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American Solar PROFITS vs. German Installation Costs.

Why Solar Installation Costs are HIGHER in Germany.

Lawrence Berkeley National Laboratory has identified several areas where solar costs could potentially be brought down.   The majority of the costs of solar energy installation go towards expenses, tools, and resources besides the solar panels themselves.

2011 saw solar panel installers for residences pay slightly over $1.80 per war for solar panels in either Germany or the United States.  However, German installers only added $1.20 to complete an installation, whereas American installers added triple the cost at $4.35 per watt. The Lawrence Berkeley National Laboratory released a report that explained this trend.

The greatest discrepancy between the solar situations in the two countries is the widespread usage of solar power in Germany in relation to the U.S., nearly five times as much. However the report states that this factor alone doesn’t entirely explain this disparity in charges and pricing, but only closer to half of it.  The other half, based on surveys of installers in the U.S. and Germany, indicates that there are fundamental differences and divides in the way that these installers do business which are geared to keep prices high in the U.S unless they are addressed.

The biggest difference between solar power costs in the two countries is the price of acquiring new customers.  Seven cents per watt is spent by installers in Germany on things like design and marketing towards a certain demographic or type of customer, where installers in the U.S. spend ten times that!  Other regulatory costs, inspections, and permits are much higher in the U.S. than in Germany, where only three cents per watt is spend in relation to 20 in the U.S.  This is largely simply due to the amount of paperwork and the permit fees and regulatory costs.  There is also the matter of labor costs, which are similarly higher in the U.S than in Germany for an installation. Other factors include wind and climate factors that often don’t have to be deal with in Germany, higher sales tax in the U.S. whereas in Germany installers are fully exempt from these taxes, and the overhead for American installers are much higher due to economies of scale factors.

The report goes in depth with other items that cause the difference.  For example, inverters are more expensive to purchase in the U.S. and this causes prices to rise. However this still doesn’t account for the massive difference in prices. Even including all these factors, there’s still a $1.30 price difference left over.  The explanation for this is simply the fact that American companies and installers are making more profit.

The SunShot Initiative is something started by the U.S. Department of Energy to fund projects that seek to bring down the costs of installing solar systems in residences. An important aspect of the Initiative is a $12 million program that seeks to sort out the regulatory and permit burdens on installers which cost so much. A $10 million dollar reward has been offered to companies which bring down the cost of non-hardware installations to less than $1 per watt. A further $21 million dollars was recently announced to aid the progression of plug and play solar systems that bring down solar energy costs of installation.

Still, the primary way to bring down solar panel costs is to reduce the amount of panels that must be installed per system, which brings down costs for everything from parts to labor. The soft costs are still the best option for solar power to compete with the affordability and availability of fossil fuels. “A scientist at the LBNL and an author of the new report on cost comparison says “A substantial improvement is on the horizon with just a replication of German practices.”

Article written by Jennifer Coleman of Sun Source Solar Energy Brokers, providing solar brokering, brokerage, and solar energy consulting services in Santa Rosa, Marin, Sonoma, Napa, Solano and San Francisco Counties.  For more information, please visit www.SunSourceSolarBroker.com.

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