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Exploring the Potential of Factory Installed Solar + Storage for

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 by Isabelina Nahmens, Ondřej Labík, Alison Donovan, Kalee Whitehouse, Damon
Lane, Desmond Kirwan, Leslie Badger, Ankur Podder, and Shanti Pless

Exploring the Potential of Factory

Installed Solar + Storage for
Homebuilding
Isabelina Nahmens
Ondřej Labík
Louisiana State University

Alison Donovan
Kalee Whitehouse
Damon Lane
Desmond Kirwan
Leslie Badger
VEIC

Ankur Podder
Shanti Pless
National Renewable Energy Laboratory

Abstract
In recent years, an increasing number of grid disruptions due to intense weather events, natural
disasters, and high peak loads resulted in increased interest in energy-resilient homes. Solar + storage
(S+S) as an energy resiliency solution can provide continuity, onsite generation, and backup power
during critical events. This project explored factory-installed solar plus storage (FISS)1 to overcome first
cost and installation barriers and bring this resiliency solution to scale for single-family affordable and
market-rate homebuyers. Guided by the principles of Lean manufacturing,2 the team explored how
factories building high-performance zero energy modular3 homes can incorporate S+S into their existing
construction system while improving quality and productivity and reducing the costs of the resilient
energy system.

1
Factory-installed solar plus storage is the study approach of installing solar panels systems, including a battery in modular
homes at the factory.
2
Lean manufacturing is a production process based on maximizing productivity while minimizing waste.
3
Zero energy modular homes are homes that combine the cost savings of modular construction with the benefits of zero energy.

Cityscape: A Journal of Policy Development and Research • Volume 25, Number 1 • 2023 Cityscape 145
U.S. Department of Housing and Urban Development • Office of Policy Development and Research
Nahmens, Labík, Donovan, Whitehouse, Lane, Kirwan, Badger, Podder, and Pless

Abstract (continued)
The team identified both potential barriers (for example, first cost, permitting, utility interconnection,
finished module transportation, and future battery replacement) and value (such as, resiliency benefits,
opportunities for utilities, clean energy equity for affordable housing, and new markets for modular
factories) of incorporating S+S into factory-built housing. Through a case study and factory information
modeling, the team analyzed the FISS approach, which resulted in about 27 percent potential total cost
reduction compared with onsite installation. Using the cost reduction results from the case study, the
team evaluated the homeowner economics and duration of backup power using the National Renewable
Energy Laboratory’s (NREL) System Advisor Model (SAM)4 in six locations in the United States. Results
showed that in five locations, homeowner net present value (NPV)5 is positive with long-term, low-
interest financing through a mortgage. The SAM analysis showed in almost all cases, the S+S system
could power 25 percent of the electricity needed in a home for 4 days, and under some scenarios, up to
100 percent of the load for 4 days. Findings from this study show S+S is a viable backup power source
during grid outages and supports the creation of a high-performance factory to produce resilient homes
that can be adopted at scale, with reduced cost by integrating S+S with prefabricated modules guided by
lean manufacturing 6 principles.

Introduction
The aim of this study was to create a resilient home product that can be adopted at scale, with reduced
cost by integrating S+S with prefabricated modules guided by lean manufacturing principles.

Significance of the Work

In the past few decades, more frequent and intense weather events, higher peak loads, and natural
disasters that create power outages have increasingly tested the electric grid in the United States.
Without power, businesses, industry, and schools are disrupted, leading to economic losses and
health and safety risks. To date, most aspects of resilient design have focused on construction
methods that can withstand severe weather with high winds or flooding. Partnering with modular
factories that already build high performance zero energy modular homes to incorporate solar +
storage (S+S) into their existing construction system will provide energy resilience, continuity,
and backup power during critical events (Green Mountain Power, 2018). In 2019, the U.S.
Department of Housing and Urban Development (HUD) tasked Home Innovation Research Labs
with creating a set of Residential Resilience Guidelines for Builders and Developers and identified
the need to include onsite renewable power generation, grid independence, and grid interaction as
resiliency measures (Home Innovation Research Labs, 2019). Factory-installed solar plus storage
(FISS) has the potential for broad adoption if promoted by voluntary resiliency standards, such

4
System Advisor Model is a free technology-economic software developed by NREL to model performance and financial
estimates of energy cost for grid-connected photovoltaic systems.
5
Net present value is a method to calculate the current value of a future stream of payments from an investment.
6
Lean manufacturing is a production process based on maximizing productivity while minimizing waste.

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 Exploring the Potential of Factory Installed Solar + Storage for Homebuilding

as FORTIFIEDTM7 and RELi.8 Shorter process for customers to research, financing, permitting, and
lengthy applications. If factories included S+S as an option in standard home designs, FISS would
reduce the decisionmaking complexity of the process from a customer perspective, help facilitate
the integration of resiliency measures in home design under a controlled environment, while also
reducing costs and providing continuity, onsite generation, and support during critical events.

How this Effort Will Change Homebuilding

Current research efforts show that inefficient construction processes are a major factor in the high
cost of construction (Feldman et al., 2020). The homebuilding process needs to change, and
factory-built homes are already well positioned to achieve more efficient processes by design and
construction. Factory-built homes can also help facilitate the integration of resiliency measures (for
example, S+S) under a controlled environment, leveraging integrated design, using assembly line
techniques and factory employees (trained, scheduled, and managed by one employer). According
to a recent report by McKinsey & Company, prefabricated assembly of modular buildings has
demonstrated up to 20 percent cost savings and 50 percent construction time savings and is
being looked to as a proven “affordability through innovation” method to increase productivity
and significantly reduce construction costs (Bertram et al., 2019). Redesigning factory processes
according to lean manufacturing principles while integrating S+S can reduce inefficiencies in the
production process, minimizing those initial costs. Currently, modular factories, the solar industry,
or storage providers do not widely understand knowledge on FISS and its lean benefits. New
quality control methods can support FISS at the plant. As construction costs decrease, energy-
efficient and resilient homes will become more desirable and widespread.

This project aims to analyze the economic benefits of FISS and explore the market to create a
resilient home product that factories can adopt at scale, with reduced cost by integrating S+S with
modular construction guided by lean manufacturing principles. Results from this project set forth
a new strategy for resilient construction to all-electric zero energy modular homes and redesigning
resilient power systems from backup diesel generators to S+S.

Anticipated Changes Needed To Bring FISS to Scale

Business as usual in the construction and homebuying processes will need to change to support
the widespread adoption of FISS. Streamlining and standardizing building codes, inspection, and
permitting processes will be crucial for the market adoption of S+S technologies. In addition,
homeowners need access to mortgages that meet the payment schedules of modular housing and
appraisals that recognize and understand the value of S+S. Utilities will need to support S+S with
interconnection and net metering. The critical need is for existing and new factories to be willing to
build a zero-energy standard and offer FISS as a standardized product to homebuyers.

7
FORTIFIED is a voluntary resilient standard that the Insurance Institute for Business & Home Safety developed and
designed to be resilient to hurricanes, high winds, and hail.
8
RELi (Resilience Action List) is a voluntary resilient standard developed to increase adaptability and reduce sensitivity to
hazards for building occupants.

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Why HUD Funding Was Needed

This project builds on past HUD funding to further lean manufacturing principles in offsite
construction, and more funding is required to explore expanding resilient homes to include
resilient power systems. Unlike other federal agencies, HUD funding supports applied research
in the cross section of housing, energy, affordability, resiliency, quality, and labor safety. Outcomes
are actionable, and evidence-based recommendations to enable the homebuilding industry
to work toward The HUD Offsite Construction Research Roadmap9 include S+S in voluntary
resiliency standards financing to promote and support S+S in new homes. The study contributes
to a better understanding of the usability of resilient technologies and eases the transition toward
implementing resiliency criteria into every home builder company’s culture. It also promotes
more efficient and cost-effective operation within the factory homebuilding industry to incentivize
integrating S+S within production while minimizing total costs and lead time. Overall, a new lean-
centric strategy was established to manage and operate modular homebuilding and disseminate
knowledge on lean pathways for integrating S+S into factory-built housing to home builders and
the solar workforce.

Market Trends and Resiliency Benefit of FISS Homes

Through interviews and market research, the team identified several key value propositions for
incorporating S+S into factory-built housing.

1. Homeowner Resilience Benefits. In many cases, if the first cost of the system is rolled into
a mortgage, lower utility bills make it a cost-effective investment for the homeowner. The
customer economic analysis did not include a value of the resilience benefit of backup power
during outages. Insurers would generally be interested in opportunities to quantify the value
of not losing power or restoring power quicker after severe disasters. Claims related to power
outages could include food spoilage or damage from frozen pipes. Some insurers may consider
homes still habitable even during power failures, but additional claims may arise for hotel
stays while waiting for power and heat to return. Power continuity is important for reducing
effects on the home, increasing habitability, and supporting claim reduction. Insurance
companies, therefore, would likely be interested in learning how onsite energy production can
drive down value of claims.

2. Opportunities for Utility Companies. There is potential value in deploying residential

S+S for utility companies. Battery deployment can reduce peak demand, deferring or
eliminating capacity investment; provide frequency regulation; and ease system integration of
renewables.10 Having more utilities embrace S+S for the residential sector with incentives will
be important to bring the solution to scale. More work should be done connecting factories
to utility companies with existing programs, making them aware of incentives and standard

9
The HUD Offsite Construction Research Roadmap is at https://www.huduser.gov/portal/pdredge/pdr-edge-
trending-072622.html.
10
For more information, see https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/how-
residential-energy-storage-could-help-support-the-power-grid.

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 Exploring the Potential of Factory Installed Solar + Storage for Homebuilding

designs to island a home during outages. Vehicle-to-grid charging is another opportunity for
utility companies to harness to provide power in post-disaster scenarios.

3. Clean Energy Equity and Affordable Housing Applications. Housing and energy
advocates have a broad cross-sector interest in zero energy modular as a potential solution to
the housing crisis, and FISS is a natural extension that would help support decarbonization
and equity goals.

4. Providing New Markets for Modular Factories. Creating standardized, repeatable home
designs with S+S that meet resiliency standards such as FORTIFIED and RELi could help
support factories in demonstrating the high quality of the housing product and directly
addressing misconceptions in the market. Because FORTIFIED requires third-party
verification, it would be a selling point to potential customers and retailers. Modular housing
lends well to incorporating resilient design features, such as roof deck sealing, protecting
attachments, and paying attention to load paths, due to their protected environments and
repeatable processes.

Key Markets for a FISS Solution

Locations with frequent power outages and a high risk of natural disasters are markets that would
benefit from S+S. Modular factories conducting market research will want to consider resilient
design elements to evaluate the appeal of these features to potential customers, while gaining
insights into the needs for energy resilience in markets that they already serve.

Energy Resilience and Climate Risk

Although frameworks have been recently proposed, a metric that measures residential utility energy
resilience has yet to be determined. The U.S. Energy Information Administration reports annual
utility reliability data through metrics of interruption duration and frequency. The Customer
Average Interruption Duration Index (CAIDI) takes the sum of all customer interruption durations
divided by the total number of customer interruptions to determine the average restoration
time for each utility. The National Risk Index that the Federal Emergency Management Agency
(FEMA) developed incorporates natural hazards risk (measured as the annual expected loss of
building value, population, or agricultural value), social vulnerability (measured by demographic
characteristics to measure susceptibility of social groups to adverse effects of natural hazards), and
community resilience (demographic characteristics as a measure of a community’s ability to prepare
for, adapt to, withstand, and recover from a disaster) to establish a baseline score for relative risk
(FEMA, 2021). When the FEMA National Risk Index data are joined with CAIDI duration data
from 2020, results reveal that a significant number of areas could benefit greatly from resilient
power systems, as exhibit 1 shows.

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Exhibit 1
Areas in 75th Percentile of CAIDI Outage Duration and National Risk Index Rating

CAIDI = Customer Average Interruption Duration Index. NRI = National Risk Index.
Note: Graph shows combined totals of each metric by state.
Source: FEMA National Risk Index for National Hazards

Nearly every state in the continental United States has at least one county in the 75th percentile of
risk and CAIDI outages. This number of outages is without the inclusion of major event days that
are projected to increase as global temperatures rise. Areas that are at high risk in the National Risk
Index and in outage duration are concentrated in coastal areas, mostly on the west coast and Pacific
Northwest. These data indicate the need for energy power backup systems across the United States and
potential for mitigating risk and supporting vulnerable populations through resilient design features.

Where Factory-Built Housing Needs To Scale

Even if current modular factories started incorporating S+S and other resilient design features
into their products, gaps of service would be likely for the priority areas noted previously. Most
residential modular factories are near the coasts; however, significant gaps are still in service
territories. Although not a requirement for a modular home to be delivered in a day, costs may
become prohibitively expensive as distance from factories increases. In addition, some factories
may limit deliveries to locations within 100 miles (exhibit 2).

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 Exploring the Potential of Factory Installed Solar + Storage for Homebuilding

Exhibit 2
Driving Distance Between Modular Factories and Identified Priority Deployment Areas

Source: Modular Building Institute

With this limitation, existing residential modular factories today could service less than 15 percent
of identified priority areas. Notably, this limitation does not account for unrealistic delivery
scenarios that geographic factors pose, such as deliveries crossing over mountain ranges. To bring
FISS to scale, more factories will be needed, calling for a joint effort of investments from the
housing, energy, and economic development sectors.

Economics of FISS Solution

Using the cost reduction results from the FISS Case Study section, the team evaluated single-family
homeowner economics and duration of backup power in six locations in the United States. The
locations were chosen to examine how different solar resources, electric consumption, and rates
affect the financial results and performance during outages. The locations cover all regions and
International Energy Conservation Code climate zones in the continental United States, and four
of the five high-priority states called out in the Advanced Building Construction Collaborative
Market Opportunities and Challenges for Decarbonizing U.S. Buildings report (Fisler et al., 2021). All
the locations chosen are in the 75th percentile for outage risk, quantified with CAIDI scores and
National Risk Index Risk Scores, as the Energy Resilience and Climate Risk sections discuss.

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To estimate home energy consumption, the team used Open Studio’s Parametric Analysis Tool with
Open Studio-HPXML measures to run Energy Plus simulations. The prototype home was modeled to an
all-electric, high-performance specification in six different climate zones. Exhibit 3 shows the locations,
climate zones, modeled electricity consumption, and modeled solar photovoltaic (PV) generation.

Exhibit 3
Locations Used for Customer Economic and Resiliency Analysis with Electric Consumption and
Photovoltaic Generation Data
IECC PV Share
Consumption PV Capacity PV Generation
Location Climate of Use
(kWh) (kWDC) (kWh)
Zone (%)
Houston, TX 2A 7,764 5.4 7,598 98
San Bernardino, CA 3B 7,172 4.3 6,357 89
Philadelphia, PA 4A 8,064 6.0 8,608 107
Bellevue, WA 4C 7,336 7.0 7,770 106
Wayne, MI 5A 9,320 7.3 9,887 106
Smallwood, NY 6A 8,695 7.0 9,713 112

IECC = International Energy Conservation Code. kWh = kilowatthour. kWDC =kilowatt direct current. PV = photovoltaic.
Sources: Consumption—HPXML model and zero energy modular home; PV capacity—calculated for 100 percent of load; PV generation—National Renewable
Energy Laboratory System Advisor Model; PV share of use—calculated by the authors

The team used the National Renewable Energy Laboratory’s (NREL) System Advisor Model (SAM)
to size the batteries to meet the modeled energy use and to evaluate homeowner economics by
running scenarios that tested the sensitivity of financing, first costs of S+S, effects of the climate
zone on solar resources, electric consumption, and electric rates to understand the effect on
financial results and performance during outages. Exhibit 4 shows the inputs to SAM.

Exhibit 4
Parametric Inputs
Input Variable Values Used
Installed cost ($) Average, average minus $5,427, average minus $10,126
Location Informed solar resource, consumption, electric rates
Photovoltaic capacity (kWDC) Varied by location 4.3 to 7.3
Battery capacity 13.5 kWhAC and 5 kWAC
Critical load percent of total load 25%, 50%, 75%, 100% of total electric load
Loan type Personal Loan Mortgage
Tax deductible interest No Yes
Loan term (years) 15 30
Loan rate (%) 5 3

kWAC =kilowatt alternate current. kWDC = kilowatt direct current.

The analysis showed that the most significant driver of positive net present value (NPV) is
long-term, low-interest financing through a mortgage. For homeowners, a positive NPV would
be attained by rolling the first cost of FISS into a mortgage in California, Michigan, New York,
Pennsylvania, and Texas. No cases of positive NPV were associated with 15-year personal loan

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 Exploring the Potential of Factory Installed Solar + Storage for Homebuilding

financing in any of the locations. Offsetting electricity with solar PV in states with high-cost electric
rates increases NPV for the customer and provides a lower NPV for customers in states with low-
cost electric rates. For example, in Washington, a state with low-cost electricity rates, homeowners
would not have the benefit of positive NPV, even when rolling the first cost of the FISS into a
mortgage. A final consideration is solar resources. Locations with higher solar resources and
production can increase NPV even in states with lower utility costs, like Texas.

To evaluate how long the S+S system would support the electric loads during an outage, the team
modeled a range of critical load percentages (exhibit 5). Under this scenario, the results show the
probability of the battery being able to support the electric load for an outage at any time of year
and time of day, as well as the mean hours the battery lasts across the simulated outages.

Exhibit 5
Resiliency Results from System Advisor Model Analysis: Likelihood of the Battery Lasting Through a
4-Day Outage and the Mean Hours of Autonomy for Four Scenarios of Regular Energy Consumption
IECC Probability of Surviving 4-Day Grid Mean Hours of Autonomy
State Climate Outage (by Percent of Load) (by Percent of Load)
Zone 25% 50% 75% 100% 25% 50% 75% 100%
TX 2A 97% 76% 28% 5% 3,236 590 79 31
CA 3B 100%* 80% 33% 5% 8,760* 633 98 34
PA 4A 94% 69% 30% 10% 3,486 1,155 96 42
WA 4C 86% 59% 39% 13% 3,046 972 150 42
MI 5A 83% 57% 33% 14% 2,510 963 112 46
NY 6A 89% 64% 35% 13% 3,103 1,403 112 45
IECC = International Energy Conservation Code.
* SAM did not find an outage that the load would not be met when evaluated during a 14-year horizon.
Source: National Renewable Energy Laboratory SAM

The SAM analysis showed that in almost all cases, the S+S system could power 25 percent of the
electricity needs in a home for 4 days, and under some scenarios, up to 100 percent of the load
for 4 days.

FISS Case Study: KBS Builders’ Factory

A case study method was used to test the FISS approach, using data from the existing plan layout,
material handling system, and operations of the project partner, KBS Builders, Inc. The team
performed a comprehensive time study to help understand current productivity and identify
opportunities to improve operations, reduce downtime at or in-between stations, and add new
activities without undermining the current weekly productivity. The team used simulation
modeling tools to replicate the flow of materials and discrete activities at and in-between
stations (Podder et al., 2022). To study the current conditions in KBS Builders’ factory, the team
followed a data collection strategy to include activity durations using a combination of expert
interviews, manually documented time stamps from travelers, and data-collection methods using
video data obtained from the factory. Key datasets included factory-built and onsite schedule,
rough-in stage details, number of workers involved in each station, factory production rate (on

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average), workforce composition (trades, labor, and other salary employees), factory photos
and documentation of visual inspections, and information pertaining to spatial aspects of the
construction progress. These datasets enabled the team to perform a comprehensive time study
to help understand the existing conditions and identify early opportunities to improve weekly
productivity, reduce downtime at or in-between stations and bays, and add new activities without
undermining the current weekly productivity.

Onsite Solar + Storage Installation: Current Approach and Challenges

Most of onsite S+S installations are retrofits. In 2020, retrofitting accounted for 72.6 percent of all
residential S+S systems installed (Grand View Research, 2021). Results of the study showed that
retrofits are less efficient than when S+S is integrated into new construction, thus construction
costs could be reduced (O’Shaughnessy et al., 2019). The team evaluated the onsite S+S installation
approach via interviews from field professionals. Onsite S+S installation requires various trades and
a solar subcontractor to coordinate material delivery and installation activities to each site. Typically,
all equipment and materials are handled manually, thus reducing the efficiency of the installation
and affecting the safety of workers. Ladders and ladder lifts are used to bring material on the roof
and workers must wear safety harnesses. A need for solar-ready design houses exists (Labik et al.,
2022). If the system is completely retrofitted, post-installation inspections are usually prolonged
and can cause the inspectors to withhold the certificate of occupancy, due to the installations
not meeting local code. Such issues lead to expensive onsite rework, decreases in efficiency, and
prolonged lead time.

Offsite Solar + Storage Installation: FISS Approach

The offsite S+S installation moves most of the site work into the factory.

Baseline Process Simulation Model

KBS Builders’ weekly production target is eight modules; however, due to perceived bottlenecks
and downtime, the factory has been able to achieve an average of five to seven modules. KBS
Builders have expressed strong interest in identifying opportunities to consistently achieve at least
eight modules per week, while adding the required activities related to S+S installation. In this
study, the team chose the weekly production rate (that is, number of modules completed per work
week) as the key performance indicator to evaluate different scenarios against the current market
trend of onsite S+S installation. Based on the data collected from KBS Builders, the team created a
baseline process simulation model in AnyLogicTM software. The baseline process simulation model
acts as a digital twin of the real-world physical factory, because it accurately reflects the two-
dimensional floor plan layout of the KBS Builders, the factory construction schedule, the workers
and resources allocation in each station, the weekly productivity, and the work time in each station.

Estimated Solar + Storage Installation Time Data

Offsite integration occurs in a controlled factory environment. This setting ensures better
coordination of standard installation procedures and resources in a controlled environment.

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In the factory, installers can perform their work at a predetermined station suitable for activities
related to S+S installation, including integration of small, distributed home batteries (see exhibit 6
for detailed installation time and resources needed).

Exhibit 6
Solar + Storage Related Activities with Installation Times

Activity with Location Production Number of Activity Time

Description
and Sequence Type Workers (in Hours)

Installation
1” PVC from mech room to roof 2 1
activity
Installation 1” PVC from mech room
Solar ready (Rough 2 1
activity to electrical main
Electrical and
Plumbing–Station #5) Installation 2” PVC from mech room to
2 4
activity electrical main (for battery)
Installation Conduit and wiring to
2 3.5
activity belly or gable end
Installation
Solar deck installed on roof 1 2.2
activity
Preset solar roofing
Installation
(Feeder Roofing Solar feet installed on roof 2
activity
Station–on the floor) 2.3
Installation
Solar rails installed on roof 3
activity
Solar roof set (Roof 0.50 (same
Roof set
Set and Exterior Solar roof set on WIP module NA as typical
activity
Insulation–Station #7) roof set)
Installation
Microinverters installed on roof 3
Post-set solar roofing activity
6.5
(on top of the module) Installation
Solar panels installed on roof 3
activity
Installation
Battery in mech room 2 2.7
activity
Home battery install
Installation
(Electrical Hookups– Battery gateway 2 2.6
activity
Station #14)
Installation Paneling for meters and
2 2
activity disconnects on gable end

NA = not applicable. PVC = polyvinyl chloride. WIP = work in progress.

Comparison Analysis and Results

The team simulated an ideal FISS scenario within AnyLogicTM, leveraging the baseline process
model. The major learning outcome from exhibit 7 is that the new activities related to S+S
installation can be added to the main production line without affecting the weekly production
rate of eight modules per week. Such an ideal scenario is only possible after stations 5 through
12 undergo line balancing strategies that include reorganization of roof-related activities. See the
Conclusions and Discussion sections for detailed results.

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Exhibit 7
Total Time Taken To Complete Activities for One Module

Total Time Taken for Activities on Main Production IDEAL SCENARIO

Line (in hours) to Complete One Module Total Time Taken for Activities on Main Production
Line (in hours) to Complete One Module

5.67
6.58 3.75

23.8

27.55

61.82
61.1

Roof-Related Activities Roof-Related Activities

Total Downtime in Stations 5-12 Total Downtime in Stations 5-12
All Other Activities All Other Activities
S+S Installation Activities

Note: the baseline is shown on the left, and the ideal scenario is shown on the right.

Cost Analysis of FISS

The team used the data from the solar vendors and installers interviews and NREL 2020 Solar
+ Storage Cost Benchmark to model the cost of the onsite installation approach (Feldman et al.,
2020). The FISS cost was modeled using these costs and the simulation output.

Onsite Installation Cost Analysis

The cost analysis assumes a solar-ready home with 7.12 kW system and Tesla Powerwall 2 battery
(13.5 kWh, 5kW rated output) installed on site. Contractors provided an onsite installation cost
averaging about $37,824, with the cost breakdown in exhibit 8.

Exhibit 8
Onsite Installation Cost Breakdown
Cost Component Cost ($)
Hardware 18,103
Permitting, inspection, and interconnection 825
Installation cost 18,896
Total cost 37,824

The team used NREL’s 2020 Solar + Storage Cost Benchmark, which breaks down the cost into
$/WDC (dollar per Watt of direct current) to further break down the installation cost into each type
of soft cost components (Feldman et al., 2020). In this analysis, the same 7.12 kW system was
used. The specific assumptions and costs/WDC are in exhibit 9.

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Exhibit 9
Assumptions of Cost Model
Cost Component Modeled Value Description
Applied to hardware, installation labor, sales
Net profit 17%
and marketing, design, PII
Sales and marketing Advertising, sales pitch, contract negotiation,
$0.67 / Watt
(customer acquisition) customer interfacing
Engineering design, professional engineer-
Engineering fee $100
stamped calculations, and drawings
Given by Completion of applications, fees, design
PII
contractors changes, field inspection
Overhead $0.28 / Watt Rent; building, equipment, staff expenses
Installation labor Calculated Time study data
Workers’ compensations, federal and state
Installation labor burden 18% unemployment insurance, FICA, builder’s risk,
public liability, applied to installation labor cost
Sales tax 5.1% 5.1% of cost of equipment
5% of cost of equipment; Shipping, handling,
Supply chain cost 5%
inventory
Conductors, switches, combiners and
Electrical BOS $0.28 / Watt transition boxes, conduit, monitoring system,
fuses, breakers
Flashing for roof penetrations, rails and
Structural BOS $0.08 / Watt
mounting
Given by
Equipment
contractors

BOS = balance of system. PII = permitting, inspection, and interconnection.

The contractor gave the actual costs of the hardware and the permitting, inspection, and
interconnection (PII). Other soft cost components were found by using the output of the ideal
scenario (including S+S installation activities) model. Net profit paid to the contractor is modeled
as a fixed margin of 17 percent that is applied to all hardware, labor, sales and marketing, design,
and PII fees, resulting in $4,699. Sales and marketing for the onsite approach were modeled as 0.67
$/WDC, resulting in $4,770 and accounting for advertising, sales pitch, contract negotiation, and
customer acquisition. The installation labor was found to be $2,492 with a labor burden of $449.
Once all soft costs were determined, the team validated the results with subject matter experts.

FISS Approach Cost Analysis

The team followed the same assumptions and approach, based on soft cost savings, to calculate
factory installation cost for each system component. First, if the system is installed in the factory
by using the existing workforce, the net profit paid to the contractor is removed, resulting in
$4,699 savings per system installed. Furthermore, sales and marketing costs of the S+S system are
significantly reduced, mainly due to the system being advertised with the house, thus eliminating
the need for extra marketing, contract negotiation, or extra customer acquisition. The sales and
marketing cost, based on field professionals’ interviews, was modeled as 0.15 $/WDC , resulting in

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savings of $3,702 per system installed. In the FISS approach, the overhead cost of the S+S system
is built into the final house cost, which subject matter experts estimated results in a 30-percent
reduction. Through the simulation, the team found the installation labor cost to be on average
$1,538 per system, with an installation burden of $277, yielding savings of $1,126 per installed
system. The FISS approach resulted in a total savings of $10,126 per installed system—about
26.77 percent potential cost reduction compared with onsite installation.

At this point, the manufacturer must decide how to allocate the savings realized through the FISS
approach—either keep savings as profit or pass on the savings to the customer. The team chose
to model three potential scenarios for the customer economics analysis: (1) Manufacturer keeps
total savings as profit (for example, $0 of the savings are passed on to the customer), similar to the
current onsite approach; (2) Manufacturer keeps the factory installation savings and the rest of the
savings, about $5,427, are passed on to the customer; and (3) All the savings, about $10,126, are
passed on to the customer.

Exhibit 10 shows the S+S cost breakdown for all three scenarios.

Exhibit 10
Solar + Storage Cost Breakdown
Onsite Factory Installation, Factory Installation,
Approach Profits Kept Maximum Price Reduction
Cost Component Cost ($) Cost ($) Savings ($) Cost ($) Savings ($)
Net profit $4,699 $4,699 $0 $0 $4,699
Sales and marketing
$4,770 $1,068 $3,702 $1,068 $3,702
(customer acquisition)
Engineering fee $100 $100 $0 $100 $0
Permitting, inspection,
$825 $825 $0 $825 $0
interconnection
Overhead $1,994 $1,396 $598 $1,396 $598
Installation labor $2,492 $1,538 $954 $1,538 $954
Installation labor burden $449 $277 $172 $277 $172
Sales tax
$923 $923 $0 $923 $0
(of cost of equipment)
Supply chain costs
$905 $905 $0 $905 $0
(of cost of equipment)
Electrical BOS $1,994 $1,994 $0 $1,994 $0
Structural BOS $570 $570 $0 $570 $0
Hardware $18,103 $18,103 $0 $18,103 $0
Total savings $5,427 $10,126
Total cost
$37,824 $32,397 $27,698
(system installed)

BOS = balance of system.

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Conclusions
The FISS approach resulted in a total savings of about 26.77-percent potential cost reduction compared
with onsite installation. In addition, implementing the ideal scenario would mean completing eight
modules per week with integrated S+S. Solar ready activities, post-set solar roofing activities, and home
battery installation activities use 86.39 percent of the observed downtime in stations 5 through 12,
where the remaining downtime can be available for idle time or buffer time by design. Furthermore, the
main production line is balanced and can continuously achieve the weekly production target of eight
modules per week. Introducing innovation into homebuilding results in a different set of challenges
to management, the following list identifies these challenges and potential solutions that managers
responsible for implementing new technology must surmount practical guidelines for factories to design
and construct affordable S+S homes. The recommendations in exhibit 11 help to ensure the efficient
and effective integration of S+S installation.
Exhibit 11

Recommendations (1 of 2)

Houses Should Be Solar-Ready Designed Early in the Design Phase

• Product Design. Using lean product design can eliminate waste in production before it happens.
• Net Zero Emission (NZE) Goals. For companies to achieve aggressive NZE goals, clear direction from
the client must be given, and teams must fully embrace the directive.

Production Line Needs To Be Tailored for Solar + Storage Installations

• Balance of Systems. New activities related to solar + storage installation can be integrated into the
main production line without affecting the weekly production rate after downstream stations undergo
line balancing strategies, leading to 100 percent utilization.
• Reorganization of Roofing Activities
| Reorganizing relevant roofing activities to the feeder stations that run parallel will reduce travel
distance and time.
| Moving the solar roofing activities to the floor closer to the roof build as an extension of the feeder
station can reduce the total time for related activities by 50 percent and mitigate existing bottlenecks.
| Preroof set activities: Mounting and solar decking activities can be moved to the floor, immediately
after solar roofing.
| Post-roof set activities: Solar photovoltaic install activities can occur after the roof is set; activities
can be moved upstream, on the floor, closer to roof build station.
| Home battery installation activities: Small, decentralized home battery can be installed after the
interior paint activities.
• Minimizing Excess Processing Time. Solar-ready activities can be performed along with electrical
roughing, and workstations with similar activities can be combined, allowing for workers and resources
to move between the stations.

Workforce Strategy Needs To Be Developed

• Workforce Strategy. To reach production objectives more quickly and efficiently, facilities must adopt
a lean-centric workforce strategy. This strategy could include multiskilling existing workers, hiring a
new department focusing only on solar + storage related activities, or using a subcontractor to install
the system.
• Maintain Skilled Workforce. Identify opportunities to upskill existing workforce and understand
trade-offs for involving solar + storage subcontractors in performing the new activities.

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Exhibit 11

Recommendations (2 of 2)

Quality Control Inspection Must Be Tailored for Solar + Storage Installation

• Quality Control. Developing a comprehensive quality control strategy for each solar + storage related
station to audit the work eliminating waste and reduce costs caused by defects.

Supply Chain, Long-Term Storage, and Staging Areas Need To Be Established

• Supply Chain. Procure solar + storage components and systems from a regional supply chain.
• Storage and Staging Area. Expand current factory floor to add a storage area for solar + storage
components and systems.
| Benefits of adding long-term storage and staging areas include limiting travel distance and material
handling and decreasing the probability of damage to materials due to handling and exposure.

Multiple stakeholders benefit from the design solution that FISS provides in exhibit 12.

Exhibit 12
FISS Design Solution

For Homebuilders
• Provides additional benefits for customers that are marketable, including quality, safety, resiliency,
energy efficiency.

For Homeowners
• Provides resilience, comfort, safety, potential financial benefits.

For Policymakers
• Product can be mass-produced, support disaster recovery, support sheltering in place, continuity in
vulnerable populations.

For Utilities
• Product can create grid-interactive homes that are able to participate in utility programs and support
grid functions.

As this analysis notes throughout, despite barriers, a growing interest is in scaling S+S as a
resiliency solution and scaling modular housing to address industry needs and gaps. Great
potential exists to scale modular housing in the United States to support resiliency and efficiency.
Driving adoption of FISS in the residential new construction market is not simple. The new
construction industry is chronically fragmented with many players across design, construction,
supply, and demand. The industry is largely the same as it was 100 years ago—same business
models and profit margins that require risk aversion. Increasing the deployment of S+S will require
a combination of technology innovation, workforce training, demand aggregation and supply
development, and a cross-sector approach. The following recommendations focus on what could
help further scale this solution to reach one million customers during the next 10 years.

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• Mortgages that meet payment schedules of modular.

• Appraisals that recognize value of S+S.

• Existing and new factories willing to build to a zero-energy standard and offer FISS as a product.

• Utility companies that will support S+S.

• Homeowners that understand value proposition.

• Standardization of building code.

Acknowledgments
The financial support that HUD provided for this research under grant number H-21690 CA is gratefully
acknowledged. Further, the authors thank Mike Blanford for managing and coordinating this work on
HUD’s behalf. Finally, the authors thank the editors and two referees for their helpful comments.

Authors
Isabelina Nahmens is a professor in the Department of Mechanical and Industrial Engineering at
Louisiana State University (LSU). Ondřej Labík is an industrial engineering graduate student at
LSU. Alison Donovan is a managing consultant at VIEC, and her team includes Kalee Whitehouse,
Damon Lane, Desmond Kirwan, and Leslie Badger. Ankur Podder and Shanti Pless are research
engineers at National Renewable Energy Laboratory.

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