. Ideally, the total amount of produced electricity versus consumed over a year offset each other, creating a "net zero" building, assuming electricity is the building's sole energy source. A net zero building has no carbon emissions and no outside utility energy use because electricity is all created on-site with an environmentally friendly, renewable source. Not all solar PV installations provide enough electricity to offset the entire building’s energy demand, but the installations will always substantially reduce the demand on the electricity that the utility provides.
The solar PV industry has a diverse group of stakeholders, including the PV equipment manufacturer, PV equipment installation contractor, local utility provider, financing firms, and the local government/jurisdiction responsible for permitting and building code enforcement (often referred to as the authority having jurisdiction or AHJ). The process of manufacturing and installing the panel, inspecting for building code compliance, and connecting to the energy grid is expensive and not yet fine-tuned enough to allow the solar PV market to survive without government or utility subsidies. Examples of current market subsidies include industry-specific research grants, federal tax credits, and utility rebates. For the solar PV market to achieve long-term success, it must become self-sustaining.
Permitting Inefficiencies Raise Costs
The 2012 Solar Leadership Summit recognized and discussed some of the more critical obstacles to industry growth and put them front and center in a room full of industry leaders to create some plausible solutions. Solar Tech estimates that permitting inefficiencies and delays cost the solar industry $500 million annually. Overcoming inefficiencies associated with the diversity of standards and requirements both for the utility connection and permitting jurisdiction provide one of the greatest opportunities for reducing soft costs, improving customer experience, and broadening use of solar PV as an alternative energy source.
Utility interconnection is the process through which a building connects to the electric power grid which would allow net metering. It involves application, review, and field inspection steps and is typically facilitated by the electric utility provider. How the utility interconnection process is carried out varies significantly among utility providers. Participants at the Solar Tech Summit pointed to this lack of uniformity in the interconnection applications and standards as a major source of inefficiencies and increased costs for the utility provider, contractor, and end user.
The contractor must be familiar with all applications procedures many of which are still based on hard copy applications rather than online systems. For example, PG&E, one of the largest utility providers in the country, is planning to migrate to an online application process near the end of 2012, relying on its paper process in the meantime. Utility providers are spending unnecessary time rejecting or correcting applications which have not been completed properly.
In addition to the utility interconnection process, the PV contractor and building owner must simultaneously undergo a separate permitting and inspection process with the local authority which enforces building code laws -- with similar application, review, and field inspection steps. Solar PV installations are making their way to new areas across the country, bringing along with them the liability and responsibility that local governments must accept when administering the permitting and building code inspection process. Similar to the utility interconnection process, each individual government has its own permitting application and inspection criteria which can cause substantial inefficiencies for contractors working across multiple jurisdictions.
Of even greater concern is the absence of any universally adopted, national building code specifically addressing residential solar PV installations. Many local governments enforce solar installations based on their adopted general building code, such as 2009 ICC International Residential Code which does not specifically address the use of solar panels and related building safety measures.
Some communities have adapted well based on both a high interest in using solar energy and local expertise. For example, Don Hughes, senior building inspector for Santa Clara County, CA, said his department currently performs over 150 solar PV plan reviews and inspections per year. The county has been able to allocate resources for the necessary education and training for its staff to support expanded use of solar PV. In contrast, other governments have set significant limits on the number of permit applications it will accept per year for solar PV installations -- as low as five per year -- because of the time and expertise required to facilitate the proper plan review, inspection, and permitting.
To meet growing demand, some local governments have used third-party providers such as Burnham Energy or the Institute for Building Technology and Safety (IBTS) to provide properly trained and experienced plan examiners and field inspectors at a reasonable per unit cost. While the use of third-party providers can meet the need for properly trained inspectors to oversee Solar PV installations, the absence of universally adopted permitting and inspection standards remains an obstacles to success.
The primary objective of the leadership summit was to develop solutions to the industry growth barriers discussed in each session. These solutions are all contingent on each jurisdiction first making a conscious effort at a policy level to embrace the solar PV industry and its effort to attack inefficiencies and reduce unnecessary costs. The summit's interconnection, permitting, and inspection work group turned to two fundamental components of the proposed solutions: (1) uniform standards, best practices, and policies and (2) ongoing education and training.
In jurisdictions with little solar PV activity, the costs associated with development of standards and best practices may not justify. There are, however, some excellent resources provided at no cost by federal agencies and national industry associations to ease the burden for local jurisdictions. Links to resources are provided at the end of this article. Centrally developed standards, best practices, and well-crafted model policies provide local jurisdictions with successfully tested resources to create their own local implementation framework. Broad adoption of nationally developed standards would greatly reduce the learning curve and costs associated with both the utility interconnection and jurisdiction permitting and inspection processes across a large market.
Ongoing education and training is the second part of the solution. This should include a commitment to engage the utility, local government, and local workforce in an ongoing education program which addresses technical and procedural gaps which are identified over time.
Regardless of the specific measures taken, proper policy attention, standardization, and ongoing education will be the foundation which provides the solar PV Industry with the proper tools to create a sustainable, renewable alternative energy source for communities across the country.
For more information, we have added some links to related information for your convienience:
For more information about IBTS Solar Energy services, please contact Chris Doyle at 512-452-8899.
Chris Doyle is certified in LEED AP O+M and a Business Development and Operations Manager for the Institute for Building Technology and Safety in Austin, TX area.