Friday, May 13, 2011

Solar Permit Process is Nightmare

For the past several years, the solar installation business has been one of the bright spots in an otherwise depressed local construction industry.

But contractors say cumbersome and inconsistent regulations are undermining the sector's growth and are increasing costs for consumers.

"It's a nightmare," Kevin Hahner, owner of Roseville Solar Electric, said of the myriad permitting rules that solar contractors face. "The problem is every building department is different."

As California races to its goal of adding a million solar roofs by 2018, solar providers say their efforts are being bogged down by a lack of uniform permitting standards, cutbacks at city and county building departments, and costly and arbitrary fees.

The Legislature has moved to streamline regulations for solar and other renewable projects. In February, Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he would back a set of bills to speed development of clean-tech industries, including one to make it easier to build large solar arrays. So far, though, legislators have not targeted smaller solar projects that rely on county approval.

Solar providers often complain about having to wait hours in line to submit permits and weeks to get final approval.

The result: Installing rooftop solar panels often takes two to three months from start to finish. In contrast, installing a central air conditioning system, which requires about the same amount of work, can take two weeks, Hahner said.

"What people don't understand is the effect on the consumer: If you have an excessively complicated permit requirement … the consumer ends up waiting and could cancel," said Peter Rive, chief operations officer of San Mateo-based SolarCity, one of the nation's largest solar providers.

Ed Murray, president of Rancho Cordova-based Aztec Solar Inc., said he ran into a number of hassles trying to get a permit from San Joaquin County for a simple $5,000 solar water heater.

Usually these kinds of permit applications are handled over the counter, but this one turned into a drawn-out process. Murray said he and his employees had to drive to the unincorporated Stockton area three times as part of the review.

"The customer was about to pull out of the project because he was so frustrated that it was taking so long," said Murray, who noted that the permit was approved Thursday.

"We're really losing out on opportunities," he said.

Tom Ushing, deputy director of building inspections for San Joaquin County, said the department had several questions about the application that caused delays. He acknowledged, however, that staff cutbacks have made it take longer to get permits.

Permitting fees are another headache. They represent a big chunk of the overall cost, and they vary from place to place.

Some, like the city of Davis, charge a flat fee of about $125. But most jurisdictions have a percentage-based fee that ranges between 2 percent and 4 percent of the project's cost.

For a typical $30,000 solar system, that's anywhere from $600 to $1,200.

Many solar contractors say the percentage-based fees are unfair.

Even though a $30,000 solar photovoltaic system requires much less labor and a lot less regulatory scrutiny than a $30,000 addition to a home, both projects are charged the same fee.

Industry expert Doug Payne said the cost of red tape is a huge concern for the solar industry.

In addition to permitting costs, projects incur large expenses for inspections and connecting to the electric grid, he said.

Payne, executive director of SolarTech, a San Jose-based solar industry trade group, said the "soft costs" for a typical $20,000 to $30,000 residential solar project add up to about $5,000.

Payne said that up to two-thirds of those costs could be avoided through the establishment of national standards and automation.

"It's like a tax that prevents consumers from realizing lower prices, erodes contractors' profitability and creates barriers for job growth," said Payne, whose organization is spearheading efforts for national permitting standards.

Some local governments are taking action on their own. Sacramento's Planning Department, for instance, is in the process of streamlining its permitting process with a flat fee system.

The city's effort is funded by a $200,000 U.S. Department of Energy grant. The goal is to establish a fee system that's based on the actual labor involved in the solar project, rather than its dollar value, said city spokesman Maurice Chaney.


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