There is growing evidence in the solar photovoltaic (PV) market that residential, commercial and industrial solar installations are becoming more economical. Let’s break down how these costs are calculated and give you our top three tips on how to make solar systems more affordable.
What is the levelized cost of energy?
When exploring the costs of energy sources, the common approach to calculate is using the levelized cost of energy (LCOE). This calculation takes the installed system costs and divides it by the lifetime of the energy. Typically, we consider “lifetime” energy to be 25 years since that’s the average warranty on the equipment. The levelized cost is often presented in cents per kWh and calculated in today’s dollars. This approach allows for comparisons across different sources of fuels, including hydro, wind, coal, gas (natural and petroleum) and biomass. All of these sources are used in Canada although according to the Canadian Energy Regulator, more than half of the electricity (61%) is from hydro.
Now that solar panels are being seen as a more affordable source of energy, the LCOE is something that all installers should consider. Make sure you’re on top of the costs and comparisons to illustrate the efficiency benefits for your customers.
Hard costs for installing solar systems
Most people focus on the cost of equipment when determining the LCOE and these hard costs are absolutely a factor. Certainly what the equipment will cost is an important element. However, it is also important to think about the whole installed system and all the components that add up to give that final cost. These additional variables can add to the initial costs and are sometimes overlooked.
The PV market has experienced a big drop in hardware costs over the last ten years. These hardware costs have hit the bottom of their reduction curve and may even see some increases over the next few years.
So if hard costs are not continuing to drop, how can you keep costs down?
Top three tips for keeping soft costs low
The soft costs for installation include aspects such as labour, permitting (electrical or building) and utility connection fees. These are the key areas that represent an opportunity to help you keep costs low. Here are Charge Solar’s recommendations:
1. Careful product selection
It’s not only the cost of the equipment, but the type of equipment you select that can make a world of difference for your installation. When it comes to choices, there are two considerations: technological advancements and physical features. Charge Solar spends a significant amount of time reviewing the available products and narrowing down the best options for the Canadian market so you have options at your fingertips. As an example, the size of the panel is a consideration that can have important implications for you. A bigger panel can mean less racking is needed and there could be a cost savings there. Going too big might mean there is a significant labour increase to install which is less appealing.
At Charge Solar, we made the choice to produce our own racking line so we can see what’s happening in the industry and better serve our installers. The benefit of having our own line is being able to hear your pain points and having the control to do something about them. As a result of hearing the difficulties installers have with clamps, we created one that has a spring loading system so the spring helps the clamp pop in and stay in place. We’ve heard how this speeds up installations and that is a win-win.
2. Installation labour
This is an obvious one. Labour costs are going up and the longer it takes to install a solar panel system, takes away from your bottom line. We believe in the lean concept, even if it was designed for manufacturing. In a nutshell, lean manufacturing means eliminating waste and streamlining as much as possible. At Charge Solar, we apply this concept to the labour installation process. Each time someone has to come down a ladder to pick up parts and go back to the roof, it’s costing money without adding value to the solar system. Charge Solar offers courses on lean installation processes to reduce those installation costs wherever possible. We know that as the industry grows and installations become more frequent (even daily!) the learning from each installation will have a snowball effect. Until then, we offer our training courses to augment that learning process and maximize the industry’s learning in one place for your benefit.
3. Permitting fees and building fees
The permitting, electrical, net meter and building fees are part of the required installation costs. It might seem an impossible task to reduce these fees as an installer, but this is where Charge Solar believes working together can improve the overall well being of the industry. We have staff dedicated to actively work with the provinces, municipalities and utilities to streamline processes and bring down those costs for you.
While these processes and fees can vary across regions and municipalities, there is progress being made in locations across Canada. For example, when it comes to electrical fees in B.C., we worked with Technical Safety BC and advocated for a fixed permit fee which has since been implemented. Currently, we are working with the Canadian Renewable Energy Association (CanREA) for commercial buildings in Ontario to have a streamlined net metering process. It’s a work in progress, but we believe in making a multi-year investment in supporting the growth of the solar industry in Canada. Ultimately, we want a long-term stable market that will benefit us all.
Predicted installation costs for 2022
Taking into account all the above considerations, the anticipated installation costs for 2022 are outlined below:
Charge Solar can you reduce soft costs and recommend installers in your area: Chargesolar.com/contact-us