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Germany's residential solar adoption is attributed to friendly policies and incentives, but alsofriendly permitting processes. Meanwhile, in the U.S., "soft" costs amount for more than half of the installed price for residential solar PV systems in the US. Various studies have pointed out the results:

• Customer acquisition costs are ten times higher in the U.S. vs. Germany, $0.67 vs. $0.06, and "overhead" adds up to $1.24/W, or $5,000 for the average system (Solar Freedom Now)
• $0.22/W on average for permitting + inspection + interconnection, including $0.09/W in fees (NREL)
• Local permitting and inspection adds $0.50/W, or $2,500 per residential install, and nearly a month of delays (SunRun)
• Labor costs alone add $0.11/W, and eight weeks average permitting time (Clean Power Finance)

The new LBNL study (PDF summary here, slides here) assembles permitting process scores from the DoE's Rooftop Solar Challenge, the California Solar Initiative, and U.S. Census Data. All told it encompasses more than 3,200 residential PV systems installed in 44 California cities during 2011, representing 27 percent of the state's total population and 20 percent of the state's PV systems sized <10 kW installed in that year.

Essentially, the study boils down to one equation: permitting processes translate into time and money invested into a solar PV installation. Cities in California with the most favorable permitting practices, for example, have average residential PV prices that are 27-77 cents/W lower (4-12 percent of median PV prices in the state) than cities with the most "onerous" permitting processes. And average development times in those solar-friendlier communities are around 24 days shorter, or 25 percent of the median development time.

This study clearly illustrates the second-level effects of difficult permitting processes, notes Barry Cinnamon, cofounder of Solar Freedom Now. Certain cities are known to be difficult and expensive to work in, so installers actively avoid working there, he added. (The Clean Power Finance installer survey also came to this conclusion.) And that 27-77 cents/W figure implies a total system cost of about $0.50-$1.00/W range, which he called "pretty realistic."

Cinnamon offered an example of differences in city permitting processes (and why solar PV installers need to know local laws). The city of Cupertino, Calif., has a particularly rigorous "fire setback" rule, requiring three feet of walkway around a roof's edge. For a given rooftop, and solar panels several feet high, that could translate to a rooftop solar PV system restricted to a single row of panels. In nearby San Jose, an identical system not so restricted in fire setback might allow a second row of panels — meaning the potential difference between a 2-kilowatt (kW) system and a 4-kW rooftop system.

Lead image: Map of California, via LBNL

In 2012, solar proved once again to be the fastest growing energy source in the U.S. The Solar Market Insight annual addition shows that as a nation, the country installed more than 3.3 GW of solar capacity, an increase of 76 percent over 2011. In terms of market size, at $11.5 billion, the solar market is 34 percent larger than it was in 2011 and SEIA points out that this figure doesn’t include any of the trickle-down industries that also benefit from the increased growth in the solar market.

Total U.S. PV Installed Capacity Approaching 10 GW

the United States accounted for 11 percent of the growth in the global solar installed capacity in 2012, this is the largest market share that U.S. has taken for at least fifteen years, according to the report.  The residential market saw 83,000 installations and eight of the 10 largest PV installations were completed in 2012.  In total, the installed PV capacity in the U.S. now stands at 7.2 GW, equivalent to the power capacity of seven nuclear power plants.  By the end of 2013, the industry expects that it will top 10 GW.

PV grew in each of its three market sectors: residential, commercial and large-scale.  The residential market installed 488 MW of solar capacity representing a 62 percent growth over 2011; non-residential (commercial) installed 1.04 GW, a 26 percent growth over 2011; and the large-scale market installed 1.78 GW up 134 percent over the previous year, said SEIA and GTM  in the report.  California remained the top state for installing PV, with 1.033 GW worth of installations taking place in 2012, and Arizona (710 MW), NJ (415 MW), Nevada (198 MW) and North Carolina (132 MW) took second through fifth place.  Interestingly neither North Carolina nor Arizona were in the top five states in 2011, showing the incredible pace in which PV grew in those states. More detail on state solar markets in the image below.

CSP Projects Make Headway

In 2012, the concentrating solar power (CSP) market also made progress. Cogentrix’s 30-MW Alamosa solar project came online and all phases of Brightsource Energy’s 392-MW Ivanpah project progressed steadily in 2012 such that the entire project is set to come online this year, according to the report.  In addition, Abengoa’s Solana Generating Station is more than 80 percent complete and will most likely come online in 2013, according to the report. Construction of Power Tower at SolarReserve’s Cresent Dunes Solar Project was also completed. Expect to see a large amount of CSP capacity online by the end of 2013 if all projects under construction continue to progress as planned.

Pricing: Solar Power Prices Experience Dramatic Decreases

In 2012, installed prices for solar went down in all three market sectors. According to the Solar Market Insight report authors, year over year, the national average prices declined by 26.6 percent in 2012, falling from $4.10 per watt in 2011 to $3.01 per watt in 2012, although these numbers are skewed by the sizable number of large-scale projects that came online in 2012. According to the report:

• From Q4 2011 to Q4 2012, residential system prices fell 18.1% percent, from $6.16/W to $5.04/W. Quarter-over-quarter, installed costs declined by 3.5% percent. Installed prices came down in most major residential markets, including California, Arizona, New Jersey, and Massachusetts, and in a number of states fell below $4.00/W.
• Non-residential system prices fell 13.3% percent year-over-year, from $4.65/W to $4.27/W. Quarter-over-quarter, installed costs actually increased by 1.4%, primarily due to a large quantity of higher-cost, government projects connected in California. SREC states, such as New Jersey and Massachusetts, saw the most significant price declines.
• Utility system prices once again declined quarter-over-quarter and year-over-year, down from $3.20/W in Q4 2011 and $2.40/W in Q3 2012 to settle at $2.27/W at the end of 2012.

Overall, SEIA and GTM don’t expect trade tariffs to have any real impact in pricing going forward as Chinese manufacturers will develop workarounds in order to keep panel prices low.  (The tariffs, which were finalized in 2012, will subject solar panels that include cells manufactured in China to tariffs up to 35 percent.) In fact, the analysts believe that prices may continue to fall in 2013 both globally and in the U.S.

In 2013, the report authors predict that 4.3 GW of solar PV will be installed, which would represent a 29 percent growth over 2012. The analysts believe that the slowdown in growth will be driven by a slow-down in the large-scale utility market as distributed generation will begin to gain market share.

Today, March 14 at 11:00 AM Eastern Time, SEIA hosted a Google Hangout in which report author Shayle Kann of GTM Research, SEIA President Rhone Resch and Recurrent Energy CEO Arno Harris discussed the results of the Solar Market Insight Report.  You can watch video the event here.  In addition, you can tweet your comments or questions under hashtag #SolarInsight.