energy.gov/sunshot

SunShot BOS Soft Costs

May, 2016

Elaine Ulrich, Ph.D

Elaine.ulrich@ee.doe.gov

1

SunShotInitiative

SunShot Goal: 5 - 6¢/kWh without subsidy.

A 75% cost reduction by 2020.Pri

ceWhy SunShot

2

SunShot Program Structure

SunShot

2020 Goal

3

4

Soft Costs and Deployment Barriers

• Soft costs and Deployment barriers are the result of a lack of information needed to do a job or make a decision

• They can be called “transaction costs”

• Information/data search, gathering and generation costs

• Bargaining costs, lost opportunity when decisions appear risky

• Compliance and enforcement costs

• These information gaps slow market growth and can prevent market access

5

SunShot Soft Costs Strategic Areas

6

Balance of Systems (Soft Costs) Portfolio

Funding: ~ $115m Awards: ~70 nation wide

Empowering Leaders & Decision Makers

• Rooftop Solar Challenge 1&2: 8 Regional Teams, 150M Residents

• Solar Outreach Partnership : Nationwide Technical Assistance

• National Lab Analysis and Assistance: Strategy and in-depth reports

• Solar Market Pathways: Community Solar, finance and deployment innovations

• Solar Powering America by Recognizing Communities: Designation for leading communities

• SunShot Prize: Race to 7-Day Solar

Training Innovators

• Solar Training and Education for Professionals: Comprehensive training for Solar and Related professionals

• Solar Instructor Training Network: 400 Community Colleges training installers and code officials

• Grid Engineers for Accelerated Renewable Energy Deployment: Utility Power System Engineering network

• Solar Utility Networks Replicable Innovations in Solar Energy: Replicable solutions for electric coops and

rural communities

Harnessing Data

• Solar Energy Evolution and Diffusion Studies: Big Data, analytics and real-world pilot programs,

University, Private and Lab developed tools: Making data accessible

• Solar Bankability Data to Advance Transactions and Adoption: Seamless solar transactions

• SunShot Incubator : Software start-ups in GIS, customer acquisition, finance and more

• CATALYST: Innovation ecosystem for rapid prototyping and launch of IT and automation solutions

Finance & Business Innovation

• Advanced Financing : Loans, MLPs, and new streams of capital for solar finance

• Solar Access to Public Capital: 350+ finance, ratings agency, developer and installer partners developing

standards contracts and templates

• Real Estate Valuation: Linking appraisal and finance best practices

• Community & Shared Solar: Expanding solar beyond residential rooftops to multi-family, commercial and

community based projects

• Commercial & Industrial Solar: Coordination between EPA’s Green Power Partnership, NREL and DOE

Soft Costs are Declining

7

Just not as rapidly as Module Costs

Setting and meeting ambitious goals 40%

Implied Non-Module Cost is used as a proxy for soft costs due to data limitations

Decrease in Non-Module Costs

Between 2008 & 2014

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

1998 2000 2002 2004 2006 2008 2010 2012 2014

Non-Module Costs

energy.gov/sunshotenergy.gov/sunshotenergy.gov/sunshotenergy.gov/sunshotenergy.gov/sunshot8

energy.gov/sunshot8

Hardware 53%

Soft Costs are a Growing Piece of a Shrinking Pie

8

Soft Costs65%

Soft Costs 47%

20102014

Hardware 53% Hardware 35%

energy.gov/sunshotenergy.gov/sunshotenergy.gov/sunshotenergy.gov/sunshot9

Market Barriers and Fragmentation Create Soft Costs

49% of households cannot procure rooftop solar due to rooftop

limitations

15 states have interconnection policies

deemed overly restrictive

14 states installed fewer than

25 MW of PV in 2015

7 stateshave no process for

compensating exported PV

20 millionlow income homes have good

solar potential but may be excluded from deployment

32% of consumers have insufficient

credit to procure solar

73%of installations are concentrated in

5 states

One Thirdof installers have avoided doing

business in jurisdictions with cumbersome permitting processes

50 days, is the median

interconnection time for a PV system

But Other Factors Can Be Used as a Proxy

10

ComplexityPrice Time Access

11

SolSmart

SolSmart

12

PERFORMANCE METRICS

IMPACT METRICS

# communities participating and

population impact

Local metrics tracked and

improvements demo’d

Designation maintains high standards and

awareness

New resources, case studies, and events produced

Transitions to sustainability

More installers doing business in

more locations

Uniform and streamlined local

practices

Lower costs in communities

Solar more accessible to range of consumers and

communities

PROGRAM EVALUATION

• Rigorous tracking of program metrics• Teaming with academic partners

• Randomized encouragement design (UC-Berkeley)• Follow-up econometric analysis of impact (LBNL/Yale/UT-Austin/SunShot)

13

INCREASING CAPACITY, LOWERING COSTS

20GW 4,000,000

average American homes

By end of 2014…

Enough to power

CREATING JOBS, ECONOMIC GROWTH

Nearly

209,000 workers22% in 2014

BUILDING A SKILLED SOLAR WORKFORCE

SOLAR READY VETS TRAINING PILOT PROGRAM

• DOE’s Solar Instructor Training Network is supporting professional development of solar PV & solar heating and cooling technologies trainers and instructors in 49 states based at more than 400 community colleges.

• Since 2011, ~30,000 students received solar instruction from SITN campuses, on the way to 75,000 trained PV professionals by 2020.

17,000 Veterans

• 3 military bases -- Camp Pendleton, CA; Fort Carson, CO; Naval Station Norfolk, VA. Expanding to 10 total.

• Intensive 4-6 week PV installation training course; guaranteed job interviews with at least 5 solar companies

• First class graduated Feb. 13

SunShot Workforce and Training

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Problem: Labor Demand is Outstripping Supply Despite Gains in Efficiency

109.28

28.77

0

1

2

3

4

5

6

7

8

0

20

40

60

80

100

120

2010 2011 2012 2013 2014 2015

An

nu

al In

stal

lati

on

s (G

W)

Emp

loye

es/

Sola

r In

stal

lati

on

s (M

W)

Solar Labor Efficiency Improvements

Annual Installations (MW) Employees/MW

30%

5-year compounded annual efficiency rate (2010-15)

From 100 To 28 people per MW installed

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Problem: PV cost of capital is too highRisk is a proxy

Reducing the perceived financial risk of PV the

industry can realize savings of over

Notes: Simplified calculation to give an order of magnitude estimation. It considers only residential and commercial PV deployment based on GTM projections to 2020 and assumes a 30-year PV life production with expected degradation rates. All net present value calculations are discounted at inflation rate of 3%. Solar City risk premium is 6.5-7%

54 GW of residential and

commercial PV

will be installed by

2025*

The NPV is $125

billion

The NPV is $116

billion

energy.gov/sunshot16

energy.gov/sunshot16

Solution: Reducing the Cost of Capital

Through Securitization

16

BBB+BBB+

BBB+

A

$-

$50

$100

$150

$200

0%

1%

2%

3%

4%

5%

6%

7%

Round 1 Round 2 Round 3 Round 4

Cap

ital

Rai

sed

(M

illio

ns)

AB

S In

tere

st R

ate

SolarCity Securitizations

Capital ABS Interest Average cost of capital for PV (2015)

150 Million

$

SolarCity & SunRun Will Save…

By issuing securities instead of using

traditional project finance

“The Department of Energy has a group called Solar Access to Public Capital, or SAPC,

that has put in a lot of effort into trying to standardize documentation ….These forms will

be a huge help.….[as] it is expensive to do your first deal with all of the diligence, setting

up the legal structure and going through the contracts. Once you get it set up, then

efficiencies kick in on future deals.”

-Chadbourne & Parke Project Finance NewsWire

2.5 - 3% Lower Interest Rates

energy.gov/sunshot17

energy.gov/sunshot

Solar Energy Evolution and Diffusion Studies (SEEDS)

17

energy.gov/sunshot18

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State Energy Strategies

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Solar Training and Education for Professionals (STEP)

20

energy.gov/sunshot21

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DATA: The Orange Button Initiative

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energy.gov/sunshot

National and/or Balancing Area

Level Data

Utility Service Area Level Data

Property and Owner Level Data

PV System Level Data

Solar

Equipment

Data

Types of Data

Pre-

performance

In-service

energy.gov/sunshot

Solar Bankability Data

Problem Solution Activity / Outcome

Convene(Activity Area A)

• Convening, defining

requirements and managing

working groups

Define(Activity Area B)

• Formulating data taxonomies

and interoperability standards

• Defining codes of conduct

Integrate(Activity Area C)

• Digitizing records and data

integration

• Developing data exchange

platform

Goal: Rapid and seamless exchange of data to increase availability of capital and reduce costs

energy.gov/sunshot24

energy.gov/sunshot

Thank you!!