America Has a Solar Red-Tape Nightmare. Here’s How to Fix It

Source: By Brian Eckhouse, Bloomberg • Posted: Wednesday, May 25, 2022

Permitting rules for residential solar panels vary around the US, but SolarAPP+, a new system for communities to adopt, helps cut bureaucracy.

How to Fix America's Solar Red-Tape Nightmare
Photo illustration: Stephanie Davidson; Photos: Getty (3)

Lengthy power outages caused by hurricanes, wildfires and even deep freezes are spurring more Americans to place solar panels atop their homes. The appeal of energy resilience amid ever-common climate crises is mounting. Last year was a record-breaking year for US residential-solar installations. And yet only 4% of US houses are topped with panels—compared with about 25% in Australia.

There are several reasons why residential installations have traditionally been slow in the US, but the solar industry’s big headline constraints—supply chain and trade—didn’t emerge until fairly recently. Among the key factors slowing adoption: a mishmash of permitting rules around the country, which contribute to high customer-acquisition costs.

“It is a crazy jurisdictional patchwork,” said Vikram Aggarwal, founder of EnergySage, a Boston-based company that allows prospective solar customers to solicit quotes from installers. “Solar installers sometimes don’t want to support certain towns or municipalities because the permitting is notoriously difficult.”

A pathway to faster permitting exists. It’s called Solar Automated Permit Processing Plus, or SolarAPP+, which the National Renewable Energy Laboratory helped fashion as a fast, standardized system for US communities. It automatically performs a compliance check against code requirements to verify installation practices and workmanship, according to a January presentation. “The novelty of the tool is that it gets rid of the lengthy, inefficient, bureaucratic and manual process of permit approvals without compromising on safety,” said Pol Lezcano, an analyst at BloombergNEF. “It may or may not be perfect, but it’s definitely way better than the current permitting process and reduces the risk of human error.”

Speeding up permitting alone wouldn’t lead to the US catching up to Australia, but it might broaden the universe of Americans who can afford it. (Adding rooftop systems and home batteries, after all, helps climate-minded consumers directly reduce emissions from the electrical system). Installers say “they could reduce their total costs by as much as 40%, including gross margins, if they could make the sale, installation and interconnection of the system in one to three days—which I totally believe,” Lezcano said.

Read More: How to Get Cleaner Energy, Faster

Early results are promising. Tucson, Arizona, cut residential permitting reviews from about 20 days to zero, US Energy Secretary Jennifer Granholm said in a September letter to mayors.

Yet only 16 jurisdictions in the US use SolarAPP+ after it was formally launched almost a year ago. About 400 others are looking into adopting it, said Jeff Cook, program manager of SolarAPP+ at NREL. There are more than 20,000 cities and counties in the US, of which NREL has approached 900 with high solar volumes. “It’s a Sisyphean task,” said Nat Kreamer, chairman emeritus of the Solar Energy Industries Association. He suggests appealing to states to mandate faster permitting. “It takes a long time to sign up jurisdiction by jurisdiction.”

Infinity Energy saw permitting take up to 12 days before the pandemic, said Chief Executive Officer Yan Purba. It then stretched to as many as 27 days, but now up to 31 days due to labor shortages.

Now that rooftop measurement and design can happen almost instantaneously, “everything that delays the project from there is red tape and bureaucracy,” said Brian Eglsaer, chief operating officer of California-based installer Freedom Forever. “The actual physical part—sale, design and installation—could take 24 hours.”

Delayed systems cost installers about $200 per day for a $30,000 system (assuming an average installation time of 45 to 60 days), according to Sam Adeyemo, a co-founder of Aurora Solar, whose artificial-intelligence technology has helped speed installations in a different way—by enabling companies to remotely design rooftop systems in less than 30 seconds. He pointed to idle equipment, labor, financing and other fixed costs. That isn’t the worst outcome. “Oftentimes, it annoys customers enough to back out of the deal entirely,” Lezcano said. Attrition has increased from about 21% before the pandemic to more than 25% as permitting and supply delivery times lengthen, Infinity Energy has found.

While faster permitting could help cut system costs, US installers will need to find a way to slash customer-acquisition costs if they want to get closer to the prices offered to Australian homeowners. Systems cost about $20,000 in the States, whereas in Australia, they can be had for under $5,000. Panels, interestingly, aren’t the big expense for residential installations—it’s typically the cost to find and sign up customers. A key selling point is the potential cost savings over utility bills, but the difference in the US varies depending on region.

Installers are hyping SolarAPP+ as a way to simplify and standardize the permitting process for all involved—and to get more clean power online faster. For them, it’s avoiding the maze of rules and systems that confound them. For local governments, it’s a chance to ditch paperwork that stacks up on desks.

“On paper, it sounds like an obvious and helpful innovation—that it should make the whole process easier, and not just for the installer,” Lezcano said. But even communities in politically progressive California and Massachusetts can be leery. Local governments tend to be concerned about safety and, inevitably, liability, so they need to be educated about the merits. “There’s skepticism that if you deviate from the ways they’ve done things for ages that there will be problems. And they don’t want to be responsible for problems.”

Permitting is “the most enduring bottleneck,” Aurora’s Adeyemo said. But addressing it wouldn’t be costly for communities. “We’re not talking about some big agreement in Congress. It’s just shining a light on things.”