Solar Firms Frustrated by Permits

By TOM ZELLER Jr.

Ken Button, the president of Verengo Solar Plus, a residential solar panel installer in Orange, Calif., says his company — and his industry — are being strangled by municipal red tape.

Fifteen Verengo employees, Mr. Button said, are dedicated solely to researching and tailoring permit applications to meet the bureaucratic idiosyncrasies of the dozens of towns in the company’s market. And because most jurisdictions require applications to be submitted in person, Verengo employs two “permit runners” whose only job, Mr. Button said, is to “take those permit packs and physically drive them around, stand in line, and pay the fees.”

“We have 50 different permitting authorities within 50 miles of our office,” Mr. Button said. “They all have different documentation requirements, different filing processes, different fee structures. It’s like doing business in 50 different countries — just in Southern California.”

His lament is being echoed by solar companies across the country.

In a new study, the industry estimates that the permit dance adds an average of $2,500 in costs to each installation, and streamlining things could provide a $1 billion stimulus to the residential and commercial solar power market over the next five years.

The analysis, which will be released publicly on Thursday, was prepared by one of the nation’s largest solar leasing companies, SunRun, and endorsed by Verengo and at least a dozen other service and installation firms.

At a time when the Obama administration has vowed to redouble its efforts to create a green economy — and, more recently, to remove regulatory roadblocks and promote growth — companies that sell and install solar panel systems for residential and commercial customers are clamoring to be among the first in line.

“This is in essence a hidden tax on solar,” Mr. Button said.

The industry’s analysis, which has been shared with officials at the White House and the Energy Department, urges the federal government to create incentive programs that would nudge municipalities to adopt common codes, fee structures and filing procedures. Germany, Japan and some other countries that aggressively promote solar power have already used such streamlined permitting.

Administration officials said that they were seriously studying the issue, and that they planned to reveal initiatives and funding opportunities to address it.

The analysis suggests that permit standardization could make solar power — still typically an expensive proposition even with various subsidies — competitive for roughly half of the nation’s 128 million homes within just two years. Today, only about 80,000 households have installed solar power in the United States.

The Energy Department has already begun tackling the lack of standardization in the solar industry, in part through its Solar America Board of Codes and Standards, established under the department’s Solar Energy Technologies Program in 2007.

The solar ABC’s, as the program is known, links policy makers, solar panel manufacturers, installers and consumers to create a central clearinghouse for information on solar building codes and best practices.

But the analysis urges the Obama administration to do more to encourage local officials to adopt the codes and procedures outlined by the solar ABC’s — including the creation of a prize program similar to the Race to the Top Fund, a $4.35 billion program created as part of the 2009 stimulus package to encourage and reward states for efforts to reform education.

Such a contest would provide grants to cities in specific solar states that show the most progress adopting standards. The paper also calls for the creation of a common online permitting tool and funds for local education and advocacy efforts aimed at further streamlining solar panel installation. It also seeks to standardize formulas for calculating permit fees, which can range from nothing in some communities to more than $2,000 in others.

“There’s a huge range from one town to another,” said Bill Condit, the head of operations for Trinity Solar, one of the largest solar providers in New Jersey. “Basically there is no standard.”

Tales of wild variation — and attendant frustration — abound.

In Westminster, Colo., for example, solar installers say permit approval can take anywhere from three to six weeks and that the office is only open four days a week. In Broomfield, less than 10 miles from Westminster, applications are approved in a matter of days, but there are arcane stipulations about the thickness of underpanel sheathing and rack components.

Meanwhile, Erie, 12 miles north of Broomfield, has some of the most expensive permit fees in the state, but installers praise it for allowing permit packages to be submitted by e-mail.

In many ways, solar installers are simply dealing with the effects of the economic downturn, which has left some cities understaffed and sometimes turning to higher fees to help balance budgets.

Jay M. Trevino, the executive director of the planning and building agency for Santa Ana, Calif., which charges no fee for solar panel installations but typically takes four to six weeks to process permit applications, said that he sympathized with installers. But he added that his office had just one electrical engineer on staff to review plans — and not just for solar panel installations, but any building project.

Still, he said solar permitting might benefit from a process similar to the handouts developed by his agency for homeowners seeking approval of projects like room additions or patio covers. If their projects adhere to the standards prescribed in the documents, permitting is more or less automatic.

Rob Cahill, manager of business development at San Francisco-based SunRun and the chief author of the company’s white paper, said that as equipment and technology costs fell, stagnant “soft costs” associated with bureaucracy represented a larger portion of the overall installation price tag. Using data from Barclays Capital, Mr. Cahill estimated that local permitting and inspections processes added 13 percent to out-of-pocket costs for a homeowner installing solar panels in 2007.

Today, the SunRun report says, they add 33 percent — and that could rise to 50 percent in a few years.

Some cities have been held out as examples of streamlined processes, including San Jose, Calif., and Philadelphia, , and also Portland, Ore., which offers online permitting.

Mr. Button of Verengo Solar says he would be happy to see some progress in one area — shortening the time his team has to wait for an inspector to show up and look at an installation.

“When you call for an inspection, the best that you can get is, ‘Well, we’ll be out there either in the morning or in the afternoon.’ ” Mr. Button said. “I mean, even the phone company will give you a two-hour window.”