The True Price of Energy: Making sense of solar power's "Soft Costs"

By Erin Vaughan, Modernize.Com

Residential solar power energy is booming this year, thanks in no small part to the dipping cost of solar panels. In fact, the installed cost of solar fell by at least five percent in 2015, according to studies from Berkeley Labs. Advances in manufacturing processes have ramped up production capacity, meaning there are more panels on the market now than ever before. And that oversupply has been good for consumers hoping to finally convert to solar energy. With prices falling, it seems as though solar may soon become cheap enough to compete with coal and oil for the residential market share.

However, as many homeowners learn soon after purchasing solar energy systems, equipment prices are merely one part of the full cost of going solar. To get a solar system off the ground, owners must also pay additional fees, such as those associated with installation, interconnection, and permitting. These so-called “soft costs” can add thousands to solar energy’s total price tag, and many homeowners don’t know in advance to factor these into their estimates.

The problem is not so much an issue of arithmetic as it is one of technology. Installation costs remain high because solar installers don’t have streamlined tools at their disposal to estimate rooftop production. Most rely on a combination of aerial photos, GPS, and visual inspections—and assets that are often distributed across multiple sources, keeping administration overhead high. The challenge facing solar now is to lower the cost of doing business and ultimately reduce these hidden fees—perhaps to the point where residential solar installations become affordable enough to lure homeowners away from their existing energy sources.

Residential solar power energy is booming this year, thanks in no small part to the dipping cost of solar panels. In fact, the installed cost of solar fell by at least five percent in 2015, according to studies from Berkeley Labs.

The DOE is Placing Their Bets on Solar Technology

Technology is definitely what the Department of Energy’s SunShot Initiative is betting on. Created in 2011, the program’s goal is to create resources and serve as an advocate for the solar energy industry, in order to ultimately lower the average installed cost of solar to $0.06 per kilowatt hour by 2020 (by way of comparison, the average retail price for fossil fuel-derived electricity currently hovers around $0.12 per kilowatt hour).

The permitting process, system requirements, incentive amounts, and panel production vary vastly by location, and that drags out the installation process as manufacturers and installers struggle to give clients accurate estimates for their system’s true cost and capacity. Without precise tools, it is difficult to predict solar productivity, since anything from a home’s climate to the pitch of its roof to tree coverage could significantly affect those numbers.

As part of the effort to provide more transparency into the process, the SunShot Initiative engaged Geostellar, a large online solar marketplace and equipment supplier whose team has developed a patented technology to give end users more insight into a site’s real production potential. Geostellar’s system employs what’s known as Light Detection and Ranging (LIDAR) to offer a more accurate representation of the average solar intensity on a roof. Their software allows users to see these rates displayed back as a heat map. It’s something like what would happen if Google Earth estimated solar productivity.


Residential solar power energy is booming this year, thanks in no small part to the dipping cost of solar panels. In fact, the installed cost of solar fell by at least five percent in 2015, according to studies from Berkeley Labs.

But Homeowners Need Better Tools Too

Ironically, homeowners coming in fresh to solar energy face many of the same challenges as installers. That is, it’s difficult for them to estimate their actual solar productivity to a degree of precision that will help them analyze costs and decide what size system they need. Larger equipment costs more upfront, but also generates more energy, which helps homeowners earn back their initial investment more quickly. Added to that, there’s the additional question of incentives and rebates. Homeowners that purchase solar panels are eligible for any number of incentives, and many rely on the money saved through these programs to make their systems affordable.

However, estimating the real-dollar value of these relief programs can be an extraordinary feat. In particular, if homeowners don’t have a great feel for their average energy production, there’s no way for them to predict the amount they’ll receive in rebates. That’s because many of the programs offered by energy providers are production-based, meaning the rates vary depending upon how much electricity homeowners return to the grid.

When we designed Modernize’s ModSun tool, we were looking to give homeowners a view into the real cost of their equipment and the actual value of their rebates. Our tool uses the same technology Geostellar created, so homeowners are able to get a more accurate understanding of their roof’s size, slope, orientation, and average sunlight intensity—and how much of their average energy consumption they can offset through a solar energy system. We also factored in system costs and incentive program savings to give homeowners the most realistic estimate possible.

Our hope is that this tool will further reduce the burden on both homeowners and installers by allowing customers to come to the gate better-informed of their energy needs, system prices, and incentive savings. And that means suppliers and installers will spend less of their time educating clients, and more of it getting panels up on rooftops—and all of us ultimately closer and closer to realizing the DOE’s goals.

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