Who says government can’t be run more like a business? The U.S. Department of Energy (DOE) has launched an initiative that embraces one of the fundamental principles of market economics. It aims to help the solar industry overcome the stubborn obstacle of pricing in a manner that even the most strident critics of big government would appreciate.
In September, the DOE announced a new program to make solar power faster, easier and cheaper to install. The primary incentive: competition.
As part of its SunShot Initiative, the DOE created a challenge that will reward a total of $10 million to the first three teams that can hold down their nonhardware costs to $1 per watt and keep them there.
The contest is focusing on the so-called “soft costs” of solar-energy systems, which include such bureaucratic hurdles as permitting, licensing and connecting to the grid. While much has been made of the drop in the “hard costs” of solar power through the use of cheaper materials and system innovations, the soft costs have not followed the same decline curve.
According to the DOE, hardware costs have dropped by about 75 percent in the last four years. The agency wants to encourage a similar drop in soft costs. The $1-per-watt target would represent a decrease in soft costs of more than 65 percent, but the plan is not to stop there. SunShot’s goal is to bring soft costs for residential systems down to $0.60 per watt by the end of the decade and, in doing so, make solar energy competitive with other forms of energy, without subsidies.
The competition will run in two phases over the next three years. Phase I will challenge participating teams to successfully deploy 5,000 small-scale rooftop-solar systems with nonhardware costs averaging $1 per watt. Small-scale is defined as a system with a capacity between 2 and 15 kilowatts. During Phase II, teams must install an additional 1,000 qualifying systems.
The first-place team will be awarded $7 million. Second place will receive $2 million, and third will win $1 million.