Who’s the BoS?

The United States has much to learn from Germany’s über-low balance of systems costs for solar PV

""From the automobile to the personal computer, the United States has been a land of innovation, a place where new technologies are rapidly brought to scale. In recent years, that pattern has played out in the world of solar PV as well, with hardware costs for solar modules dropping precipitously since 2008, including 58 percent since the first quarter of 2011 alone, according to the Solar Energy Industries Association. The result is that the average installed price per Watt of completed PV systems in the U.S. is half what it was five short years ago. But we can do better.

The U.S. has yet to repeat that solar hardware success within the solar installation process. The soft Balance of System costs associated with installation now account for more than half the installed cost of a solar PV system. Driving down those soft costs will be a key lever in further reducing the overall cost of solar PV in the U.S., subsequently driving far greater adoption at prices competitive with fossil-fuel-generated electricity.

Yet despite the U.S.’s failure to lower soft costs to date, others—notably Germany—show it can be done. Germany is the reigning boss when it comes to BoS, with residential soft costs just 19 percent of those in the U.S.

How do they do it? RMI, in partnership with the Georgia Tech Research Institute, intends to find out. We recently launched an exciting new project to reduce soft BoS costs for solar PV in the U.S.


We’ll be taking Lean manufacturing techniques and Six Sigma process improvement—the same methods pioneered by Ford and Toyota in their vehicle production facilities and more recently tapped by heavyweights ranging from 3M to Southwest Airlines—to suss out the root causes of waste and inefficiency, and ultimately determine and implement solutions that will improve the process. In other words, we’ll unlock innovative pathways to reduce the soft costs of U.S. solar PV.

Preliminary data from a Lawrence Berkeley National Laboratory (LBNL) survey and report and a National Renewable Energy Laboratory report shed light on the situation and its opportunities. National politics, stable (or unstable) incentive policies, and a German regulatory regime that heavily prioritizes renewables help to explain some of the difference in costs between our two countries. However, much of the cost disparity is due to three primary factors:

1. Labor Hours – The act of physically installing a PV system in the U.S. takes twice as long (and more than twice the labor cost) than in Germany.

2. Red Tape – Local governments typically take about eight weeks in the U.S. to meet all permitting, inspection, and zoning-related requirements for a residential installation, according to a Clean Power Finance report. In Germany, it can take as little as eight days, according to a New York Times article.

3. Time to System Activation – It takes about four months for a solar project to go from signed contract to energized system in the U.S.; the average in Germany is just one month.

Much has been hypothesized about these disparities, but little has been done to test and substantiate them with real data. RMI and Georgia Tech will dive into these issues and tease out actionable, meaningful insights that will shed light on how to lower solar costs here in the U.S. This effort is about more than U.S./Germany benchmarks; it’s about making the solar installation process as efficient as possible relative to the hypothetical perfect system.


If we can succeed in that endeavor, the payoff for U.S. solar PV could be substantial. In their seminal work, Lean Thinking, Lean manufacturing pioneers James Womack and Daniel Jones tout: “if you can’t quickly take throughput times down by … 90 percent in physical production, you are doing something wrong.” Based on the current process times reported by LBNL, if the U.S. solar industry can reduce installation time (i.e. physical production) by 90 percent, we will leapfrog far beyond Germany.

As part of this project, RMI is looking to partner with solar installers in the U.S. and Germany to collect detailed survey data, including on-site time and motion analysis for individual installers. To our knowledge, this will be the first time anyone has applied the proven tools of Lean and Six Sigma to the solar PV installation industry. Working with key installers, RMI will measure the status quo in both countries, analyze key differences, and then propose solutions to improve the installation process in the U.S. and beyond.

The U.S. is rich in solar generation potential. And already, the U.S. is seeing record installation of residential solar PV capacity. But if we can harness or even surpass the soft cost efficiencies of a country like Germany—with its far inferior solar resource potential, yet far superior installation rates—the future of solar PV in the U.S. will look even brighter.

Visit https://rmi.org/simple to learn more about the project and to join us in this effort!

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