Solar Energy’s Soft Costs – How Can We Tackle Them?

Over the past decade, the price of solar hardware has dropped by over 75%. Despite being a key element, associated hardware costs (modules, inverters and BOS) are less than half of the picture. Soft costs include non-hardware elements associated with going solar; including permitting, financing and installing solar, as well as the expenses solar companies incur to acquire new customers, pay suppliers and cover their bottom line. These costs account for 40-64% of the total price of installed solar systems depending on market (commercial, residential and geographic location). Solar soft cost optimization follows the growth of the industry, which today sits at a value of $145 billion, and is expected to grow at a compound annual growth rate of 15% through 2023. Soft costs create a barrier for customers looking to transition to solar, thus creating an opportunity for innovators to reduce soft costs and improve the economics of solar companies.

Residentail solar PV panel pricing for solar projects
Figure 1: Solar soft costs, courtesy of SEIA

Business Models

Over-specifying projects during the design stage is frequent in solar and commonly used to hedge risk for cost inertia later in development. One solution is to introduce design platforms, enabling solar developers to determine site potential, design PV systems, conduct shading analysis, simulate energy production results and calculate pre- and post-solar utility bills before projects have been signed off. This approach reduced the time needed for scoping from weeks to minutes.

Incorporation of advanced data is used by Aurora Solar among others to further optimize costs. Weather data, satellite imagery, 3D LiDAR data and open utility rate data are used in data models to forecast and accurately measure the costs and long-term impact of projects.

Marketplaces are being developed to aggregate the various stakeholders along the solar supply chain to reduce information silos. The marketplace approach allows data on pricing, locations and component availability to be made common knowledge. Marketplaces also serve to link the buyers and sellers of solar within communities, reducing the time taken to keep on top of inventory requirements.

Generally, the solar market lacks quality data to forecast and measure project costs.  Partnerships with data providers are a key part of developing a robust, efficient software platform that can be scaled.


Station A and Aurora Solar are both targeting the residential solar market, providing cloud-based platforms which automate project design. Both are also providing a marketplace for connecting market stakeholders. While the US is a target focus for many distributors in this space due to state-level deployment mandates, innovators are also looking to other developed markets with high level of solar penetration such as Australia, Canada and Scandinavia.

Aurora Solar is aiming to differentiate by offering in-app purchases through business partnerships, where users can apply directly for solar financing, or purchase higher fidelity map data via partner NearMap and Google. Station A is aiming to differentiate by offering automated project design for all distributed resourse asset types such as solar, but is also provide granule data on battery deployment and wind.

Battery storage potential in San Francisco. Figure 2: Building-by-building analysis of downtown San Francisco for battery storage potential using Station A (source: Station A).

Terrabase, a newer competitor focusing on the utility-scale solar market, recently closed a seed funding round from Powerhouse Ventures.  The company is currently working on more than 5GW of projects in seven markets, utilizing GIS design, AI engineering services and tags to track the location and fidelity of components across the supply chain.

EnergySage, Geostellare and EnergyBin are providing software platforms to reduce customer acquisition costs, using the e-commerce model to connect business in a centralized marketplace. Developing strong marketplaces will be crucial as the second life components market grows, adding value and further reducing costs.

Work in the space in not just focused on commercial development however. The US Department of Energy has a $128 million project focused on reducing solar soft costs by expanding access to those who have been left out of the solar market, like non-profits, renters, and low-income households.

While data in the U.S. is easy to obtain, innovators who wish to scale globally and find bigger commercial success will have to partner with local data providers for areas where utility data and LIDAR information may be more siloed. In the developing world, IoT mesh network innovator Okra Solar has incorporated a microgrid forecasting/planning tool for utilities to plan in jurisdictions which they operate but are not yet servicing. This may become  a key enabler for renewable deployment in remote areas where some of the economic value of solar energy above diesel generators is not truly understood.

Keep an eye on…

Aurora Solar is a provider of a cloud-based platform that enables solar PV engineering design, supports operations and facilitates customer acquisition for solar installers, financiers, and utilities.

Station A is a provider of a platform that automates clean energy devleopment, as well as services to originate, design, and execute clean energy projects.

Terabase Energy is a provider of a development and deployment platform that tracks and automates utility-scale solar development.

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