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AB 2188 -New State Bill Clears Permitting Roadblocks for Solar Energy

The price of solar energy has dropped dramatically over the past several years. In just two years, between 2010 and 2012 for example, manufacturers were able to cut the average price of a solar module in half. In terms of the price of the energy produced, recent trends are finding that the wholesale price of solar energy is becoming increasingly competitive with fossil-fuels, and in some instances, home solar installations are generating electricity at lower prices than the grid’s retail prices can deliver. Notwithstanding this general decline, it is widely acknowledged that these price reductions could be even more dramatic, but for the proportional increase in “soft costs”– permitting, installing, and inspecting the projects. Studies have shown that since 2010, whereas the per-Kwh hard-cost of a solar module dropped by almost 70 percent, the soft costs were reduced by only 30 percent.  To describe it another way, in 2010 soft costs accounted for approximately 30% of the costs typically incurred to develop a utility scale solar facility, whereas today soft costs account for more than 40%, and is now the largest single proportional cost attributed to solar. For smaller-scale solar installations, such as those installed on single-family homes, these soft costs can sometimes be attributed to over 60 percent of the total installation’s costs.

Although the reasons for this proportional increase in soft-costs are varied, the often complicated and cumbersome permitting process has been identified as a major contributor to the problem. As described by the Governor’s Office of Planning and Research:

“Currently, local permitting agencies maintain differing permit processes for small solar [photovoltaic] installations. These differences have created a confusing patchwork of requirements, which has made installing solar PV more expensive and slowed the expansion of this technology in California.” (See the California Solar Permitting Guidebook, pg 4)

In an attempt to address the proportional rise in soft costs as well as the long and costly local permitting process, the California legislature passed Assembly Bill (or “AB”) 2188 in August of 2014 (signed by the Governor in September of 2014), a much needed bill designed to streamline local permitting practices for new solar energy systems. The bill, which builds on the various protections already afforded to solar developers in the Solar Rights Act of 1978, seeks to reduce permitting barriers by mandating cities institute a more accessible and straight forward permitting process, and by reducing opportunities for local governments to delay and unnecessarily condition approvals.

These barriers, which solar installers and homeowners have been complaining about for years, have included long, complex, and unnecessarily long permit applications, excessive inspection and review requirements, slow processing times, and disproportionate permit fees. The costs and delays caused by these barriers are not insignificant. One study, conducted by the Lawrence Berkeley National Laboratory, found that a solar energy system’s cost may be reduced by as much as 4 to 12 percent depending on the permitting practices. (See, Ryan Wiser and Changgui Dong, The Impact of City Level Permitting Processes on Residential Photovoltaic Installation Prices and Development Times, April 2013, available to download at

AB 2188 addresses this problem by directing California cities and counties to adopt a more transparent and homogenous permitting process. Specifically, the bill mandates that, no later than September 30, 2015, each and every city and county adopt an ordinance which creates a streamlined permitting procedure that is consistent with the state’s recommendations in the California Solar Permitting Guidebook developed by the Governor’s Office of Planning and Research. This new streamlined permitting procedure will include: (a) a publicly accessible checklist clarifying which solar energy systems may be eligible for expedited review; (b) an online permit application that may be completed, filed, and submitted over the internet; (c) a requirement that any application properly filed, that is eligible for expedited review and deemed complete, must be approved and all authorizations issued.  The bill also provides for the following:

  • For applications submitted that are deemed incomplete, the city or county is required to issue a written correction notice explaining the deficiencies in the application.
  • The amount of time allowed to Homeowners Associations to review and deny a solar energy system is reduced from 60 days to 45 days, and in the event an application is not denied in that timeframe, it is deemed approved.
  • Only one city or county inspection shall be required for a solar installation, and that any such inspection must be conducted in a timely manner (excluding fire safety inspections).
  • For those solar installations installed by an association that manages a common interest development, the bill prohibits local governments from conditioning their approvals.

With regards to costs, the bill is also explicit about further limiting what types of fees or conditions may be required by covenant, restriction, or condition (or “CC&R”). Under existing law, CC&R’s may not impose requirements that “significantly” increase the cost of the system or decrease its efficiency or performance of the solar energy system. Under California Civil Code Sections 714 (d)(1)(A) and 714 (d)(1)(B), “significantly” means that it increases the system cost by more than $2,000, or decreases system efficiency by more than 20 percent. This new bill cuts those numbers in half, and now restricts any CCRs that increase the system’s cost by more than $1,000, or decrease the system efficiency by more than 10 percent. In some jurisdictions, this restriction may result in immediate cost reductions and savings for solar energy installers. This new permitting scheme is expected to make local permitting much easier, and much faster, saving homeowners and solar energy installers across the state a significant amount of time and money.

The new bill also provides some limited relief to utility scale developers as well, who are faced with increasing levels of hostility by local governments and activist groups across the state. Of particular significance is the bill’s effort to further restrict local government’s reliance on “use” permits, which can often significantly delay project approvals and can provide local governments an opportunity to push developers for exactions or to institute unreasonable conditions of approval. Before the bill, use permits could only be required for solar projects when the building official finds that the proposed solar energy system will have a “specific, adverse impact upon the public health or safety.” This finding, under the old law, had to be justified by a good-faith belief, a very lose standard that was very difficult to challenge. Now, as mandated by the new bill, a building official’s finding of a specific, adverse impact on public health or safety must be supported by substantial evidence. Under this standard, findings still do not require specific judicial precision, but must at least “expose the mode of analysis…” used by the building official. Craik v. County of Santa Cruz (2000) 81 Cal.App.4th 880, 891. This limits a building official’s discretion to make generalized findings of a public health or safety impact, without clear and logical evidentiary support to back up the finding.

While the passage of AB 2188 will not have any major immediate impacts on the growth of solar in California, the long-term benefits of having simple and manageable local permitting standards will pay huge dividends in the long run for solar installers and homeowners alike.