Permitting Incentives

Permitting incentives may take the form of reduced or waived local building permit fees, plan check fees, design review fees, or other charges that consumers and businesses normally incur when installing a solar energy system. Expedited permitting, which often translates into cash savings, may also serve as an incentive to developers and consumers.

Permits are generally required to cover the costs of building inspectors who ensure that engineering and safety standards are met. A building permit ensures that the roof can support a solar-energy system and meet wind-load requirements, for example. An electrical permit is typically required for photovoltaic (PV) installations to ensure that the system does not pose fire, electrocution or power surge hazards.[1]  Permit fees are set locally, but states may establish standards for how permits are awarded and the fees that municipalities and counties are allowed to charge.

Surveys of, or experience with, local permit fees in several states, including California,[1],[2] Oregon,[3],[4] Nevada,[4] Colorado,[5] Arizona,[6],[4] and Pennsylvania [9] have revealed a wide disparity in the charges local jurisdictions impose -- from $0 to more than $1,200. Municipalities typically set solar permit fees using a flat-fee method, a valuation method, or a combination of the two. Flat-fee assessments charge the same fee regardless of system size, while valuation-based assessment methods calculate fees based on the cost of the system. At the residential level, larger solar systems don’t necessarily take longer to inspect than smaller ones, so those who invest in larger systems are essentially penalized by the valuation assessment method.[7]

In 2006, a review of 11 local building departments in Oregon revealed that jurisdictions assessing permit fees based on the valuation of the system were imposing substantially higher fees than jurisdictions charging flat-fees or for electrical/plumbing permits only. In fact, the average commercial solar permit calculated using a valuation method was about 10 times costlier than the average flat-fee solar permit.[3]  Although these fees usually make up only a small percentage of overall project cost, they could negate months or years of energy savings and increase the payback period beyond the tipping point of feasibility.

Slow permit processing times and excessive paperwork requirements may be equally discouraging. Permitting officials’ unfamiliarity with solar is often at the root of this problem.[1]  “Top-of-the-stack” or “fast-track” permitting is another incentive local governments can provide to consumers or developers for installing solar, after inspectors are brought up to speed with solar installations through training and standardized procedures.

By reducing or eliminating local permit fees and adopting fast-track permitting for solar projects, local governments can demonstrate their support for community investment in solar energy and ensure that local policies do not obstruct state-level solar goals. State governments can set guidelines for how municipalities and counties calculate solar permitting fees to ensure uniformity and fairness across the state. While permitting incentives alone will not drive solar development, these incentives are an important local policy option that can complement other federal, state, local or utility policies that encourage solar.


Status & Trends

Because permitting incentives are typically implemented at the local level, it is difficult to assess the number of jurisdictions in the United States that offer permitting incentives. However, a 2005 study conducted by a local chapter of the Sierra Club compared the permit fees charged for standardized residential PV systems in 42 cities across San Mateo, Santa Clara and San Benito counties in California, concluding that permit fees ranges from $0 to $1,074, with an average cost of $652. Sierra Club published these results and followed up with a campaign to press local governments for more affordable fees. Two years later, the average permit fee had fallen to $252. As part of a 2005 California law prohibiting permitting authorities from restricting PV systems based on aesthetic considerations, the state legislature stated its intent for local agencies “to encourage the installation of solar-energy systems by removing obstacles to, and minimizing costs of, permitting for such systems.”[8]

A 2008 update of the Sierra Club study surveyed 131 municipalities in northern California and found that “the permit fees varied from $0 to $671, or 0% to 3.6% of the total post-rebate cost ($18,600) of a standard PV installation. Of 131 jurisdictions, 102 imposed fees of $300 or less; seven had fees of $500 or more; and 21 charged nothing. The average fee was $214.”[7]

As a growing number of California cities and counties are reducing permitting fees, other states have also taken action to ensure that solar permit fees are fair and reasonable. Both Arizona and Colorado enacted laws in 2008 to compel local jurisdictions to charge solar permit fees in line with actual cost of issuing the permit. (See details below.)

 

In 2010, data from Vote Solar's "Project: Permit" revealed that average permit fees were $229 in Arizona, $277 in Nevada and $300 in Oregon. In Arizona, permit fees ranged from $25 in Sierra Vista to $1,000 in Dewey (Humbolt).  Several municipalities or counties in Arizona have permit fees less than $100 and issue permits in under one week, including Maricopa County, Pima County, Peoria, Lake Havasu, Sierra Vista and Goodyear. In Nevada, permit fees ranged from $23 in Humbolt County to $553 in Storey County. In Oregon, permit fees ranged from $45 in Ashland to $700 in St. Helens. Sacramento and San Francisco had permit fees of $724 and $475, respectively.[4] In addition, a 2012 study of Pennsylvania’s solar permits revealed that the average permit fee in that state was $450. [9]

In addition to streamlining and standardizing permitting processes, local agencies should consider the following guidelines for permitting incentives:

1.  Institute a flat-fee method that reflects the actual costs of issuing the permit. Several organizations have issued recommended cost structures.

- Small PV system (up to 4 kW): $75 - $200
- Large PV system (up to 10 kW): $150 - $400
- For systems over 10 kW, consider a permit cost of $15 - $40 per kW.

2.  Publicize the fee structure and the permitting requirements and procedures on the appropriate agency web site.

3.  Fast-track all solar permits or, at a minimum, those from contractors with a reliable track record.  

 

4.  Allow expedited permitting and over-the-counter permits for smaller residential systems, and allow online applications.

 

Examples

 

DSIRE: Summary of Solar Permitting Incentives. DSIRE, 2012.

 

PROJECT: PERMIT, The Vote Solar Initiative.

 

 

Nationwide Solar Permitting Study. Clean Power Finance, 2013.

 

Why Are Residential PV Prices in Germany So Much Lower Than in the United States? A Scoping Analysis. Joachim Seel, Galen Barbose, and Ryan Wiser. Lawrence Berkeley National Laboratory, February 2013.

 

Sharing Success: Emerging Approaches to Efficient Rooftop Solar Permitting. Interstate Renewable Energy Council, Inc. (IREC), May 2012.

 

Expedited Permit Process for PV Systems: A Standardized Process for the Review of Small-Scale PV Systems. Solar America Board of Codes and Standards (Solar ABCs), July 2012.

 

Commercial Solar Permit Fee Report. Sierra Club, October 2010.

Solar Energy Permitting Fees in the San Diego Region--A Comparative Study with Recommendations. Utility Consumers' Action Network, November 2006.

Field Inspection Guidelines for PV Systems. Brooks Engineering & Interstate Renewable Energy Council, Inc. (IREC), June 2010.

Vote Solar White Paper: Solar Permit Fees. The Vote Solar Initiative, 2007.