Soft Costs Account for Majority of Installation Costs for Solar

According to a new report released by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), soft costs accounted for 63.5% of total costs of residential solar installations, 56.7% for small commercial systems ( < 250kW) and 52% for large commercial systems ( ≥ 250kW) in 2012. The report, entitled, Benchmarking Non-Hardware Balance-of-System (Soft) Costs for U.S. Photovoltaic Systems, Using a Bottom-Up Approach and Installer Survey, broke down soft costs into the following categories: sales tax, supply chain costs, installer/developer profit, indirect corporate costs, transaction costs, customer acquisition, permit fee, PII labor, and installation labor.

The results of this new report should come as no surprise given the decline in solar PV hardware costs in recent years. The report noted that residential solar PV prices have dropped from approximately $3.30/W in 2010 to $1.83/W in 2012.

Supply chain costs, installation labor, and customer acquisition were the top three soft costs for residential solar installations. Customer acquisition costs varied widely among low volume installers. For small commercial systems and large commercial systems, the top three soft costs were installer/developer profit, indirect corporate costs, and supply chain costs.

The report also sought to better understand the costs associated with financing as approximately 68% of all U.S. residential systems were financed in 2012. The report noted that because such costs are fixed, the cost per watt is largely determined based on sales volume.

The full report is available here.

Walter Wang is Managing Editor of CleanTechies. Follow Walter on Twitter: @energytaxprof

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