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California solar energy installations are sometimes seen as a luxury that only the rich can afford. This misconception is fueled in part by the fact that, many years ago, it was indeed very expensive to have solar panels installed on your roof.

But this is no longer the case. The solar industry has been advocating and raising awareness about the sustainability and affordability of the technology for all families, not just those who are wealthy. In fact, for many low-income Californians, solar could be a useful tool for saving money and increasing disposable income.

Solar Energy for Multi-Family Housing Complexes

Solar power has already been integrated into many affordable housing complexes, including Tassafaronga Village in Oakland, California, originally built in 1964. Tassafaronga has been completely rehabilitated with sustainable building techniques and energy-efficient apartments.

The most notable improvement is the solar panel array that covers the rooftops of the apartment buildings. In addition, there are pylons scattered throughout the complex with photovoltaic modules on top to collect extra energy. The solar panels are already paying dividends for residents of Tassafaronga, whose energy bills range from $10 to 15 a month, according to news publication OaklandLocal.com.

How Energy Costs Affect Low-Income Residents

Prior to its rehabilitation, residents of Tassafaronga, many of whom receive assistance through Federal Section 8 subsidies, suffered from the same problem that afflicts other low-income citizens: high energy costs. In most cities, affordable housing units are in dilapidated and outdated apartment buildings are inefficient when it comes to energy consumption.

In 2013, the Rocky Mountain Institute found that energy costs in public housing were 40 percent higher than in private homes. In addition, apartments built before 1970, which comprise much of the affordable housing stock throughout the country, use 55 percent more energy than those built after 1990.

The people who end up paying the price for the inefficiencies are low-income residents, who are often in no position to afford the high costs of energy.

Solar Energy Provides a Solution

However, it’s important to note that the solar energy industry and lawmakers are making efforts to reverse this trend and make more renewable energy available to low-income families.

Two of the most notable public programs are Single Family Affordable Solar Homes (SASH) and Multi Family Affordable Solar Homes (MASH), which were passed as part of the California Solar Initiative (CSI) in 2006. These programs set aside part of the solar rebates that were made available through CSI to be used specifically for low-income housing.

Making solar power available to low-income families solves a number of problems all at once. It sharply reduces energy costs for those receiving subsidies, while also helping to move the state’s energy infrastructure in a more sustainable direction. Hopefully, Tassafaronga can serve as a model for other communities that are hoping to go green to save their residents money.

One of the most popular methods of financing a Los Angeles or Orange County solar project is a lease agreement from a third-party institution. Solar leases allow homeowners to pay for their solar panels over time while still saving money on electricity costs.

In fact,  over 75% of California’s new solar installations in 2012 were paid for with a solar lease, rather than being purchased outright with a large cash payment. Many speculate that 2013 and 2014 may show an even higher percentage of leased solar systems.

But some solar installations, particularly mid-sized projects that would be put on the rooftop of a school, church or other nonprofit institution, have trouble securing such solar leases or loans. This is mainly because banks are less likely to fund a larger project unless the borrower has both a good credit score and considerable equity — something that many organizations lack.

Mosaic: Loaning Funds for Solar Projects

Enter Mosaic, a startup based in Oakland, California, that helps institutions across the United States convert their facilities to solar. Similar to Kickstarter, Mosaic is a crowdfunding platform that aims to connect investors with solar projects.

The idea is that anyone can invest in a solar project, and once the system is completed, they receive both principal and interest repayments on the power that is produced from the solar panels. Projects typically pay about 4-7 percent annual interest.

One of the biggest strengths of the Mosaic platform is that the loaning system is flexible. Investors can decide how much they are willing to invest in each project.

How to Become a Solar Investor

Getting involved in a Mosaic solar project is fairly easy. Log on to the platform on their website and then browse through the different investment projects. Once you choose from the options (previous projects include solar panels for military housing, schools, and a local convention center), you can finance a local project in any amount from $25 up.

Since the company began soliciting money a year ago in January of 2013, they’ve raised $5.5 million for solar projects from thousands of investors. These funds have led to the completion of 27 solar projects in six different states so far.

Among the funded solar installations are a photovoltaic (PV) system with 400 solar panels at an affordable housing facility in San Bruno, California and 120 solar panels for the Asian Resource Center in Oakland, California.

Limitations of Mosaic’s Solar Investments for Other States

There are a few limitations that Mosaic will need to sort out to become more useful for organizations looking to acquire a solar electric system. Certain states have securities regulations that prevent residents from investing. However, these restrictions do not apply to Californians. Any California resident may invest in a Mosaic solar project and earn real income back on their investment

In one short year, Mosaic has already proven itself to be a revolutionary way for institutions to switch to clean, solar energy. They will be a “green” corporation to watch in the coming years.

As the year comes to a close, we’re reflecting on everything that has happened in the past twelve months. Since 1974, AMECO has been promoting solar energy as a clean, renewable source of power for our planet. These top five moments remind us why we have made solar our priority and why we dedicate ourselves to it each and every day.

Solar Moment #1: Solar Grand Prix in Long Beach

Pure joy. Those two words can explain the look on the face of every child at the  Solar Grand Prix earlier this year. As we snapped photos of the kids before the races, each team held up their car with pride. Though a few teams encountered some disappointment after the races, all of the students came away as winners who had learned something new about solar energy.

Solar Moment #2: Helping a Local Nonprofit Go Solar

AMECO was honored to be awarded the  solar project at the California Aquatics Therapy & Wellness Center in North Long Beach, just minutes from our office in Paramount, California. After installing nearly 50 solar pool panels on the roof, the organization has been heating their pool with solar energy and saving on their monthly gas bill. All the more to go to their great programs!

Solar Moment #3: 1st Solar Decathlon on the West Coast

For years we’ve wanted to attend the  Solar Decathlon, so we were pretty excited when it was announced that this year’s event would be in Irvine, California. While touring the 19 solar homes displayed, we couldn’t help but feel inspired. Not only were the university teams innovative and creative about their solar home designs and use of the technology, but they were passionate about promoting the clean, renewable energy source. Seeing their enthusiasm gave us an extra hop in our solar step that week.

Solar Moment #4: Supporting the Go Solar LA Campaign

Throughout 2013,  Environment California has been pushing the idea that Los Angeles should aim to use 20% solar power by 2020. They have rallied politicians and local community members alike to accomplish this renewable energy goal. We were happy to interview a couple of our customers for their recent report, Solar in the Spotlight: Stories of Angelenos Investing in a Clean Energy Future. Check out our customer who made the final cut on page 19.

Solar Moment #5: Our Happy Solar Customers

It may be cheesy, but there is nothing that makes us happier than our happy solar customers. Each time that someone contacts us to tell us that they happy with their solar panel installation, we’re reminded why we work so hard to provide reliable, quality solar systems. Whether someone is ecstatic about their lower electric bills, pleased that their pool was nicely heated for their weekend pool party or paying a compliment to our professional installation team, we’re overjoyed every time we receive positive feedback. You may read some of  our customer testimonials on our website or see  our interviews with customers on our blog.

The falling price of solar panels has made clean energy more accessible than ever. However, the overall cost of going solar in the U.S. has been stubbornly high compared to other countries. The reason? Persistent “soft costs”—the non-hardware expenses for things like permitting and labor. The good news is that this is finally changing. Thanks to new government initiatives and smarter local policies, there are now clear, actionable strategies you can use to lower soft costs, making your transition to solar power in California more affordable and faster than ever before.

However, the actual cost of a solar panel can only go so low. It will be essential for the solar industry to whittle down soft costs in order to accomplish wider adoption of solar energy in the United States.

What Are Soft Costs in a Solar Project?

When you think about the cost of going solar, your mind probably jumps straight to the hardware: the solar panels, the inverters, and the mounting equipment. These are what we call “hard costs.” But there’s another significant category of expenses known as “soft costs.” The U.S. Department of Energy defines soft costs as all the non-hardware expenses involved in a solar installation. This includes everything from the initial system design and local permitting to the labor for installation and the costs of connecting to the grid. While the price of solar panels has fallen dramatically, soft costs now make up a large portion of the total price tag for a residential solar project. Understanding these costs is the first step to managing them effectively.

Defining Soft Costs vs. Hard Costs

Think of it this way: hard costs are the tangible items you can touch, like the solar panels on your roof or the battery backup system in your garage. Soft costs are the services and processes required to get them there and turn them on. This includes the expertise of the engineers who design your system, the administrative work to file for permits, the wages for the installation crew, and any fees your utility company charges for interconnection. While you can’t hold these costs in your hand, they are absolutely essential for a successful and legally compliant solar installation. An experienced solar provider will bundle these into your total project quote, giving you a clear picture of the complete investment from day one.

Examples of Common Solar Soft Costs

Soft costs can seem a bit abstract, so let's break them down into concrete examples. These are the behind-the-scenes expenses that are crucial for getting your solar project off the ground and running smoothly. From initial planning to final inspection, each step involves a cost that contributes to your total investment. Recognizing these components helps you appreciate the full scope of work involved and understand exactly what you're paying for when you receive a comprehensive quote from a reputable installer.

Design and Engineering Fees

Every home is unique, and so is every solar energy system. Before a single panel is installed, engineers and designers must create a custom plan tailored to your home’s specific characteristics. This involves analyzing your roof’s orientation and angle, assessing potential shading from trees or other structures, and calculating your family’s energy consumption to determine the optimal system size. This meticulous planning ensures your system produces the maximum amount of power possible. At AMECO, our customized approach means we handle all the design and engineering to create a system that perfectly fits your energy needs and home layout.

Permitting, Inspection, and Interconnection Fees

Going solar involves a bit of red tape. Your local municipality requires permits to ensure the installation is safe and up to code. After the installation is complete, an inspector will need to sign off on the work. Finally, you’ll need to get approval from your utility company to connect your system to the grid, a process called interconnection. Each of these steps comes with associated fees and administrative work. A full-service solar company manages this entire process for you, dealing with the paperwork and scheduling so you don’t have to worry about the bureaucratic hurdles.

Financial and Legal Costs

This category covers the business side of your solar project. It includes costs like liability insurance for the installation crew, financing fees if you’re taking out a solar loan, and the legal paperwork associated with contracts and warranties. While these costs aren't as visible as the installation itself, they are vital for protecting both you and the installation company. Ensuring all legal and financial aspects are handled properly provides peace of mind and secures your long-term investment in clean energy for your home.

Project Management and Labor

A significant portion of your project's soft costs is the labor required to bring your solar system to life. This includes the wages for the certified electricians and installers who work on your roof, as well as the project manager who coordinates the entire process from start to finish. Effective project management ensures that your installation is completed on time, on budget, and with minimal disruption to your daily life. This human element is what turns a great design into a high-performing reality for residential customers.

The Financial Impact of Unmanaged Soft Costs

Ignoring or underestimating soft costs can have a serious impact on your solar project's budget and timeline. Because they can account for such a large percentage of the total expense—sometimes as much as 50%—a lack of clear planning can lead to unexpected financial strain. When a solar quote seems too good to be true, it might be because it omits or downplays these essential expenses, leaving you to face them later. This is why it’s so important to work with a transparent and experienced installer who provides a comprehensive, all-inclusive quote. A clear breakdown helps you avoid surprises and ensures your project stays on track financially from the very beginning.

How Soft Costs Affect Your Total Project Budget

According to industry data from Buildxact, a surprising number of construction projects—over 90%—end up going over budget, and a primary reason is the underestimation of soft costs. In a solar project, these expenses can quickly add up if they aren't accounted for upfront. An incomplete quote might not include fees for unexpected structural upgrades to your roof or complex permitting requirements. By partnering with a company that has decades of experience, you get the benefit of foresight. We anticipate these potential costs and include them in your initial estimate, ensuring the number you see is the number you pay.

The Risk of Project Delays and Overruns

When soft costs aren't managed properly, the consequences go beyond just your wallet. Unforeseen issues with permitting, for example, can halt a project for weeks, creating frustrating delays. If your installer didn't properly budget for labor or materials, you could face work stoppages or a drawn-out installation timeline. These overruns are not just inconvenient; they delay the moment you can start saving money on your electricity bills. A well-managed project with a clear, upfront plan for all costs is the best way to ensure your transition to solar is smooth, timely, and stress-free.

Why Lowering Soft Costs Is Key to Affordable Solar

There are other costs that go into the final price of installing solar panels on your home or business including labor, marketing, administrative costs and permitting fees.

Commonly referred to as “soft costs”, they have remained relatively flat when compared to the drop in price of “hard costs” (i.e. solar panels and inverters).

What Germany Can Teach Us About Solar Soft Costs

Though roughly the size of New Mexico and with a population about the quarter of the United States, Germany has been the worldwide leader in solar for over a decade.

By reducing their soft costs, the Germans have lowered the price of solar installations to $2.24 per watt (compared to an average of $4.44 in the U.S., according to  GreenTech Media). This is likely a result of easier permitting processes, which allows solar contractors to spend less time on each system and avoid high fees for obtaining permits.

Can the U.S. Lower Its Solar Costs, Too?

Even though solar soft costs are higher in the United States, solar panel installation has become increasingly popular in our country. In fact, the solar analysts from SEIA and GTM Research predict that 2013 will be the first time in 15 years that the United States will beat out Germany in total solar capacity installed.

With the Sunshot Initiative, the U.S. Department of Energy (DOE) Solar Technologies aims to make solar energy competitive with traditional forms of electricity by 2020. They fund research projects and market studies that provide solutions for solar price reduction. In time, their efforts could reduce the soft costs enough so that the United States will be competitive with Germany when it comes to price per watt installed.

Even without such reductions, solar power in California is still an excellent way for families and businesses to save money on energy costs. Additionally, those who install a solar electric system will be able to take advantage of the 30% federal tax credit, which is set to expire about two years from now on December 31, 2016. For more information, contact AMECO today at (888) 595-9570 or email gosolar@th2.e81.myftpupload.com.

Setting the Record Straight: U.S. Progress on Soft Costs

While it’s true that the U.S. has historically lagged behind countries like Germany in minimizing solar soft costs, the tide is turning. Significant efforts are underway at both the federal and local levels to streamline the process of going solar. These initiatives are focused on cutting the red tape and administrative hurdles that can inflate the final price tag of a solar installation. This progress is making solar more accessible and affordable for homeowners across the country, including right here in California, by tackling the bureaucratic friction that has kept costs unnecessarily high for too long.

Current Government Initiatives to Reduce Costs

The U.S. Department of Energy (DOE) is actively working to bring down these expenses. Through its Solar Energy Technologies Office (SETO), the government funds research and develops tools aimed squarely at reducing soft costs. By identifying best practices for things like permitting and inspection, SETO helps create successful, repeatable methods that can be adopted nationwide. This work is crucial for sharing information and ensuring that installers and local governments have the resources they need to make solar installations smoother and more cost-effective for everyone involved.

SolarAPP+ for Faster Permitting

One of the most promising tools to emerge from these efforts is SolarAPP+. This automated, online platform has been a game-changer for speeding up the permitting process for residential solar projects. Instead of waiting weeks or even months for manual review, contractors can use SolarAPP+ to get instant approval for standardized installations. This efficiency benefits homeowners with shorter project timelines, contractors with lower administrative burdens, and local governments by freeing up staff to focus on more complex projects. It’s a win-win-win for making solar faster and cheaper.

The SolSmart Program

Progress is also happening at the community level, thanks to programs like SolSmart. This initiative provides technical assistance and national recognition to cities and counties that make it easier for residents to go solar. By encouraging local governments to simplify their permitting processes, update zoning codes, and train staff, SolSmart helps remove common roadblocks that drive up soft costs. When your local government is "solar-friendly," it directly translates into a smoother, more affordable installation experience for you as a homeowner, reducing unnecessary delays and paperwork.

Strategies for Reducing Solar Soft Costs

While government programs are making a big impact, there are other key strategies that help chip away at soft costs. These efforts involve everyone from local city planners to the solar installer you choose for your project. Understanding these strategies can help you appreciate the behind-the-scenes work that goes into making your transition to solar as seamless as possible. When local governments and experienced installers work together, they can significantly reduce the administrative friction that adds unnecessary expense and time to a solar installation, leading to a better outcome for you.

How Local Governments Can Help

Your local government plays a surprisingly large role in the total cost of your solar project. Complicated local rules and lengthy approval timelines are major contributors to soft costs, making projects more expensive and unpredictable. When municipalities take steps to streamline their procedures, they can directly lower the cost of solar for their residents. This involves re-evaluating old regulations and adopting new, more efficient ways of managing solar installations, which ultimately saves you money and time by removing unnecessary bureaucratic hurdles from the process.

Updating Zoning Laws

Outdated zoning laws can create unnecessary hurdles for solar projects. By updating these rules to be more flexible, local governments can make the approval process much simpler. For example, clearly defining where and how solar panels can be installed removes ambiguity and reduces the need for special exceptions or lengthy reviews. This concept, sometimes called "flexible zoning," ensures that the regulations on the books match the modern reality of residential solar, preventing needless delays and administrative costs that would otherwise be passed on to you.

Providing Clear Project Information

Clarity is key to keeping costs down. When a local government provides clear, comprehensive information about its requirements for a solar project, it helps everyone involved. This means having easily accessible guidelines on permitting, inspections, and grid connection. When your solar installer has all the necessary information upfront, they can prepare accurate plans and applications from the start. This simple step avoids the back-and-forth that leads to delays and unexpected costs, ensuring a much smoother process from design to installation.

The Role of an Experienced Solar Installer

Choosing the right solar installer is one of the most effective ways to control soft costs. An experienced company does more than just mount panels on your roof; they act as your project manager, guiding you through every step and handling the complex administrative tasks. A seasoned installer understands the local landscape, from permitting quirks to utility requirements, and can anticipate potential issues before they become costly problems. This expertise is invaluable for ensuring your project stays on budget and on schedule, giving you peace of mind throughout the process.

Improving Collaboration and Planning

A great solar project begins with a great plan. An experienced installer, like AMECO, brings deep expertise to the design process right from the start. By involving professionals early, you get a more accurate and realistic cost estimate, which helps avoid budget cuts or surprises down the line. This collaborative approach ensures that your system is designed not just for optimal energy production but also for a smooth installation. Because we also specialize in roofing solutions, we can assess your roof's condition and integrate it into the plan, preventing separate, costly roofing work later.

Navigating Local Permitting and Grid Interconnection

Dealing with permits and utility paperwork is often the most frustrating part of going solar. This is where a veteran installer truly shines. With over 50 years of combined experience in California, we know the specific requirements of different cities and utility companies. We handle the entire permitting and interconnection process for you, from submitting the initial application to securing the final approval to operate your system. This service not only saves you a massive headache but also prevents the costly delays that can arise from incorrect or incomplete paperwork.

Other Key Areas for Cost Reduction

Beyond local policies and installer expertise, a few other forward-thinking strategies are helping to make solar more affordable in the long run. These areas focus on building a sustainable and efficient solar industry from the ground up. By investing in the workforce and planning for the future, the industry can continue to drive down costs and ensure that solar remains a smart, accessible energy choice for generations to come. These efforts are vital for the long-term health and affordability of solar power.

Investing in Workforce Training

A skilled workforce is an efficient workforce. As the solar industry grows, so does the need for well-trained professionals who can install systems quickly, safely, and correctly. Investing in programs that train solar installers, electricians, and utility workers helps ensure high-quality work and reduces labor costs. When your installation team is highly skilled, they work more efficiently, which minimizes the on-site labor time—a key component of soft costs—and gets your system up and running faster without sacrificing quality or safety.

Planning for Solar Panel End-of-Life Management

Thinking ahead is crucial for long-term affordability. While today's solar panels are built to last for decades, it's important to have a plan for what happens when they reach the end of their useful life. The solar industry is actively working on creating clear and cost-effective processes for recycling and managing old panels. By establishing these end-of-life solutions now, we can prevent disposal from becoming a significant future expense, ensuring that solar power remains a sustainable and financially sound choice for the long haul.

Frequently Asked Questions

What exactly are "soft costs" in a solar project? Soft costs are all the expenses that aren't the physical hardware. Think of them as the services and processes needed to get your solar system running. This includes the cost of designing your custom system, filing for local permits, paying for inspections, and the labor for the installation crew. While you can't touch them like a solar panel, they are essential for a successful project.

Why are soft costs such a big part of the total price? While the price of solar panels has dropped significantly, the costs for services like engineering, project management, and navigating local government approvals have not fallen as quickly. Each home requires a custom design, and every city has its own permitting rules and fees. These necessary steps require time and expertise, which contribute to the overall project budget.

How can I, as a homeowner, help lower my own soft costs? The most impactful step you can take is to choose an experienced, full-service solar installer. A seasoned company knows how to handle local permitting and utility connections efficiently, which prevents costly delays. They also provide comprehensive quotes that account for all potential expenses upfront, so you avoid surprise costs later. This expertise is your best tool for a smooth and budget-friendly installation.

Are government programs actually making a difference in reducing these costs? Yes, they are. Programs like SolarAPP+ are creating a standardized, online process for permits, which drastically cuts down on waiting times and administrative work. Other initiatives, like SolSmart, encourage local governments to simplify their rules. These efforts directly tackle the bureaucratic hurdles that have historically driven up soft costs, making solar more affordable for everyone.

If I get a solar quote, will it include all the soft costs? A quote from a reputable, experienced installer should be comprehensive and include all anticipated soft costs. This transparency is crucial. Be cautious of quotes that seem unusually low, as they might be omitting key expenses like permitting fees or labor, which could lead to unexpected bills later. A good installer will walk you through a detailed breakdown so you understand the complete investment from the start.

Key Takeaways

• Understand what you're paying for: Soft costs are the non-hardware expenses like design, permitting, and labor that make up a large portion of your total solar project price. Working with a transparent installer who provides an all-inclusive quote is the best way to avoid surprise fees and budget overruns.
• Choose an experienced installer to manage the process: A veteran solar company handles complex administrative work, such as navigating local permits and utility interconnection, which prevents costly delays. Their expertise in planning and project management ensures your installation is smooth, efficient, and stays on budget.
• Know that costs are actively being reduced: Thanks to government initiatives like SolarAPP+ and the SolSmart program, the administrative hurdles that drive up solar prices are being streamlined. These efforts, combined with an experienced installer, make going solar in California more affordable and faster than before.

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