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Connecting Solar: Roadmap to Startup Expansion in Solar Becoming Clearer

Peter Lougee

Energy Columnist, 1776

Over the past several years, solar power has been in high demand within the domestic consumer market. A bevy of green-energy-savvy startups have helped meet that demand, but the growing residential and consumer installations raised the question of connecting to the overall grid as consumers found themselves in a position to sell energy back to the utilities.

Then, state and local regulations kicked in, coupled with large utility company processes and procedures. And as it turns out, consumers with residential solar panel installations likely have to file paperwork and apply for approval with both government and utility companies to connect themselves to the grid. Not only does this cause delays, but it also causes headaches for any startups looking to position themselves in the consumer solar panel market.

So, how long does this process take?

According to a recently released report from the Department of Energy’s National Renewable Energy Laboratory, the median number of business days it takes for a utility to approve an interconnection request—from the date a residential photo-voltaic installer submits an application to the utility—is 53 business days. This 10-week stretch represents the longest portion of a solar panel project, with installation of the actual system accounting for only 4 business days on average. Furthermore, the DOE report finds that there is “wide variation” within the interconnection timeline—with some regions taking up to 6 months to complete a connection request, according to Science Daily.

As Solar Daily explains, the DOE’s lead author on the study notes that the findings are very important to understanding the new solar market. Not only does it offer a baseline for understanding where the most significant delays in the process reside, it also proves “how long it takes to construct and inspect a system” and represents “the first data-driven evaluation of how PV-deployment time frames compare to state regulations in key solar markets.”

Indeed, the DOE report examines data at the state-level, including the largest solar markets in the United States—Arizona, California, Colorado, New Jersey, and New York. This examination of the consumer solar process provides a roadmap for startup companies that should be invaluable when developing their business plan.

There is one last conclusion the DOE report reaches that is important for startups to consider: “[The report’s] state-by-state analysis does suggest that more stringent regulations limiting the timeframe for application approval…might reduce project length.” Yes, you read that correctly. The right kind of regulations—those that establish guidelines for expedited approvals to connect to the utility grid—may actually reduce the amount of time it takes to connect a residential solar installation to the utility grid.

On a related note with regard to the 2015 outlook of the solar industry writ large, four of Greentech Media’s eight expected solar trends in 2015 predict a further decrease in the cost of residential solar installations. First, the U.S. Department of Commerce has filed a “preliminary review” of the current tariffs on Chinese solar panel imports to the United States. This review recommends that these tariffs be reduced. Although the final outcome relies on further bureaucratic wrangling, it is expected that the final decision will indeed see some reduction on these tariffs, which in turn could lead to a fall in the price of solar panels. Second, a general trend toward efficiency in PV cells and rooftop units will continue to manifest in the coming year. Third, “best-in-class” residential solar installation will become available for “less than $3 per watt” due to savings and cost reductions in labor and supply chains. Finally, as prices have fallen, the residential solar market has shifted to direct ownership away from previous leasing models, leading to a new availability of residential solar loans.

All of this adds up to what may be a significant opportunity for startups in the residential solar energy field. Not only has the DOE National Renewable Energy Laboratory provided a detailed breakdown of the processes needed to connect consumers to the grid in key states, but it also illustrates the utility of helpful regulations. Add to this the projected fall in costs and rise in loan availability across the market, and the roadmap to making a big expansion (or entry!) in the solar market is apparent.

Not only did the DOE report identify the most significant states with the shortest wait times for connection, but it also gave policy-minded startup leaders the knowledge of what to look for at the state-level, in an effort to identify emerging friendly jurisdictions.

Peter Lougee

Energy Columnist, 1776

Peter is a Washington, D.C.-based freelance writer with a Master's Degree in Public Policy from American University. In addition to startups, Peter likes coffee, books and whiskey.