Roughly one in three installers said they have avoided expanding their businesses to over an average of three regions because those areas would make it difficult (ie. expensive) for them to obtain permits, the survey said. Government agencies and utilities can take up to almost eight weeks collectively to sign off on permits. The survey also showed that 11 percent of installations happen in cities or counties that don’t have rules in place to issue permits.

The survey, conducted by San Francisco-based solar financing startup Clean Power Finance, is part of a project funded by the U.S. Department of Energy’s SunShot initiative. SunShot supports projects that seek to reduce the cost of installing solar panels so that solar energy can price competitively against power from coal or natural gas power plants.

The program also has allocated money to develop more efficient solar cells and design systems of solar panels and other components to make them quicker to install. Cutting red tape isn’t a sexy subject, but non-hardware costs can make up 41-50 percent of the expense of selling and installing a photovoltaic system, said a recent report by the National Renewable Energy Laboratory.

These so-called “soft costs” in general refer to the costs of marketing, signing up customers, helping customers line up financing, designing and installing a solar systems, applying for permits and even monitoring the system’s performance post installation. Many of the solutions on the market that are reducing soft costs are using software and are focused on communication strategies.

For some venture capitalists, who have shied away from putting money into capital-intensive technologies such as solar cell manufacturing, they have found solace in investing in software-centric startups. The executives at SolarCity, which just went public, have talked about the importance of solid software – and they develop their own – in coming up with business expansion plans.

With the SunShot funding, Clean Power Finance is knitting together a national database of local regulations for issuing permits to install solar electric systems and connect them to the local electric grid. The database isn’t just for solar retailers. It also could serve as a guide for cities, counties and utilities looking for good role models as they draft their permitting regulations.

“What is often ignored is when we talk about solar permitting it’s as if installers are bearing all the costs. The city is bearing the cost, too,” said James Tong, senior director of Clean Power Finance and the leader of the database project. He’s gotten responses from government agency officials who say, they, too, are frustrated by poorly organized and incomplete paperwork from installers.

Clean Power Finance released an early version of the database in September, and it plans to release a more data-rich version in early 2013, Tong said. He hopes to get more crowd-sourcing going to help him expand the database. The project started only in late 2011 and is set to run for three years, after which the company plans to continue to maintain and expand it and to make it available for free.

The survey aims to identify and quantify the challenges that the installers, government agencies and utilities face in promoting or regulating a relatively new but growing type of business. Tong conducted the survey this past summer and received responses from 273 residential solar installers who had completed 546 projects in 12 states, which include California, New Jersey, Colorado, Hawaii and New York.

The survey found that installers on average deal with two agencies, such as a city’s planning department and the local utility, but sometimes they have to contend with five. It’s ideal to have to face just one, though, Tong noted that scenario is unlikely unless the utility also happens to be run by the city.

So what is the ideal permitting experience for installers? The specifics will vary depending on whom you talk to. But in general, they want to be able to file their applications easily, such as by electronic submission. They don’t want to wait a few months to get all the permits and complete the sale, especially when it usually takes them less than two days to fill out the paperwork. They also want to avoid high permitting fees, though there doesn’t seem to be a consensus on what is considered excessive. The database project, if successful, could provide an invaluable service and help to track the growth of the solar industry.

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Electric rates are the basis for calculating a home or business owner’s utility bill and figuring out whether investing in solar will save them money by reducing their need for power from the utility. It also enables installers to put together better marketing and sales pitches.

But consider this: there are about 3,000 utilities in the U.S. with tens of thousands of electric rates devised for various classes of residential and commercial customers. And those rates fluctuate – about 3,500 rate updates occur every month, said John Tucker, the startup’s product manager, during an interview at the company’s office across from the Gap headquarters.

“It takes so much to keep up with it,” Tucker said. “It’s a real pain point for everybody we talk to.”

By assembling the electric rates, developing data-crunching tools, and offering the data to customers via a website, Genability is taking on a task that many solar service providers would rather avoid. The startup charges monthly subscription fees, which range from $89 to $1,000, depending on the number of users with each company and amount of data used.

Many solar companies don’t have the resources to maintain accurate electric pricing data to better calculate energy savings, Tucker said. So they use averages and maybe spreadsheets to do the math, and those methods could lead to estimates that are wildly off. Some installers may have good data for the local territory they serve, but they will find it expensive and time-consuming to do it again and again if they want to expand out of their home state.

The idea

Jason Riley founded Genability after realizing that having accurate electric pricing data is critical for running energy delivery services. He co-founded an enterprise software company called Entessa that was bought by Energy Solutions International, which offers software to manage oil and gas pipelines, in June 2010.

Genability, whose name is a mash up of “generation” and “ability,” amassed the electric pricing data by combing through regulatory filings from utilities and outsourcing the data input work to offshore contractors. It’s got 10 full time employees. Riley, now Genability’s CEO, has been funding the startup with his own money and is now looking to raise a venture capital round of $1 million to $3 million.

Last month, Genability won a $500,000 grant from the federal SunShot program to develop new features and expand the use of the database in order to boost solar installations. SunShot’s goal is to lower the price of solar electricity to levels comparable to power from fossil fuel power plants.  The startup has one year to complete its SunShot project, for which it’s providing a 40 percent matching fund.

The company currently offers the web portal and software tools for its customers to draw on the electric pricing data to do number crunching on their own computers. The SunShot funding will allow Genability to expand its database and add features that will eliminate that step of moving data from one computer system to another and allow its customers to get the results they want by using only Genability’s system.

The startup plans to incorporate a calculator called PV Watts from the National Renewable Energy Laboratory that provides hourly estimates of solar power production by using factors such as the size of a solar energy system and its location. The SunShot project also will make it easier for Genability’s customers to make use of different electric rates to design better projects and offer services beyond solar. For example, building energy management firms could look for the best rates to make power buying decisions or shift energy use to save money or get paybacks from utilities for lowering energy consumption when demand for electricity is particularly high.

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Solar PV shade made by the Fraunhofer researchers

Why can’t there be a solar panel rooftop system that works as easily as your TV: no professional installation, no permits, just plug it in and start it up? That was a question that Ramamoorthy Ramesh, director of the U.S. Department of Energy’s SunShot Initiative, posed in his remarks at one of the largest solar conferences in the U.S., Intersolar, last week. “My 12-year-old kid can install my TV,” said Ramesh, suggesting how easy such a ready-to-go solar system could be.

The potential benefits from plug-n-play solar could be a massive game changer for the solar industry. Solar panels only make up 20 percent of the price of the entire rooftop system and the rest comes from other components, sales, marketing, permits and labor. If there was a solar product that removed some of these costs — like permits and labor — the entire cost of the product could drop dramatically. Such a system could be sold at a big box retailer, like Home Depot or even Best Buy, and be more accessible to the average consumer.

Well, that’s the idea anyway. The hurdles to such systems are sizable. Skimming through a workshop that the SunShot program put on earlier this year on the subject reveal some of the more obvious problems facing plug-and-play solar, including: safety concerns around installing an electrical system on a rooftop; the question of how do people make sure the solar panels are placed in the right way to maximize the sun exposure; the fact that many solar panels are too heavy for an average individual person to lift onto a roof; and the issue that current solar panels need specialized tools that many people don’t have.

Solar window tech from GCL

But the SunShot program wants to invest a little bit of money into thinking about ways around some of these problems, no matter how outside of the box that is. The program has pledged $25 million over five years to go into helping a plug-and-play solar system make it to commercialization. “We’re expecting teams of young people to forget everything they know about glass and photovoltaics,” and create “a totally new way of making solar panels that can be plug and play,” said Ramesh at Intersolar. The SunShot program explains the potential product as:

An off-the-shelf product that is fully inclusive with little need for individual customization. Homeowners can install the system without special training or tools. The homeowner simply plugs the system into a PV-ready circuit and an automatic PV discovery process initiates communication between the system and the utility.

SoloPower’s solar panel booth

Plug-and-play solar isn’t a new idea. Some companies have already been trying to commercialize such systems. A company called Veranda Solar was trying to be the Apple of solar, but doesn’t seem to be around any longer. Armageddon Energy makes a solar system in a box called the SolarClover. A company called Clarian Power has also developed a plug-in solar box.

During the SunShot program’s brainstorming session, participants suggested some solutions such as:

• Have houses be solar ready: Develop a standard PV plug at the utility meter. Change the National Electrical Code. Have houses get smart solar-ready circuit breakers.
• Use polymers and new materials that don’t need roof penetrations or specialized tools. Can a solar system fit over a roof like a bed sheet?
• Panels that are very light can avoid some of these issues. Spray on paint photovoltaics?
• Add GPS to panels to help them self-locate for best sun generation placement.

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By buying Innovalight, DuPont not only added a new material offering to its lineup, it also snagged customers that have licensed Innovalight’s technology. The silicon ink developer has signed up some of the biggest solar-cell makers in the world, including Yingli Green Energy, JA Solar and Motech. Innovalight works with its customers to figure out how to incorporate silicon ink into their production lines, and it sells the ink as well.

A few years ago Innovalight decided to change its business model and has now demonstrated that to be a wise decision. Innovalight once wanted to become solar-cell maker.

Founded in 2002, the company decided to forgo that ambition when the financial market crashed and demand for solar goods dived in late 2008 and first half of 2009.  Startup companies were having a hard time lining up money to continue their product development and move into production. Innovalight’s CEO, Conrad Burke, told me at the time that Innovalight needed to steer away from the manufacturing business because it required too much capital.

Since then, the company has to seemed to have found success with the licensing model (and also selling the silicon ink). The U.S. Department of Energy has funded Innovalight’s research and development, including $3 million in 2009 and another $3.4 million earlier this year.

Innovalight targets silicon solar-cell makers who want to boost their solar cells’ efficiencies quickly without only relying on internal technology development that typically requires millions of dollars and years of development time. The rapid decline of the price of solar cells, which are assembled into panels, has prompted solar-cell makers to figure out ways to better compete not just in price but also performance in the last three years. Most of the solar panels sold today are made with silicon.

The prestigious R&D Magazine put Innovalight’s silicon ink technology, which was developed with the help of the National Renewable Energy Laboratory, on its annual top 100 list of innovations this year.

DuPont already is a big player in the solar market. It makes the films that protect solar cells from moisture and other environmental damage. The company said the solar market brought it over $1 billion in revenue last year.

Image courtesy of Innovalight

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The $29.5 billion proposed budget includes $550 million for the ARPA-E program, which funds early-stage clean energy projects. The budget also contains $3.2 billion for renewable energy and energy efficiency programs; $5.4 billion for the Office of Science, which oversees research at national labs; $300 million in credit subsidies (fees borrowers have to pay to get the government to back their loans) to provide $3 to 4 billion in loan guarantees for renewable energy and energy efficiency projects; and the authority to provide $36 billion in loan guarantees for nuclear.

Obama and his Energy Secretary, Steven Chu, have outlined some clean energy goals they want to achieve, though some of the timelines they have set will go beyond Obama’s current term and even the second term, if he’s re-elected. One goal is to cut the cost of solar electricity by about 75 percent to roughly $0.06 per kilowatt-hour, or $1 per watt. At $0.06 per kilowatt-hour, solar electricity will be cost competitive against power from fossil fuel sources without needing government subsidies.

The DOE recently came up with the SunShot initiative to demonstrate its focus on reducing solar electricity costs. SunShot more or less incorporates existing programs, while also adding an emphasis on developing projects. (The DOE has historically focused on developing new materials and more efficiency solar cells.) The DOE estimates SunShot will make use of $425 million of the proposed budgets for various divisions within the DOE, such as the Office of Science and ARPA-E.

The DOE also is asking for $588 million to support its work on electric cars and, specifically, to achieve Obama’s goal of putting 1 million electric cars — from pure EVs to plug-in hybrids — on the road by 2015. The $588 million is part of the $3.2 billion budget for renewable energy/energy efficiency mentioned above. Last week, the DOE issued a report outlining the billions of dollars it has invested so far to achieve that plug-in car goal.

The DOE also had a plan to create an innovation hub for battery research, but also added on two new plans to build energy hubs around smart grid and materials. In the budget proposal, the DOE is asking for $146 million to add the three hubs and to support three existing ones (green buildings, biofuel and nuclear).

Energy conservation and efficiency is also a key goal for the administration. Earlier this month, the White House outlined a Better Buildings Initiative it said would save commercial building owners, schools and city governments $40 billion in energy costs per year. The initiative calls for a mix of tax breaks, grants and loan guarantees. The DOE budget proposal now includes a $100 million loan guarantee program for the initiative. The DOE also asks for $320 million to install energy efficiency technologies at low-income homes.

The government wants to promote nuclear power in a big way, and the DOE wants to be able to offer $36 billion in loan guarantees which, combined with its existing ability to provide $18.5 billion in loan guarantees for nuclear, would be able to fund six to eight nuclear power projects. The DOE is also proposing to spend $64 million for offshore wind, $50 million for geothermal, and $97 million for small nuclear reactors.

Mindful of intent by Republicans to advocate deep spending cuts, Chu has highlighted some of the cuts he plans to make. The hydrogen program would see a 41 percent budget cut, or nearly $70 million. The fossil energy program would see its budget slashed by 45 percent, or $418 million. The DOE also plans to shutter parts of certain national labs and cut administrative costs by nearly 13 percent, or close to $48 million, across the board. Chu outlined the cuts in his blog post last Friday.

Aside from asking for more money for the DOE, Obama also wants to cut tax subsidies for oil, coal and gas industries. He’s asking Congress to make a $3.6 billion cut in those subsidies. During his State of the Union address, the president highlighted his intent to end oil subsidies. He’s unlikely to get his wish, however. A Democratic leader in the Senate, Jeff Bingaman from New Mexico, already called the idea unrealistic.

Republicans in the House of Representatives haven’t unveiled their own fiscal 2012 spending plan, but they have proposed a budget for rest of this fiscal year that would slash funding to the Environmental Protection Agency, a high-speed rail plan, and renewable energy and energy efficiency programs. What Republicans seek to cut for this current budget year reflects areas they will target for the next fiscal year.

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Photo courtesy of Nick Ares via Flickr