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The high capital costs are one of the biggest factors that discourage people from going solar. Incentives and Policies that Benefit Solar Energy These can include fuel, repairs, and operation personnel.
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O&M costs refer to costs that are associated with running and maintaining the system. According to SEIA, while hard costs have come down dramatically over the last decade, soft costs have remained largely constant. Fiedman, et al, “Benchmarking Non-hardware BoS Costs for US PV Systems, Using a Bottoms-Up Approach and Installer Survey,” National Renewable Energy Laboratory, Second Edition, December 2013.įigure 1 illustrates the relationship between soft and hard costs, and breaks down hard costs into its components. Soft costs include intangible costs such as permitting, taxes, customer acquisition costs, etc.įigure 1. Hard costs are the costs of the equipment, including modules, inverters, and BOS components, as well as installation-related labor. Capital costs are categorized into hard costs and soft costs. Capital CostsĬapital costs refer to the fixed, one-time costs of designing and installing the system. There are two general categories of PV systems costs: capital costs and operation and management (O&M) costs.
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In order to determine financial returns, it is important to have a solid understanding of the basic economics that dictate PV system costs.