Owners of commercial buildings can pay tens of thousands of dollars for a solar system permit that costs the city less than $2,000 to process. Photo: Mike Kahn, Green Stock Media
Some Bay Area communities require businesses to pay over $25,000 just for the permit to install photovoltaic (PV) solar panels. By contrast, other jurisdictions in the area charge under $1,000 for the permit, according to a survey of Santa Clara, San Mateo and Alameda counties. In some jurisdictions, the permit is free.
In the spring and fall of 2008, members of the Chapter's Global Warming and Energy Committee (GWEC) conducted what they believe to be the first survey of nonresidential PV permit fees in the United States. The survey's purpose was to gauge the progress of Bay Area municipalities in making solar energy financially viable for nonresidential entities, including businesses, schools, hospitals, government buildings and nonprofit organizations.
GWEC conducted surveys of fees for residential PV permits starting in 2005. The original survey of Santa Clara and San Mateo counties has since been expanded to other parts of northern California. The attendant publicity persuaded numerous jurisdictions to dramatically lower their fees. For example, Belmont reduced its fee from $1,100 to $0.
"High permit fees can discourage customers," said Kurt Newick, a Sierra Club energy expert who led the survey. While larger companies can afford a $25,000 permit, smaller businesses might find that fee prohibitive.
"High fees undermine the PV industry itself, too," said Newick. "Most companies that install PV systems are tiny compared to the corporations that provide dirty energy from coal, oil and gas. High fees hurt smaller companies more." The GWEC survey compared the permit fees for 8 kilowatt (kW), 49 kW and 131 kW PV systems. An 8 kW system might be appropriate for a suite of doctors' offices and would cost about $75,000. A 49 kW system (about $475,000) would power a 30,000 square foot commercial office building. A $1,200,000 131 kW system might power a specialty grocery store. The accompanying chart shows how the jurisdictions in the survey area compare.
Municipal governments charge permit fees to cover the cost of assessing whether a PV system plan meets health and safety standards. The fee also covers the cost for an inspector to assess the system after installation. Such assessments protect people and the utility's electric grid itself from such hazards as faulty wiring, improper mounting, and insufficient roof support.
Newick has worked for PV installer Horizon Energy Systems for six years. Drawing on that experience, he said high fees often result because building departments base fees on the value of the PV system instead of the staffhours needed to review the permit application and inspect the installation. "From a city's point of view, the staff-hours needed to process a 49 kW system aren't much less than the staff-hours needed to process a 131 kW system. "Nevertheless, the permit for a 131 kW system can be over $20,000 higher than for a 49 kW system in some cities.
The survey authors recommend that municipalities try to streamline their permitting processes to reduce the required staff-hours. Reduced staff-hours would mean lower permitting costs for municipalities and therefore lower fees for solar installers. Assuming a billable rate of $180/hour for staff-hours (this varies among municipalities), the survey authors recommend the following maximum fees (assuming a professional permit submittal and knowledgeable inspector):
* 8 kW PV system: 1 hour for the plan check, 1 hour for the inspection, 1 hour for miscellaneous = 3 hours x $180 = $540 maximum
* 49 kW PV system: 2 hours for the plan check, 2 hours for the inspection, 1 hour for miscellaneous = 5 hours x $180 = $900 maximum
* 131 kW PV system: 4 hours for the plan check, 4 hours for the inspection, 2 hours for miscellaneous = 10 hours x $180 = $1,800 maximum
By comparison, the Colorado legislature passed a law in 2008 that set the maximum permit fee for nonresidential PV systems of any size at $1,000 across the state.
Carl Mills is a volunteer with the Chapter's Global Warming and Energy Committee and was the primary author of its PV permit fee study for residential systems.
Solar Electric Permit Fees for Non-residential Systems
Jurisdictions in San Mateo & Santa Clara Counties
Fees charged for solar system permits vary dramatically from city to city.
This table shows the fees for 49 kW nonresidential systems as of 4/17/2009.
See lomaprietaglobalwarming.sierraclub.org/solar.php for more information.
* Fees unkown by municipality
** Fees under review
# No response to survey yet...
## Fees updated by April 17, 2009