The Hard Realities of Soft Cost in the Solar Industry

The Hard Realities of Soft Cost in the Solar Industry

Solar energy production in North America, as a percentage of overall energy production across various sources, is expected to grow from less than 1% today to 14% by 2030. Making this a reality requires market and regulatory forces to bring the unsubsidized leveled cost of solar energy to be cost-competitive with other non-renewable energy sources. To quantify, this entails the price of solar electricity to reach $0.06 per kilowatt-hour.

Reduction in Soft Cost or BOS (Balance of Systems) cost i.e. “non-hardware cost” presents the next biggest opportunity to reduce system level cost of solar energy and achieve grid parity. Soft Costs include customer acquisition, financing and contracting, permitting, interconnection, inspection, installation and O&M cost. According to NREL, soft costs accounted for a significant portion of total installed PV system prices: 64% of the total residential system price, 57% of the small (less than 250 kW) commercial system price, and 52% of the large (250 kW or larger) commercial system price.

There are several challenges (and opportunities) that ought to be confronted head-on to drive down Soft Cost in the solar industry:

  1. Information asymmetry both across ecosystem players and end consumers
  2. Lack of process standardization for permitting, inspection and interconnections
  3. Lack of availability of cost-effective and robust system performance and reliability tools and
  4. Entrenched mentality of Operations & Maintenance (O&M) as an afterthought.

Come talk to POUNDRA! From being a market influencer, to a solution provider let’s walk you through how we have been able to help customers address their soft cost today and our future plans to deliver on an integrated software offering that addresses the problem.

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