The U.S. Department of Energys National Renewable Energy Laboratory (NREL) has published an updated report in which it states that up to 64% of installation costs for rooftop solar systems are taken up by so-called "soft costs".
The first edition of the report titled Benchmarking Non-Hardware Balance-of-System (Soft) Costs for U.S. Photovoltaic Systems, Using a Bottom-Up Approach and Installer Survey was published in 2012 and found that soft costs accounted for approximately 50% of the entire installation costs.
This latest edition appears to lend credence to the notion that non-hardware costs now account for the majority of the expense when installing a rooftop solar system.
The study found that for residential U.S. systems, supply chain costs of $0.61/W were the largest single soft cost, followed by installation labor at $0.55/W, customer acquisition ($0.48/W) and indirect corporate costs such as accounting functions and maintaining office management at $0.47/W. Less expensive but still an important consideration were costs relating to permits, inspection, interconnection, system design and susidy applications.
NREL’s updated report took a bottom-up approach to its calculations, quantifying five sub-categories: transaction costs, indirect corporate costs, installer/developer profit, supply chain costs, and sales tax. These sub-categories were balled together as one in the earlier study, but broken down and analyzed by researchers for the second report: an approach that enabled NREL to better quantify the costs associatied with each step of a solar system installation process.
As well as identifying soft costs, the second report titled Financing, Overhead and Profit: An In-depth Discussion of Costs Associated with Third-Party Financing of Residential and Commercial Photovoltaic Systems also looked at the cost breakdown of third-party owned systems and found that for residential systems, third-party ownership added $0.78/W. For commercial projects, that figure was lower, at $0.67/W.
NREL noted that despite the costs, there where three main benefits in choosing a third-party finance option: the availability of additional services, incentives and maintenance arrangements; third-party financing is likely to lower the overal LCOE over time; and businesses that offer third-party installations are now in charge of 70% of the U.S. residential solar market, and so are driving demand.
"The two reports, along with previous reports, provide a comprehensive look at the full cost of installing solar, while delineating and quantifying the various contributors to that final cost," said NREL analyst Barry Friedman.