Solar Soft Costs Part Two: The Tangled Web of Permitting

August 27, 2014 MODsolar Admin

In the first part of our blog series on the soft costs of solar in the US, we introduced some different areas of the solar business which are costing you money. This week, we will analyze these areas one by one. To start with, let’s look at the solar permitting process.

The solar permitting process in the US costs over $2500 (or 50 cents per watt) for every single residential installation. According to a recent report by SunRun, inefficiencies in the permitting process will cost Americans $1 billion over the next five years.

The main reason for this is the complex and varied systems that operate in each local area. In most regions, the states leave the business of solar permitting to the local authorities. This is known as the AHJ (Authority Having Jurisdiction). The AHJ will then set a permitting process based on their local community ordinances and building codes and other regional differences.

The result of all this is the tangled web of solar permitting that installers are facing across the country. If you are an installer who is only working in one area, you might not have much of a problem with this. Like any contractor working in a particular town, you learn the ins and outs of the permitting process that you need to know.

However, this also limits your ability to grow. According to a report by Clean Power Finance, 1 in 3 installers avoided selling solar in new areas because of complex permitting.

There are improvements being made. Several states legislatures have put laws into place which simplify or standardize permitting structure. Lucky states include Colorado; Delaware; Maine; Massachusetts; New Jersey; New York; Rhode Island and Vermont.

Additionally, the National Permitting Database, a website launched last year, is an excellent online resource for information on permitting for over 18,000 US cities and counties.

While the ideal solution would be a national, enforceable standard, such as those in Australia and Germany, there are some things that you can do right now to reduce your permitting soft costs from within your business.

1. Consider what processes are repeatable.

Take a look at the AHJ’s that you regularly deal with and look for the consistencies between them. Repeatable processes can be easily streamlined to reduce costs by creating an in-house system that limits the amount of time you need to spend searching for information on each permit.

2. Think about implementing a workflow tool.

For installers who are only seeing five deals or so every month, purchasing a workflow tool might not be necessary. However, as soon as you start getting to around 20 deals per month, using software to track and maintain your permitting system is vital to ensure efficient practices.

3. Use Standardized Documents.

Wherever possible, using a standard set of permitting documents. This simple step will improve your efficiency and reduce your headaches. We really can’t emphasize enough how vital document organization is for tackling the solar permitting problem. Pushing for standardization in states where there are big local and regional variations is something we want to get behind!

In the future, MODsolar may develop tools that can help deal with these permitting headaches for you, but as it stands, until a national system is put into place, your company should set up in-house standards using tools that make sense for you. Working on a system for your office that can be quickly adapted for the AHJ’s will be much easier than doing things the other way around.

Don’t forget to revisit the blog next week to find out about innovations that could reduce your Change Order costs.