SIMPLIFYING RESIDENTIAL SOLAR PERMITTING Cutting a Local Cost Culprit

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1 SIMPLIFYING RESIDENTIAL SOLAR PERMITTING Cutting a Local Cost Culprit WRITTEN BY MONIKA DARWISH SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 1

2 The local permitting process accounts for a significant portion of the cost of going solar today. Long waits, high fees, excessive inspections, avoidable paperwork and nonstandard practices across different jurisdictions can all add unnecessary costs to what should be a simple, transparent process. By streamlining these processes, local governments in Los Angeles County can make it easier and more costeffective for residents to invest in solar power. SOFT COSTS AND CURRENT PERMITTING LANDSCAPE In the past decade, the solar industry has achieved significant cost reductions that have expanded access to rooftop solar photovoltaics (PV). The cost of hardware (the PV modules, racking system, inverters, and other balance-of-system costs) fell $2.60 per watt from 2008 to In 2013, the State of California added over 2,600 megawatts (MW) of solar PV; 2,300 MW from wholesale solar PV, and 300 MW from self-generation PV. Solar PV programs, codified by Senate Bill 1 in 2006 (SB 1, Murray, Chapter 132), which set a target for 3,000 MW of self-generation solar, are driving much of the self-generation installation in California. 2 Since the start of the California Solar Initiative (see sidebar at right) in 2007, the overall cost of a residential PV installation has fallen from an average of $10.97 per watt CEC-AC to $5.49 per watt CEC-AC. These cost reductions have made it possible for more Californians to lower their energy bills through clean, renewable, solar energy. In fact, solar has become so much more affordable that, in California today, low- and middleincome consumers constitute over 70 percent of Californians taking advantage of residential rooftop solar. 3 However, to truly bring solar energy to scale and achieve the goals of SB1, we need to continue to lower costs and remove barriers to market participation. Given the dramatic drop in balance of system costs, non-hardware soft costs (customer marketing and acquisition, labor, overhead, and permitting) represent an area where public policy can encourage continued cost reductions and increased consumer solar adoption. Recent analysis shows that in some cases soft costs account for up to 64 percent of the total system price. 4 The National Renewable Energy Laboratory s Tracking the Sun report found that soft costs represent the most significant opportunity for continued price reduction. Within the soft costs category, Vote Solar and the Sierra Club have identified rooftop-solar permitting as the cost culprit that can most effectively be reduced through direct government intervention. Unfortunately, the solar-permitting landscape today is inefficient, as permitting requirements and costs vary significantly across municipalities, referred to henceforth as Authorities Having Jurisdiction (AHJs). Over 18,000 AHJs across the U.S. have established unique solar-permitting requirements. These nonstandardized processes can add up to 3.5 weeks of delay to residential solar-project construction timelines. In fact, a 2012 survey of residential installers spanning 12 states and representing 90 percent of the residential solar market found that more than 1 in 3 installers avoid selling in an average of 3.5 jurisdictions because of associated permitting difficulties. 5 Cutting red tape through standardized permitting, zoning, metering, and interconnection processes can save an estimated $0.24 per watt (or between $1,000 to $2,000) off the total cost of a residential solar energy system, while boosting installer competition by eliminating inconsistencies and creating a more time-efficient process. The problem is significant enough that streamlining permitting processes could boost solar market growth by over 13 percent, generate 2,000 new jobs, and result in $5.1 billion of net economic gain in California by LOS ANGELES COUNTY: PERMITTING REPORT CARD Los Angeles has tremendous rooftop solar potential. It is estimated that over 5,536 MW worth of electricity from Rooftop Solar Takes Off in California California is the largest rooftop solar market in the nation. Solar panels are installed on over 200,000 homes, businesses, and schools. The state s massive rooftop solar portfolio is to the result of ambitious policy goals. In 2010, Governor Jerry Brown launched a Clean Energy Jobs Plan to realize the tremendous economic benefits that accompany clean energy development. A major portion of this plan, which is the nation s most aggressive, is dedicated to achieving 12,000 MW of distributed generation, primarily through rooftop solar, by The rooftop solar boom in California has brought tremendous social benefits to the broader public. Since 2007, rooftop solar has helped create over 43,000 jobs in the solar industry, $10 billion dollars in private investment, and the construction of 2,000 MW of clean energy (enough to power 19,877 homes, businesses, non-profits, and government agencies statewide) (Wise, 2013), the equivalent of four large natural gas peaker plants. (CPUC Report) SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 2

3 464,325 rooftop solar sites, of which 70 percent are singlefamily homes, could be installed. Now is the time to streamline the solar-permitting landscape in the county to help AHJs prepare for what will be a massive solar influx in the near term. To aid communities in designing effective and efficient solarpermitting processes, the Interstate Renewable Energy Council, Inc. (IREC) and Vote Solar have identified nine Residential Solar Permitting Best Practices. In this report, Vote Solar and the Sierra Club grade Los Angeles County on six of the best practices, based on available data from Project Permit. The Project Permit website ( incorporates data on current permitting practices from Clean Power Finance s (CPF) National Solar Permitting Database (www. solarpermit.org), and scores municipalities on the nine solar permitting best practices. Project Permit was developed in 2012 by Vote Solar and funded by the Department of Energy s SunShot grant program. All AHJs require a building permit for residential solar PV installations. However, some also require separate electrical and fire permits, each of which can entail separate plan check review and inspection processes. Presently, the Project Permit scoring system focuses solely on the building permit process and does not penalize cities for requiring separate fire or electrical permits. These separate departmental permits create redundancies that can result in higher fees and wait times, which increase a homeowner s overall cost to install rooftop solar. We strongly discourage AHJs from requiring multiple permits, and future reports may penalize cities for this redundancy. DATA COLLECTION PROCESS When collecting data for the Project Permit database in the cities of Los Angeles County, Sierra Club interns first did an initial search of the building department websites to obtain information about permit fees, application requirements, and process. After this stage, the Sierra Club called each building department to confirm relevant data. Officials were asked the following questions regarding residential rooftop solar PV installations: Is information on permit fees, application requirements, and process posted on the city s website? Can building permit proposals be submitted online? What is the turnaround time for each application? Is the permitting fee schedule a flat rate or based on the installation? What is the rate? Can building permits exceed $400? Is there a narrow inspection-appointment window (limited to a maximum of two hours)? How many inspections are required? Are reviews limited to validating the safe and efficient operation of a proposed PV system? Through our data collection process, two special cases arose that warrant clarification. First, Los Angeles County processes its permits out of several regional offices, which preside over the region s unincorporated areas. These offices were graded separately and the data is presented in Table 2. The information gathered presents practical inconsistencies between these regional branches, despite the presence of countywide guidelines. The expected turnaround times and inspection protocol were the most frequent variants between these offices, highlighting the need for a more-efficient standardized County permitting process. Second, although the City of Los Angeles receives a Good grade, we recognize that the city is rapidly overhauling its permitting system under Mayor Garcetti s Sunny Skies initiative. The city s new permitting system, which we expect to be implemented in the coming months, will dramatically improve the speed and efficiency of solar installations in Los Angeles. Though these changes are not included in this version of the report, we applaud the city s efforts. We believe the city s new process could serve as a national model for permitting. PERMITTING BEST PRACTICES The best practices can be grouped into two main categories: the permit application process and the field inspection process. Permitting best practices, described in more detail below, include posting requirements online, enabling online processing, offering a speedy turnaround time, assessing reasonable permitting fees, and eliminating community-specific license requirements. Field inspection best practices include offering a narrow inspection appointment window and the elimination of excessive inspections. The following best practices descriptions are transcribed from the IREC best practices report. 1. Requirements Posted Online AHJs should have a website that offers a one-stop location for residents, businesses, and installers to obtain all necessary information on obtaining a solar permit in that municipality or region. In particular, the website should include a clear description of the requirements and process for getting a solar permit, including any necessary forms, and information on fees, approval time, and inspections. The website could also contain checklists for the application and inspection requirements for solar. Making these resources easily accessible to solar installers will reduce the number of questions that municipal staff have to answer and will improve the efficiency of the permitting SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 3

4 process for all involved. In addition, it can help to increase the quality of applications submitted, which in turn shortens review time. It also decreases the frustrating back-and-forth that installers and municipal staff may otherwise experience. Providing these resources can be particularly helpful to homeowners and to installers who are new to a specific municipality. If an AHJ has unique or unusual requirements, or has recently modified its process or requirements, the website is a good way to inform stakeholders about these differences. 2. Online Processing Submittal, review, and approval of solar permits should be possible via or a website, with no trips to the municipal office required for most residential permits. Implementation of this best practice could range from a simple -based solution to a fully online permitting system. An online permitting system offers numerous streamlining benefits for both installers and municipalities, which vary depending on the sophistication of the system. Generally speaking, when an application and supporting materials are submitted online, municipal staff can immediately access them and do not need to enter the information manually, which saves staff time. Likewise, installers save time and money by not having to submit paper copies or make extra trips to the AH permitting department. In a more fully online system, once the application has entered the system, multiple personnel may work on reviewing the materials at the same time and track the review progress and comments made by different departments. If there is an online web portal that records the path of a permit application through the review process, then installers can follow the status of their applications. With some systems, applicants can also pay their permit fees online and the AHJ can keep track of the revenue information automatically. While the more sophisticated online permitting systems can require significant upfront investment by an AHJ, their benefits are also significant for both municipalities and solar installers, as well as other types of permit applicants. Enabling online permit processing could be part of the implementation of an expedited permit process. Similarly, online permit processing could facilitate faster turnaround for permits. 3. Rapid Turnaround Time If clearly defined review requirements are met, the majority of small residential PV systems can be processed quickly, ideally over-the-counter or electronically, within one day. Such expedited treatment can be accomplished in several ways, including through prequalification for certain systems, plans, WHAT ARE NET METERING/ SOLAR CREDITS? 1 During the day, your solar panels produce energy to help power your home, school, or business or installers. The Expedited Permit Process for PV Systems, from the Solar America Board for Codes and Standards (Solar ABCs), which provides a framework for expedited review for typical residential PV systems, has proven especially popular and effective. Regardless of the method chosen, we recommend that the permitting requirements, including the permit form itself, be made consistent regionally and, to the extent possible, statewide. Any leftover energy flows into the grid to help power your neighborhood For all the extra power generated during the day, you get a bill credit THANKS, NEIGHBOR! BILL $$$$ -$$ DUE: $$ At night, your house gets power from the grid and the cost is offset with your bill credits. Just like a cell phone bill, credits that you don t use roll over month to month Expediting the process can save time and money for both installers and municipalities. Installers receive their permits SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 4

5 more quickly, and can move forward with installing the project and soliciting additional projects sooner. Municipalities can redirect valuable staff time to projects that require moreintensive review. While these procedural improvements are sometimes specific to solar, all permit applicants may benefit if they are implemented broadly. 4. Fair Permitting Costs Fees should fairly reflect the time needed for city staff to review and issue a permit. They should remain relatively consistent regardless of system size and are often not proportional to the materials cost of a solar installation, in contrast to other types of projects. A flat fee of $400 or less is reasonable for a residential solar permit. A common way for AHJs to cover the administrative expense of providing permits is to assess fees for their issuance. Therefore, it is critical that permit fees cover the time it takes to review and issue permits so that AHJs have adequate staff and resources to meet demand. At the same time, it is important that AHJs make their permitting processes as efficient as possible by adopting the other best practices, which in turn should keep fees reasonable. As far as calculation of the appropriate fee and fee cap, using a flat-fee method instead of a value-based method to assess permit fees streamlines the process and ensures that larger solar energy systems are not arbitrarily penalized. The typical value-based method, which relies on the cost of a PV system, often results in an inflated fee that does not reflect the actual staff time required to review the permit application. In the end, it is important to recognize that the role of AHJs in permitting is valuable. Payment of a reasonable permit fee that compensates the AHJ for its time and labor may actually aid in the long-term sustainability of the rooftop solar market. 5. Narrow Inspection Appointment Windows Ideally, installers should be able to schedule an appointment for an inspection at a precise time. When this is not possible, the window for inspection appointments should be kept to within two hours or less. We also recommend that inspectors notify contractors as the inspector nears the site as an additional way of reducing waiting time for both installers and inspectors. Shorter windows for inspection appointments benefit both installers and inspectors. It reduces the amount of costly installer time spent waiting for inspectors to arrive. In addition, it lessens the chance that an inspector will arrive and find the installer unprepared for the inspection. If the inspector provides a two-hour or shorter time window, and notifies the installer close to the time of arrival, it can help to ensure that the installer will be there and ready for the inspection. This avoids wasting the inspector s time as well. Taking advantage of the ubiquity of cellphones and Internet access, jurisdictions have developed a variety of new methods for scheduling inspections and enabling shorter windows. 6. Eliminate Excessive Inspections We recommend requiring only one inspection by the AHJ for standard rooftop systems on existing homes or businesses. Numerous AHJs have found that they can safely permit solar systems without requiring more than one inspection, often by rolling together electrical, structural, and fire safety inspection. Eliminating reviews that do little to validate the safe and efficient operation of a proposed PV system for example, plan checks with aesthetic criteria, or certain rough or in-process inspections removes unnecessary costs and expedites permit issuance. For rough or in-process inspections in particular, the installer s work crew has to be put on hold while the inspection is scheduled and completed. This creates scheduling and staffing challenges for solar installers, who in certain cases might otherwise be able to complete installation in one day. For AHJs, requiring only one inspection can free up inspectors to be more thorough on other job sites and possibly reduce the need to rely on third-party inspectors in overflow periods. PRESENTATION OF FINDINGS In collecting the permitting data on AHJs throughout Los Angeles County, we found that performance varied widely. In fact, while cities can take several steps to improve their individual processes, the biggest problem is the lack of standardization. Nearly every city has adopted a unique permit approval process. Thus, while we discuss several steps that cities can take to improve their own processes, further state-level action is clearly needed to standardize and simplify residential solar permitting. In Table 1, we provide our findings on each AHJ in the county. Los Angeles County regional offices preside over unincorporated regions in Los Angeles. Table 2 highlights that even within these offices, which function from the same permitting guidelines, discrepancies exist. La Puente and South Whittier were both able to process permits over the counter, while all other offices needed more than two days for processing. The inspection appointment windows and the number of required inspections also varied, illustrating the need for county and statewide training to prevent such inconsistencies. SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 5

6 TABLE 1 (ALL CITIES) LOS ANGELES COUNTY MUNICIPALITIES Jurisdiction Name Project Permit Score Posts requirements online? Enables online processing? time? (PART 1) time? (PART 2) Reasonable permitting fees? Offers a narrow inspection appointment window? Eliminates excessive inspections? SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 6

7 TABLE 1 (ALL CITIES) LOS ANGELES COUNTY MUNICIPALITIES CONTINUED Jurisdiction Name Project Permit Score Posts requirements online? Enables online processing? time? (PART 1) time? (PART 2) Reasonable permitting fees? Offers a narrow inspection appointment window? Eliminates excessive inspections? TABLE 2 (LA CITY) LOS ANGELES INCORPORATED AREAS Jurisdiction Name Project Permit Score Posts requirements online? Enables online processing? time? (PART 1) time? (PART 2) Reasonable permitting fees? Offers a narrow inspection appointment window? Eliminates excessive inspections? SIMPLIFYING RESIDENTIAL SOLAR PERMITTING: Cutting a Local Cost Culprit 7

8 DISCUSSION Much work remains if the Los Angeles region is going to realize its full rooftop solar potential. Only eight AHJs across the region received a Best rating, compared with 40 others that received a Worst rating. By far, AHJs have the hardest time processing applications online, with only 6 out of 90 providing this option to installers. 1. Requirements Posted Online Many AHJs have posted PV permit-requirement checklists to their building department websites. Some have developed PV installation permits that consolidate relevant information and provide a conclusive review of the project while eliminating redundant permitting fees. Smaller and more rural cities were less likely to achieve this best practice, but could often provide a list of requirements over the phone. Overall, 62 percent of Best cities, 41 percent of Good cities, and 20 percent of Worst cities complied with this best practice. 2. Online Processing This category faces the lowest level of compliance, with 6 out of 90 AHJs accepting permits online or by . Budgetary constraints often make the initial investment in web development tools that enable online permitting daunting for smaller AHJs. A state-funded template is recommended to assist budgetary restricted AHJs. Alternatively, AHJs could choose to defray costs by collaborating on a multiplejurisdiction website. Where this is not possible, simply offering an address, to avoid the time and cost of delivering an application in person, would be suitable. 3. Rapid Turnaround Time A city s ability and willingness to process these permits reflected the efficiency of its overall PV permitting review process. While wait times varied, all Best cities, one-third (12 total) of Good cities, but no Worst city were able to process the permit applications over the counter. Only three Worst cities could process the report within one to two days. 4. Fair Permitting Costs Fee schedules were also indicative of a city s overall ranking. All Best cities, 60 percent of Good cities, but only 10 percent of Worst cities had reasonable fees. In total, more than half the AHJs in Los Angeles County failed to adhere to the best practice of capping fees at $400. AHJ representatives were occasionally uncertain of the exact permitting cost and fee schedule. This ambiguity creates another hindrance for prospective installers who must exert further efforts to get a quote. 5. Narrow Inspection Appointment Windows Only 35 percent of all AHJs offered narrow inspection appointment windows. Only half of the Best cities, 36 percent of Good cities and 28 percent of Worst cities offered narrow appointment windows. 6. Eliminate Excessive Inspections Only five out of eight Best cities (62 percent), 27 of 41 Good cities (65 percent), and 20 of 39 Worst cities (51 percent) have eliminated excessive inspections. Low compliance in this category indicates a lack of education, familiarity, and priority for residential solar installations among AHJs. Strengthening training efforts would better prepare inspectors to assess a system fully in just one visit. CONCLUSION Huge rooftop-solar energy advancements have been made in California. The California Solar Initiative and industry technological advancements have set the stage for full integration of distributed solar energy into the state s grid. Reform of the permitting process offers a high return on investment and would boost solar installations across the state. Simplifying and standardizing the permitting process for residential photovoltaic rooftop systems is necessary if AHJs want solar to help achieve local and statewide renewable energy goals. The collected data show that all best practices have been implemented to varying degrees across the county. The improvements suggested in this report would ease the process of expanding these practices for AHJs, would benefit the solar installation community, and would decrease installation costs for homeowners. ENDNOTES 1 Barbose, Galen, Naim Darghouth, Samantha Weaver, and Ryan Wiser. Tracking the Sun VI. Rep. Lawrence Berkeley National Laboratory, July Web. 2 Tong, James. Nationwide Analysis of Solar Permitting and the Implications for Soft Costs. Rep. Clean Power Finance, Dec Web. Dec2012_Final.pdf 3 Hernandez, Mari. Solar Power to the People: The Rise of Rooftop Solar Among the Middle Class. Center for American Progress, 21 Oct Web. solar-power-to-the-people-the-rise-of-rooftop-solar-among-the-middleclass/ 4 National Renewable Energy Laboratory. Friedman, Barry et al. Benchmarking Non-Hardware Balance-of-System (Soft) Costs for U.S. Photovoltaic Systems, Using a Bottom-Up Approach and Installer Survey Second Edition. October pdf 5 Tong, James. Nationwide Analysis of Solar Permitting and the Implications for Soft Costs. Rep. Clean Power Finance, Dec Web. Dec2012_Final.pdf We would like to recognize and thank Kyle Toliva, Wendy Whitcombe, and Alyssa Young for their invaluable time and support during the data collection process. Their support was critical to the development of this report.