Rocky Mountain Institute Identifies Opportunities for Reducing Solar Installation Costs

Today, Rocky Mountain Institute (RMI) released a report, Reducing Solar PV Soft Costs: A Focus on Installation, that examines the differences between U.S. and German solar photovoltaic installations. Funded by the U.S. Department of Energy’s SunShot program and produced in collaboration with Georgia Tech Research Institute (GTRI), the report focuses on the two countries’ installation costs—specifically labor—to better understand why the cost for installed solar PV in Germany is dramatically cheaper than in the U.S.

While the cost of permitting, hardware procurement, customer acquisition, and financing is high in the U.S., the report details how labor cost reduction represents the single most tangible near-term strategy that installers can pursue to offer more attractive prices. By aggressively pursuing new designs and adoption of the most efficient installation practices, U.S. solar installers could reduce labor costs by 64 percent—effectively undercutting observed installation labor costs in Germany. Holding hardware and non-installation labor costs constant, the overall installed costs of a U.S. rooftop residential system could be reduced by 10 percent.

Between 2008 and 2012, the cost of installed solar PV in the U.S. decreased significantly; however, much of that cost decline resulted from cheaper PV modules. Today, nearly 70 percent of total installation costs are attributable to “soft” or “balance of system” costs—installation labor; permitting, inspection and interconnection; customer acquisition, and financing.

“This is the first publicly released study to use direct observation to understand the root causes of high PV installation costs in the U.S. and identify areas ripe for innovation,” said Dan Seif, a principal with RMI’s electricity practice. “As module, inverter and hardware component costs continue to decline, soft costs will become an increasingly potent opportunity for cost reduction.”

RMI and GTRI developed a time and motion methodology for tracking installation labor costs of rooftop installations and collected primary data from 26 sites across the U.S. and Germany. The study revealed several initial cost reduction opportunities:

•     Moving to one-day installations
•     Simplification of racking base installation through design innovation
•     Specialization of installation crews

“By highlighting areas where installation labor costs can be reduced, the field data produced from our work with RMI has helped us develop tangible technologies that will enable installers to make smarter, more cost effective decisions,” said Joseph Goodman, a senior research engineer at GTRI.

“Distributed solar energy is a key enabler of the affordable, resilient, secure and low-carbon electricity future RMI outlines in Reinventing Fire,” said RMI Managing Director Jon Creyts. “To create this future electricity system, between now and 2050 we will need to deploy 70 times more solar than we have today. This report offers a big first step to bringing soft costs down and making solar PV cost competitive across the U.S.”

About RMI
Since 1982, Rocky Mountain Institute has advanced market-based solutions that transform global energy use to create a clean, prosperous and secure future. An independent, nonprofit think-and-do tank, RMI engages with businesses, communities and institutions to accelerate and scale replicable solutions that drive the cost-effective shift from fossil fuels to efficiency and renewables.