Solar is All About Efficiency -- Business Efficiency

Stephen Lacey, Editor
April 07, 2011 | 9 Comments

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.

9 Comments

Marvin Hamon, P.E.
April 13, 2011

At a $1/W will there still be enough profit in solar to have a robust and diverse industry? What kind of profit margin should we expect companies to have in this industry? How close are we now? I have not seen this factored into the $1/W discussions to date.

Bill,

Those higher efficiency PV cells are in CPV systems where you can use a little cell to gather a lot of sun. If you tried to make a standard flat plate PV module out of them even you might not be willing to pay the price to do the right thing. The theoretical efficiency limit on Si cells is 29% so to top that we need a better process to use the more expensive and more efficient material. Even with the best materials cell efficiency has not broken out of the low 40% area.

Pamela Cargill
April 13, 2011

TrahanM (hi Mike!) - Keep you eyes out for the California Solar Challenge, Bay Area cities are working to race to streamline and reduce permitting costs/process first.

Check out Santa Clara, CA for an example of a one-stop over the counter process for solar permits.

Mike Trahan
April 13, 2011

I read recently that some states have addressed non-hardware factors like permitting. Anyone gotten traction with a statewide permitting process?

Stephen Lacey
April 13, 2011

@Jim -- You make a great point. I'm not purposefully avoiding solar thermal. The PV America conference revolved around photovoltaics, so that's what we focused on!

I agree that we need more attention to solar thermal though...

Thanks. -Stephen

Patrick O'Leary
April 12, 2011

Sooner or later, we will notice that PV is a big corporate focus. Sooner or later, we will notice that thermal better serves us and the communities and businesses that matter to us.

Every building standing today is a solar collector anyway. Putting that energy to good use is our best solution.

Low profile commercial buildings can best harvest and employ that energy. Futura Solar is focused on exactly that. We;ve revived sawtooth type roofing with additional solar benefits. Sawtooth roofing always provided daylighting, another little hyped solar technology. To that we've added solar air, yes, solar air. The two pass air heater serves in part as an air handler and also hosts the PV and/or SWH. The daylighter does not admit solar loading into the interior of the building. The 2 pass air heater harvests most of the solar loading for use inside the commercial process housed in the building.

The sun will do more than bake the tourists, it will provide a competitive advantage.

Jim Lindsey
April 12, 2011

Stephen:
When I first read the title of you article, "Solar Is All About
Efficiency," my first thought was, "hey, an article about solar thermal." Then I finished reading the rest of the title.

Your article was well written but when are we going to stop treating "thermal" like it's not even there?
Hawaii may have the answer, since they installed 10,000 solar water heaters in 2010.

Jim Lindsey solarplexusco.com

William Fitch
April 9, 2011

Hi Pam:

I would agree on your micro added approach as to better define nuances. However there are simply many ways that positives can not be allocated to dollars. That is simple fact. Because that is true, it does not logically follow that the attributes have no value in the decision process.
I recently attended a Marcellus Shale seminar that was sponsored by our local chamber of commerce. The speaker was a Hydro Geologist that lived out by Penn State main campus, and was involved in there MS outreach program.
Without going into allot of detail, it was expectedly entertaining to see the language used to "half say" and leave out various pieces of information to skew Shale Gas extraction in a positive direction. One outright lie was when he was stating how the 5 cleared acres of woods on average for the "well site", would produce more energy from the NG extraction than if a wind turbine occupied the location. He then gave KWH numbers for the NG and the turbine, with the NG number being much bigger. The real truth, is that land can produce an infinite amount of power from wind or PV, and only a finite amount from fuel extraction. The NG will run out, the wind and sun will never run out. Infinity is an infinite amount of times bigger than any finite number, so a total energy dollar yield comparing the NG dollar value to wind or sun power based on the forest displacement is mathematically impossible. One tiny example, but it shows the game playing and distortions used when dealing with cost justifications.
BTW, he did not use the phrase, "peak power" or equipment life cycle in the presentation of those numbers. This section was part of his presentation regarding land impact.

.....Bill

Pamela Cargill
April 8, 2011

I think we are looking at this problem in the wrong way. While we have spent so much time focusing on the $/watt cost of this widget or that process, precious little time has been devoted to looking at the value of the energy generated by the system when it is placed into service. Not all products and designs produce the same results across all utility sectors and territories. While it terrifically complicates the analysis, it delivers better results that we can feed back into the system to get a more balanced understanding of what the actual problems are in system designs. A much more micro-regional approach is needed.

William Fitch
April 7, 2011

Hi:

Basically agree but with that said, module eff. is still horrible and the total net eff is usually 12% to 15% turning 85% of the energy into heat contributing to warming. It was at least 3 years ago I read on this site, 2 or more articles on breakthroughs in full spectrum solar cells. Where are they? Where are even the prototypes? These were, as I recall, breakthroughs from places like MIT and IBM, etc., not some start up off road venture capital sales ad. Anotherwards credible. Net eff needs to get over 30% to really turn a corner.

.....Bill

Add Your Comments

To add your comments you must sign-in or create a free account.

Stephen Lacey

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