What Are Soft Costs and How Do They Affect the Price of Community Solar?

Community Involvement


The cost of solar panels has drastically declined over the past decade, and experts predict that the cost of solar panels will drop another 34 percent by 2030. However, there are many other costs associated with community solar. Known as soft costs, these expenses, in short, are the non-hardware–related expenses associated with going solar and with maintaining a community-solar project. Soft costs impact the accessibility of going solar for some people because they factor into billing. National efforts are underway to reduce the impact of soft costs on the affordability of community solar. Below is a look at community-solar soft costs and how they affect the price of community solar.


What Are Types of Soft Costs?

Soft costs make up a large portion of the overhead expenses incurred by a community-solar company. In fact, approximately two-thirds (64 percent) of a solar company’s expenses are related to soft costs. What qualifies as a soft cost ranges widely. Soft costs include everything from costs associated with obtaining financing for a community-solar project, to applying for and obtaining permits for the development of the project, to paying the lease on rented land, to finding new customers. Other expenses include sales tax, installation labor, transaction costs, supply chain costs, worker training and certification, supply chain control, and developer profits.


Programs to Reduce Soft Costs

Red tape is another general category that adds to soft costs because it increases the amount of time and effort required to establish and run a community-solar project. There are a number of initiatives underway that are generally concerned with reducing barriers to going solar. These programs work to address accessibility issues in solar and to recognize governmental entities that are doing the same.

The Department of Energy’s (DOE) Solar Energy Technologies Office (SETO) works with for-profit companies, non-profit organizations, and state and local governments to render their operations more efficient and to make solar development more accessible to communities that are interested in addressing barriers to going solar, like zoning and permitting. Solsmart is a designation program that recognizes local and state governments for reducing barriers to going solar. The National Community Solar Partnership is a coalition of community stakeholders that is working to make community solar affordable for and accessible to every American household by the year 2025.


Reduced Soft Costs and Savings

The more community-solar companies are able to reduce soft costs, the more affordable and accessible community solar will be. Soft costs are difficult to rein in because building and maintaining community solar is a cost-intensive endeavor with many expenses and phases. With the support of federal programs, community-solar companies are able to work to reduce their costs while making community solar an increasingly viable option for more and more households. Reducing soft costs is therefore a key strategy in the long-term efforts to make America a country of renewable energy.


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Community solar works a lot like a community garden. Local utility customers sign up for subscriptions to a central solar facility—known as a community solar garden—and receive credit on their utility bills for energy produced..


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