U.S. Energy Secretary Steven Chu announced a new $10 million Department of Energy competition last week to reduce the price of installing solar panels. The goal is to make the technology more “cost-competitive” by the end of the decade.

The prize is part of the SunShot Initiative, a program runs through 2015 and hopes to decrease the so-called “soft costs” of installing solar modules on private homes and businesses. Reductions in permitting and licensing costs — costs that are imposed by the government — are included in the goal of overall “non-hardware” price decreases, according to the department’s announcement.

Heritage’s Nick Loris last year called the SunShot Initiative a “huge government subsidy” that is costing U.S. taxpayers $200 million per year. He added: “Government has no business trying to make private-sector projects cost-competitive. It’s neither appropriate nor necessary.”

An earlier SunShot Incubator program, also designed to reduce the “soft costs” of solar installation, pledged an additional $7 million on top of $60 million in solar “incubator” initiatives from the department since 2007. According to figures released in late 2011 by the DOE, as much as half of the cost of solar-module installation came from the non-hardware costs, which ranged from approximately $3.80 to $5.71.

“This race to the rooftops is designed to inspire innovative teams including installers, local governments, and utilities to make solar energy systems more affordable,” said Chu. “This aggressive target is an important step that will help bring us significantly closer to reaching the SunShot goal of cost-competitive solar energy by the end of the decade.”

The winner will receive $7 million and will be tapped as “The Winner of America’s Most Affordable Rooftop Solar,” according to the department:

As part of the Energy Department’s SunShot Initiative, which is working to make solar energy competitive with other forms of energy without subsidy by the end of the decade, the Energy Department today announced the start of a new competition to make it faster, easier, and cheaper to install rooftop solar energy systems. The SunShot Prize makes a total of $10 million in cash awards available to the first three teams that repeatedly demonstrate the non-hardware costs, or price to plug in, can be as low as $1 per watt (W) for small-scale photovoltaic (PV) systems on American homes and businesses. This ambitious target represents a decrease in the “soft costs” of solar energy systems – including permitting, licensing, connecting to the grid and other non-hardware costs – by more than 65 percent.  By breaking a significant price barrier that was considered unachievable only a decade ago, the winning teams will demonstrate that solar energy is an affordable solution for American families and businesses.

Competition winners will have to demonstrate sustained cost reductions over several phases of the program:

“During Phase I of the competition, winning teams will successfully deploy 5,000 small-scale (2–15 kilowatt) rooftop PV systems with non-hardware costs averaging $1/W.  Phase II, which is intended to assess the business sustainability of the winning teams, calls for the installation of an additional 1,000 qualifying systems. The competition will run through 2015.

Solar power contributed only 0.14 percent of all electricity generated and consumed in the month of June, according to the latest figures available from the Energy Information Administration.