Improved Local Residential Solar Permitting Processes Were Found To Increase Solar PV Installations In California Cities

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Solar energy has experienced tremendous growth in the United States in recent years. To further facilitate the deployment of residential solar photovoltaic (PV) systems, city governments hold an important role in enacting solar policies and improving local permitting processes. By doing so, city governments can potentially reduce “soft” (non-hardware) costs for solar energy installations and generate a higher penetration of rooftop solar energy.

Compared to the continuously decreasing solar hardware costs in recent years, the soft costs of solar energy — such as permitting fees, labor, taxes, and transaction costs — had held steady. Accounting for more than 50% of the total system installation cost, soft costs can be reduced by city-level policies that shorten development times and remove administrative barriers for installers and system owners.

Residential solar PV systems, usually small-scale (no larger than 10 kilowatts) and installed on the rooftop of single-family houses, are built close to electricity consumers with the benefits to save electricity bills, prevent transmission power loss, and increase electricity reliability for system owners. The construction of solar PV systems also creates local jobs and contributes clean energy to the local energy mix.

Typically, the application of solar PV installations requires multiple local agency reviews, such as building, electrical, fire, and structural approvals. In some cases, local ordinances may pose obstacles to rooftop solar PV installations. For example, some local zoning ordinances restrict erection of structures no higher than 35 feet and can prohibit some solar panel installations. Additionally, different solar permitting processes and fees across local jurisdictions can cause confusion to the builders and installers of solar PV systems and make solar installations even more expensive.

In an effort to understand the role of local governments and policies in residential solar PV development, this paper asks two important questions: (1) What factors influence cities’ adoption of solar approval processes? And (2) does the adoption of local solar approval processes increase cities’ residential solar capacity?

To answer these questions, data were drawn from California’s annual statewide planning surveys of 2010 and 2011, which were delivered to all 480 cities to inquire whether the jurisdiction had developed an administrative approval process for residential solar energy systems. The survey results indicate that by 2011, more than 78% California cities had adopted such processes. With high response rates of more than 85%, this survey sample consisted of California cities that vary in size, institution design, socioeconomics, and climate conditions that enable robust analysis. City-level data such as population size, number of solar PV installations, and electricity rates were also collected from the Census Bureau, the Open PV Project, and the National Renewable Energy Lab.

Previous studies suggest that municipal resources, political environment, and sociodemographic factors influence local environmental policymaking. Built on the extant literature, the first part of the analysis tests these factors — both at the organization (i.e. city governments) and community levels — that influence cities’ decisions to adopt local solar approval processes in California.

Consistent with theories, the statistical results find that cities with large population size, municipal utilities, and high proportions of pro-environment, educated constituents are more likely to adopt solar approval processes. In general, cities with a large population have more resources, greater tax bases, and higher human resources to adopt a wide range of policies. On the other hand, ownership of a municipal utility brings in additional fiscal and technical resources to local governments that can be utilized in renewable energy policymaking. Additionally, unlike investor-owned utilities that are usually privately owned and tend to maximize profits, public utilities are less economically driven and have more flexibility in supporting policies that reduce consumer energy consumption.

The second part of the analysis quantitatively analyzes the impact of local solar approval processes on the size (kW) and a number of small-scale residential solar PV installations in cities. In addition to the presence of local solar approval processes, previous studies found that the most dominating motivation for households to install solar PV systems is an economic consideration. Households install solar PV systems with the expectation to save electricity bills, recoup the installation cost, and generate a steady monthly income by selling solar energy back to utilities. Therefore, in the analysis, household income, solar insolation, cost of electricity, and electricity consumption at the city level are controlled. The results confirm that the presence of a local solar approval process increases both the number and size of solar PV installation in a city in the following year. Results also support the economic hypothesis that cities with strong solar insolation, high usage of residential electricity, and a high cost of electricity install more residential solar PV installations.

In conclusion, local governments play an indispensable role in facilitating the deployment of solar energy systems. The findings of this paper offer important policy implications that local solar permitting processes may be further simplified, standardized, and streamlined to reduce the soft costs of solar installations.

These findings are described in the article entitled Predictors for Adoption of Local Solar Approval Processes and Impact on Residential Solar Installations in California Cities, recently published in the journal Energy Policy. This work was conducted by Jenneille Hsu, who was a doctoral student at the University of Southern California.

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