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According to a recent report, the cost per watt of a photovoltaic array goes up by approximately $1 per watt because of the extensive paperwork needed to permit, complete and fund it.

According to Steven Chan, chief strategy officer with Suntech Power Holdings, permitting from state and local regulatory agencies, filling out inspection reports, and applying for the myriad solar rebates and tax incentives available – from entities as diverse as regional city councils to the federal government – make the process entirely too complex and time-consuming for most installers to handle, so many companies are now hiring professionals who knows the ropes.

The permitting process has improved in recent years thanks to growing familiarity with solar energy. Most local city building departments, and their inspectors, have at least a generic understanding of what is needed. Structural engineers, who review a roof’s construction, pitch and framing, are even more cognizant, and an engineering report on older roofs should be an essential first step in installation. Rebates and incentives, however, are a whole other ballgame.

For example, in California, DSIRE (the Database of State Incentives for Renewable Energy) lists over 130 different solar resources, from “green” building incentives to lease purchase programs to local grant, loan and rebate programs. The list of participating utilities alone runs to almost 100 entries.

Imagine wading through those possibilities, and perusing all the requirements, just to determine how much a homeowner can ask for to offset the costs of a solar energy installation! According to Danny Kennedy, founder of Sungevity, a solar installer, it can take 10 to 20 hours to fill out all the paperwork to qualify for a solar rebate. That is why Kennedy – who has created a software program for providing installation estimates over the Internet – is pushing state and local governing and granting bodies to accept e-signatures. Kennedy adds that online estimates can cut solar installation costs by around 10 percent by eliminating up to 80 percent of the onsite pre-inspections needed.

Although the average installation cost of solar was $7.60 per watt in 2007, and the recession has caused a drop in panel prices, solar installations in late 2008 and early 2009 don’t show that much of a drop, not counting rebates and incentives. In fact, it may take a full year or more for the economic impact of the recession to reflect itself in solar energy installation costs, if only because surviving solar manufacturers and installers didn’t begin with such inflated workforces that cutbacks are possible.

Of course, the more you install, the cheaper the cost. A five-kilowatt system averages $8.3 per watt; 750 kilowatts or larger averages $6.8 per watt. Since most residential systems are in the five-kilowatt range, prices remain high.

Complicating the paperwork costs of solar installation in the future are mandated renewable energy credits, or RECs. In some states like Maryland, public utilities are required to buy RECs from residential homeowners. These credits are designed to meet state mandates that specify a certain amount of a utility’s energy generation has to come from renewable energy, or more specifically, residential solar energy.

The Maryland mandate has already spurred the creation of at least one company – U.S. Photovoltaics Inc. – which offers to set up a homeowner’s credit and trade it at highest value to a participating utility. For a flat fee of about $250, and from 10 to 25 percent of the REC’s value, private firms or solar installers licensed to trade in these commodity-based certificates will also complete the paperwork to establish the account at state and federal levels.

Trading in RECs is quite new, so the costs and profit margins are somewhat unknown, but Maryland traders estimate each kilowatt-hour is worth between $450 and $700. Karen Czarnowski of Anne Arundel County, Maryland, thinks that her home’s RECs could generate about $10,000 over a 15-year period, which will accelerate the payoff time on her $20,000 solar system.

Most reputable solar installers will, of course, handle the paperwork for you as they put together your system. If you build and install, or simply install, your own solar electric system, you will be responsible for your own paperwork. At $1 per watt, I personally think I’d leave the headaches to the professionals.

The Hidden Cost of Paperwork in Solar Projects

The Hidden Cost of Paperwork in Solar Projects