Solar Panels, or Low Permitting Costs, for Every Home?

Last week’s op-ed by the seemingly unlikely duo of David Crane (CEO of NRG) and Robert F. Kennedy Jr., repeats a point highlighted in several places recently about the degree to which, to quote the piece, “state regulatory agencies and local governments imposes permitting and siting requirements that unnecessarily raise installation costs.”   They cite NREL data in representing red-tape as constituting 25 to 30 percent of US solar installation costs.

Taking this percentage at face value (I have no reason not to), this does raise the question of whether the solution is to “put solar on every home” or to take some other actions that will reduce red-tape.  They are a little coy about cause and effect in this respect.  Its hard to imagine that mandating, or even subsidizing,  more solar installations would by itself lower the costs of red-tape. One would expect, if anything, that a higher volume would increase permitting and inspection costs.

If instead they are pushing for eliminating unnecessary red-tape, well, its hard to argue with that. Perhaps cutting this value substantially will lead to a booming of installations by itself.   It does raise several fascinating questions though.  Are we talking about eliminating unnecessary red-tape for solar installs, but leaving it for every other residential remodel activity?  If residential permitting and inspection costs were lowered overall, would that lead to more additions and larger homes?  Is a similar red-tape barrier blocking energy efficiency investment?  Could it be that a non-trivial amount of these costs are justified in protecting consumers (and their neighbors) from faulty or poorly designed installations?

Oh, and the piece also brings up the specter of the self-serving investor-owned utilities which “depend upon the existing system for their profits” and “have little interest in promoting a technology that empowers customers to generate their own power.”    Um, these are regulated distribution companies, who make exactly as much profit, in exactly the manner, as their regulatory commission’s allow.  If we set up a scheme where distribution utilities earned rate-base bonuses on customers who leave their system, I’m sure they would pursue it with gusto.  But who would pay for those incentives?  The folks without solar panels.

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One Response to Solar Panels, or Low Permitting Costs, for Every Home?

  1. Dan Staley says:

    I have the NREL paper – from the author – that many claim to cite when decrying the “red-tape as constituting 25 to 30 percent of US solar installation costs.”

    This 25-30% is incorrect.

    Why is that figure incorrect?

    This figure is incorrect because the paper finds that 25-30% consists of company overhead in addition to permitting and fees.

    That’s right: permitting and fees is a single-digit %.

    To repeat: permitting and fees (red tape) is a single-digit % of the total cost of a system.

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