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As much as half of the price of solar energy, represented in red above graph, is made up of non-hardware costs. | Data source: Goodrich et al 2011. | Image courtesy of the Energy Department's SunShot Initiative.
The price for solar modules is now nearly $1 per watt and continues to plummet, but did you know that as much as half of the price of solar energy is made up of non-hardware costs – or “soft costs”?
To achieve cost-competitive solar energy we must address expenses related to installation, financing, contracting, permitting, interconnection and inspection.
To jump start a decline in these non-hardware costs, the Energy Department's SunShot Initiative is investing approximately $7 million over 18 months in a new SunShot Incubator Program for Soft Cost Reduction.
This new round of solar incubator funding will help small businesses and entrepreneurs create novel approaches to reduce these soft costs, making it faster and cheaper for families and businesses to go solar. Through this new program, the SunShot Initiative aims to fund the next Amazon or Google of solar energy.
The Incubator Program for Soft Cost Reduction is an offshoot of the successful SunShot Incubator program. With a total of $60 million, the U.S. government has jumpstarted dozens of start-ups since 2007, which has helped attract over $1.3 billion in private investment for those companies. But it's not just about spurring private investment – these growing companies have created well over 1,200 jobs in the solar energy field.
What's more, the SunShot Incubator has done all this by only investing in technological innovation for solar hardware. Now, the Energy Department is applying the Incubator's proven system to unleash innovative business models, financing options, system designs, software and more.
Divided into two tiers, this round of incubator funding enables companies to make the leap from great idea to the initial prototype phase of a project, or to transition projects from the initial prototype phase to a product launch.
Even though installation and permitting may seem like afterthoughts compared to the price of the actual solar cell, they can cost a solar customer just as much money. By targeting soft costs, the SunShot Initiative is taking aim at an area with huge potential to make solar energy more affordable for all Americans.
Through the SunShot Incubator Program for Soft Cost Reduction and other funding efforts, the SunShot Initiative is exploring all promising avenues to achieve its goal of a 75% reduction in the cost of solar energy by the end of this decade, making subsidy-free solar energy just as inexpensive as other popular sources of energy, even coal and oil.
For more information on the SunShot Incubator funding opportunity, visit the Funding Opportunity Exchange.