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Solar is All About Efficiency -- Business Efficiency

As squeezing out efficiency improvements on the module level becomes harder for manufacturers, the industry is turning toward gaining efficiencies in other areas like financing, permitting, installation and back-office management.

Manufacturers are rarely featuring groundbreaking new panels at conferences these days. Instead, the exhibit hall floor is filled with companies hawking new pieces of software for managing sales channels, different racking systems that reduce installation time, packages for point-of-sale financing and plug-and-play modules with existing crystalline-silicon materials.

These improvements might not be as sexy as a new-fangled thing-a-ma-jig solar technology, but they are just as revolutionary.

Non-panel costs can be broken up into two categories: soft costs (i.e. non-hardware factors like permitting, interconnection and sales channel management) and hard costs (i.e. balance of systems technologies like inverters, racking and wiring). Improvements in both of these areas will drive down the installed cost of PV substantially.

According to a recent report from the Rocky Mountain Institute, hardware-related BOS costs equal about $1.25 per watt for a ground-mounted PV system and $1.50 a watt for a roof-mounted system. With a continued focus on improving non-panel components that make installation and maintenance easier, RMI projects that BOS costs could be reduced by 50% in the next five years.

In order to address this issue, a number of companies have developed “plug-and-play” panels with integrated microinverters, wiring and racking systems.

At PV America in Philadelphia this week, we sat down with Barry Cinnamon, CEO of Westinghouse Solar to chat about the company's new AC panel, which the company claims can reduce installation costs by about 20%.

On the other side of the equation, the soft costs make up around $2.21 per watt for a residential installation. These costs are associated with lead generation, data entry, site management, incentive processing, interconnection paperwork and labor. Not including labor, they add up to about $1.00 per watt.

The best way to manage those costs? Web-based software. One of the leading companies building a business-management platform is SolarNexus. We spoke with Brian Farhi, SolarNexus' VP of marketing and business development, about the industry need for better online tools for contractors. (Also, for a more detailed article on soft cost reductions, check out this article from Farhi).

Simplicity is the name of the game in solar these days. But even with simpler hardware and business-management tools, consumers are often faced with making complicated decisions around tax credits, net metering and renewable energy credits. In order to reduce the upfront cost of a solar system and make a purchase easier for a customer, point-of-sale financing products (i.e. solar leases or power purchase agreements) have become an increasingly popular option.

One up-and-coming financing provider, BrightGrid Renewable Finance, is partnering with Centrosolar to offer a “plug-and-play” module package with its solar lease. We spoke with Roger Franco, the VP of business development for BrightGrid, about how the partnership leverages improvements in both hard costs and soft costs.

Sungevity, another solar-services provider on a path to rapid growth, also uses the power of the internet to streamline system design and financing. The company's early success in California has allowed it to expand to Arizona, Colorado and, sometime in May, the East Coast. Below, Alec Guettel, the chair of the board of directors for Sungevity, talks about where the solar-services sector is headed.

The importance of these technologies and services cannot be understated.

According to a recent report from GTM Research and the Solar Energy Industries Association, the average weighted price for a PV system was $5.13 a watt in 2010, down from $6.45 per watt in 2009. Much of that decline was due to a drop in module prices and an increase in utility-scale systems that capture economies of scale.

But the decrease can also be attributed to the effort to simplify components and streamline business processes – allowing companies to drive down costs and offer more competitive prices.

The future of the solar industry is not in some far-off technology. It is here, in the form of better business.

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I am a reporter with, a blog published by the Center for American Progress. I am former editor and producer for, where I contributed stories and hosted the Inside Renewable Energy Podcast. Keep in to...


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