News From the East Bay Green Corridor

Annual residential PV installations

PV Price Comparison: U.S. Versus Germany

In September 2012, Joachim Seel, Galen Barbose and Ryan Wiser, researchers from the Lawrence Berkeley National Laboratory, released the findings of their study "Why Are Residential PV Prices in Germany So Much Lower than in the United States? A Scoping Analysis."

"Our past cost analysis of American residential PV systems showed a wide disparity with prices in Germany. We set out to find the reasons," said Seel. Because Seel speaks German fluently, the researchers were able to take a deeper look into this price discrepancy between the two countries.

Substantially lower prices

Just how much do residential PV prices in Germany vary from U.S. prices? The study found that:

  • Soft costs in Germany including permitting, inspection and interconnection averaged $0.62/W compared to $3.34/W in the U.S.
  • Customer acquisition costs in Germany averaged $0.07/W compared to $0.69 in the U.S.
  • Systems in Germany are installed 10 times faster than in the U.S. (7.5 hours versus 75 hours), leading to lower labor costs.
  • Soft cost processes averaged $0.03/W in Germany, versus $0.24/W in the U.S.
  • Germany exempts residential PV systems from sales tax; 23 states in the U.S. levy sales tax of 4 - 8%.

A combination of factors

"We attempted to do a learning curve analysis where we mapped soft costs against capacity installed," said Seel. "If more PV was installed in a country, the prices should go down because of experience." But in fact, even in the early 2000s, when Germany and the U.S. had a similar number of PV systems installed, German systems still cost less. (Last year, Germany installed 2.5 times more PV systems than the U.S.—over nine times as many when measured per capita.)

"I think a big difference is just the fact that Germany has one national market with the same regulatory regimen for renewable energy whereas in the United States that is left to single states which have different regulatory requirements." Seel added that even some counties have established their own regulatory requirements. "That makes it a lot more difficult here in the United States," he said.

Seel added that some effects can be more easily measured than others. For one, in the mature German PV market, "there's just something of a critical mass." This creates word of mouth, which leads more consumers to install PV systems. "That may be something that is increasingly picking up here in the United States."

Bringing down costs at home

As a recommendation, Seel believes that "further streamlining permitting requirements, trying to simplify them, maybe making them digital so you can just go to an online portal...will be a great first step." As demand for solar increases in the U.S.—solar is now one of the fastest growing job markets in the country—this kind of streamlining will become necessary for solar companies to keep up.

Although U.S. consumers do pay more for installed residential PV systems, they have actually had some relief. Recent figures show that, due in large part to lower PV module costs, prices have fallen dramatically—by 11 to 14 percent last year, and by and additional 3 to 7 percent in California in the first six months of 2012. With efforts like the Green Corridor's initiative to streamline the permitting process, we expect soft costs to decline even further.

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