

Why Solar Installations Cost More in the U.S. than in Germany - iProject
http://www.technologyreview.com/news/509196/why-solar-installations-cost-more-in-the-us-than-in-germany/

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mrb
One of the reasons is, as the article states, that US companies have to
recover higher costs to acquire customers.

But it doesn't say why. The reason is because grid power is more expensive in
Germany: $0.30/kWh compared to $0.10/kWh on average in the US. Therefore
potential customers are easier to convince to use solar in Germany.

~~~
quanticle
And, on the flip side, Germany has massive tax subsidies for solar power. It's
a lot easier to convince someone to get solar panels installed on their roof
if you can show them a tax benefit for doing so.

On a broader note, I don't get why we think it's a _good_ thing for Germany to
have this much solar energy. Unlike, say, Spain, the German climate is not
especially well suited to solar power. It's too far north, as a country, and
climatically, Germany has a lot of cloudy days, which means that solar panels
are not really running at peak efficiency most of the time. Germany would be
much better served by wind power, because of its advantageous position on the
North European Plain. In a free market, that is exactly what would have
happened. Instead, German government subsidies have unfairly advantaged solar
energy, leading to an inefficiently high number of solar panels and
underinvestment in wind.

~~~
lispm
> underinvestment in wind

estimated electricity production for Germany in 2012:

* Wind: 45 Billion kwh * Solar: 28,5 Billion kWh

~~~
jakeonthemove
Well, exactly - if there was more incentive for wind power, that number would
be much higher.

~~~
SethMurphy
Germany has an incredible amount of wind power, almost to the point of
saturation. They are in the process of upgrading old ones to be more efficient
instead of creating more. Here are some numbers
<http://en.wikipedia.org/wiki/Wind_power_by_country>

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redwood
Red tape is a big part of the cost in the US and a problem that needs to be
solved. Every locality and state has its own requirements, inspections,
licenses etc.

A solar industry insider told me one of the worst solar markets in California
is Palo Alto. Wealthy, green, suburban, techy: how can this be? The city runs
its own utilities and makes it hard to install (apparently).

Regulations need to be streamlined.

~~~
jusben1369
My first thought when reading this was that it was really confusing cause and
effect and (deliberately?) failing to cover the alternatives to solar. So I
was pleased to see the currently top rated comment here started out with:"The
reason is because grid power is more expensive in Germany: $0.30/kWh compared
to $0.10/kWh on average in the US. Therefore potential customers are easier to
convince to use solar in Germany." Many of the issues highlighted in the US
simply relate to where the US is in the curve of adoption. If Solar was more
competitive with the regular grid then a) There would be more demand = lowered
customer acquisition costs = lowered installation costs (vols and skills) =
reduced red tape based on political clout from industry and consumers. So
everything outlined in this article seems more about symptoms than causes.
What we do about that can either be government regulation driven or market
driven but either way it feels like a pretty big missing piece from the
original article.

~~~
redwood
Good points, but on the flipside, German solar is probably roughly a third as
productive as sunny American states could be... so when you factor in the
added output per equivalent installation, the 3x grid cost _should_ be roughly
mitigated. However, the trouble is the costs are not primarily correlated with
size of installation and the cost of the panels themselves are no longer the
primary cost driver. This means tertiary costs like installation and
regulation, which do not necessarily scale with system size, are an important
and complex piece.

edit: it's not 3x but still as high as 2.5x in some places:
[http://www.nrel.gov/gis/images/us_germany_spain/pv_map_us_ge...](http://www.nrel.gov/gis/images/us_germany_spain/pv_map_us_germany_spain.jpg)
and more if you compare to northern Germany. Anyway some parts of the US have
significantly higher power costs than others (not surprisingly these are
generally good solar sales markets)

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pavel_lishin
So, it sounds like most of the reason for the higher cost in the United States
is that solar panels aren't a common sight - they have to be marketed more
heavily to the end consumer, and power companies have to ensure that the
system is safe to hook up to the grid.

~~~
gbhn
I got solar a while back, and the company seems desperate for customers. They
call and want to throw parties for my friends at my house, ask for referrals,
etc. I think part of the challenge is that solar here in the US is still a
pretty big up-front expense. We need to get the financing figured out better.
Maybe the power company should own the panels...

~~~
paul_odin
SolarCity has some interesting options where they can install their systems
for free and rent it out to you, on a per kwh or per month basis.

<http://www.solarcity.com/residential/solar-ppa.aspx>

<http://www.solarcity.com/residential/solar-lease.aspx>

~~~
tsotha
I don't understand why more people haven't taken them up on this offer. If it
really guarantees you cheaper power and you don't have to put any money in,
what's the downside?

~~~
idupree
These are some of the reasons that discourage people I know:

* Having to make a decision

* Opportunity cost (doing this deal means not getting some other solar arrangement and means not getting next year's better technology)

* "To qualify for financing, you need to have excellent credit (a FICO score of 700 or greater)."

* Some of us don't like companies that keep basic information off the Web and require you to talk on the phone to a sales rep: "Availability of SolarPPA and SolarLease vary by location based on what your local utility company prefers." ... "Financing terms vary by location and are not available in all areas. To find out which plans are available in your area, request a free consultation."

* Not knowing people in-person who will vouch for the company's honesty and good service.

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carlosgg
Article on Business Week: "Solar Energy Is Ready. The U.S. Isn't"

[http://www.businessweek.com/news/2012-10-25/solar-energy-
is-...](http://www.businessweek.com/news/2012-10-25/solar-energy-is-ready-dot-
the-u-dot-s-dot-isnt)

------
walshemj
well its the tax breaks of course silly. In the UK the grants for solar used
to guarantee around a 8% return - this is a tax break for the Upper middle
classes who can spend $20k or so.

This is a result of the silly panic over fukishima in Germany and the greens
being brought off to keep Adrea Merkal in power.

~~~
arrrg
No it’s not, silly. There aren’t any tax breaks for solar installations in
Germany. There are guaranteed prices energy companies have to pay for solar
energy from small private installations.

And besides, this is about the cost of the installation. You did read the
article?

~~~
uvdiv
There's a tax break right in the article:

 _"They pay more in sales tax (German installers are exempt)."_

But you're right, that the largest subsidy is not paid out of tax money, but
through a (very large [0]) mandated surcharge on private utility bills.
There's little practical difference. It's functionally equivalent to a tax
subsidy funded by a tax on electricity.

[0] [http://www.reuters.com/article/2012/09/25/eu-oettinger-
idUSL...](http://www.reuters.com/article/2012/09/25/eu-oettinger-
idUSL5E8KP22V20120925)

~~~
arrrg
That’s not a tax break specific to solar installations. In fact, it’s not a
tax break at all. It is just a consequence of how German tax law is
constructed. It has nothing to do with subsidizing solar installations.

If you register your private solar installation as a business, you are exempt
from paying sales tax if you also pay revenue tax (= sales tax) for the energy
you are selling. Just like the baker buying her oven, if a business buys
something for the business, it is (usually) exempt from paying sales tax for
it – since sales tax is supposed to be only paid once, not several times.

You know, what annoys me is ignorance about the actual policies and then
pontificating as if you have it all figured out.

~~~
walshemj
if the tax law is constructed to have advantages for these "home businesses"
then its a tax break and don't get me started on the "hobby" farms that get
subsidy's from the CAP budget.

An I am a pro EU guy you can see why Ukip are gaining in popularity

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pge
One factor that does not seem to have been explored is financing costs. As I
understand the situation in the US, residential solar is often financed by
banks, and capital for this type is expensive right now, leading to high
costs. Anyone in the industry know whether that could account for the cost
discrepancy?

~~~
dredmorbius
You sure about that?

Interest rates are at all-time lows. Lending _standards_ may make loans
unavailable, but the cost of capital is anything but high.

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jakeonthemove
The installation is the most expensive part. The hardware itself is cheaper in
the US, most people just don't know how to install it properly (and there's no
detailed guide on the topic, either).

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jcampbell1
I have never understood residential solar. Seems like a gimmick. Why would I
want these panels on my roof? It seems like hosting a server in your basement.
It is appealing in theory, but silly in practice. If I just hosted my panels
at a site where other people hosted their solar panels, you could probably
install it for less than $1.00 per watt.

~~~
jsiarto
Well for one, in some parts of the country residential solar means a $0/mo
electric bills and in somes cases you spin the meter in reverse and build a
credit. The panels themselves are maintenance-free, have 20-30 year warranties
and (personally) just look plain cool.

I have a family member who has a large array on his roof and he runs his
entire house and charges his Tesla all off the grid. He's still connected, but
in most cases he runs a $0 bill.

~~~
secondChrome
I think jcampbell1's point is why bother putting the pannels on top of your
own roof? Instead, buy your pannels on some other shared property that is
already connected to the grid, and share the overhead costs. The same power
would be sold back to the grid and offset your own home's power. I call this
the co-op model, and I think it's also appealing for areas where not everyone
is a home-owner.

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mtgx
Integrating solar panels into rooftops seems to be a big opportunity in the
future:

[http://gigaom.com/cleantech/building-integrated-solar-
panels...](http://gigaom.com/cleantech/building-integrated-solar-panels-set-
to-boom-over-the-next-5-years/)

