How Much Do Local Regulations Matter? Exploring the Impact of Permitting and Local Regulatory Processes on PV Prices in the United States

Solar photovoltaics (PV) are providing an ever increasing proportion of U.S. energy supply. In part, this is because

the costs of PV modules and other hardware have declined rapidly over the last decade, primarily due to technology improvements and manufacturing scale.

 

Non-hardware “soft” costs, on the other hand, including permitting and other local regulatory processes, have not been falling as rapidly, and now comprise the majority of total costs for residential PV systems. This paper statistically isolates the impacts of city-level permitting and other local regulatory processes on residential PV prices in the U.S. by combining

data from two “scoring” mechanisms that independently capture local regulatory process efficiency with the largest dataset of installed PV prices in the United States. Our dataset also utilizes a rich set of installation level control variables that allows us to better explain PV price variations in general.

 

Based on regression analysis, we find that variations among and improvements in local regulatory processes can meaningfully affect residential PV installation prices. More specifically, we find that variations in local permitting procedures can lead to differences in average residential PV prices of approximately $0.18/W between the jurisdictions

with the most-onerous and most-favorable permitting procedures.