Why German solar costs half as much as US solar
A new study by the Lawrence Berkeley National Laboratory investigates why solar currently costs around twice as much in sunny parts of the US than in cloudy Germany.
Berkeley Lab has published a series of charts based on chief author Joachim Seel's study completed in May. The slideshow (PDF) is fortunately quite self-explanatory. The main question is posed in the title: "Why are residential PV prices in Germany so much lower than in the United States?" The focus is on customer-owned, completely installed systems smaller than 10 kilowatts; as Renewables International previously explained, third-party ownership is a common business model in the US, but is relatively unpopular in Germany, where people want to own their own systems.
The study finds that "soft" costs are the main difference, not the cost of components; in particular, Germans do not use more inexpensive modules from Asia than the US market does. While the study points out a number of potential factors it does not investigate, it nonetheless believes that sheer market size – Germany has 14 times more residential solar on a per capita basis – may account for roughly half of the price difference.
The authors say that feed-in tariffs have brought down prices in Germany (currently at 1.70 euros per kilowatt) and that "similar forces may operate less efficiently in the US." Essentially, feed-in tariffs have been reduced each year since introduced for photovoltaics in 2004, putting pressure on "German installers to lower system prices to maintain attractive investments for their customers."
Other reasons for the higher price in the US could be summed up under the category of "red tape": longer installation processes in the US, longer permitting procedures and inspections, greater customer acquisition and marketing costs, and higher sales tax on PV in the US. Labor costs are also considerably higher in the US – but mainly because American installers need 10 times as long as Germans do (75 hours per system versus 7.5 hours).
The study also found great differences between system prices within the US, suggesting that different state policies also considerably affect prices. The authors proposed that further research be conducted into assessing "the role of FIT policies in Germany in stimulating price reductions and potential implications for US solar policy." (Craig Morris)