Why Solar Installations Cost More in the U.S. than in Germany

Why Solar Installations Cost More in the U.S. than in Germany

www.technologyreview.com

In 2011, residential solar system installers paid a little over $1.80 per watt for solar panels in both Germany and the United States. In Germany, installers added $1.20 to the cost of the solar panel to complete an installation. But in the U.S., they tacked on $4.36 per watt, more than three times as much.

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... It was a conversation that I got very tired of repeating.....

Often, we hear talking heads and political thespians, activist mouthpieces, and the usual parade of media 'talkers' explaining why solar power just isn't 'economically viable.' When asked why, they almost always resort to the 'quote' high cost of solar 'unquote.'

But this answer is not only completely illogical, it is also patently incorrect.

Finally, an actual survey of the available information surfaces that gives us a real idea of why the US can't seem to get it's solar act together.... and - as any cynic such as myself could have told you... it's about profit - revenue streams - and the massively damaging paradigm that business aims should be to prefer "making a killing" instead of being content with "making a living."

In true 'establishment' style, the attached report from Lawrence Berkeley National Laboratory was massaged into a less of a criticism of the 'business paradigm' than it really is... but when facts are presented, we can see the narrative change for what it is.

In the end it is the perennial presence of allowing business to explain their 'price' as if it had anything to do with the cost.... as if their ridiculous 'profit margin' were somehow 'an entitlement.'

German installers spend seven cents per watt of installed capacity on things like marketing and designing systems for specific customers. U.S. installers spend 10 times that amount.

The first 'layer' of added "cost" - paying a middlemen to "market" the product.

Costs for permitting, connecting the systems to the grid, and having them inspected are also far higher in the United States. The Germans spent only three cents a watt on these things, while U.S. installers spend 20 cents, in part because of larger amounts of paperwork and the fact that U.S. installers have to pay permitting fees.

And of course, wherever there are opportunities for the government to influence the price... the US and State governments demand at least six (6) times as much to "connect to the grid." Why would that be so? Why would "paperwork" be deemed an adequate excuse to hamstring the most logical alternative to maintaining the energy cartel's monopoly on "metered" energy?

One (such as myself) might wonder if the influence of the energy cartel doesn't have some input into this... but then, since most of the relevant government policy-makers come from the industry itself (and eventually return there) - perhaps that's not such a remote possibility.

U.S. installers also spend more on labor during actual installation (in some cases, higher winds force more expensive installations). They pay more in sales tax (German installers are exempt). And they pay more for overhead (which is closely related to economies of scale).

Hmmm.... well, interestingly, they mention labor costs in the accompanying article ..... but not the specifics.... I sense another political idea entrenched herein... but let's leave that for another conversation.... Obviously - however, it must be no dis-incentive to be exempt from sales tax for this kind of initiative... here in the US that cost is just massaged through and passed on to the consumer... go figure.

The author of this article cites the "cost" (ahem) of solar panels to be around $1.35 per watt - which the "u.S. market" translates to $6.21 per watt..... better than quadrupling the price - for all the middlemen who must be "served."






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reply to post by Maxmars

USA is much more cautious how it does these things. It's not rushing. I think Germany needs to be more careful. I think overall quality and freedom in the german energy industry will suffer.

You see greed in the US, I see irresponsible behavior by the german industry. I also think they're taking a big kick in the ***** just to say that they have X amount of solar capacity.

You also have to consider that what works in Germany probably won't work in the US. This is a big country and our lifestyles are bigger and people have different expectations about living.

I'm always skeptical about people who think that what works elsewhere works anywhere. Like gun control for example. It's sure easy for dictatorships and communists to implement. But the US values its freedoms more than they do. So what works for them won't work for the US.

S&F

That's certainly eye opening information. I found one bit a little bit encouraging:

The U.S. Department of Energy’s SunShot Initiative is funding projects aimed at reducing the non-hardware costs of an installed solar system. One part of SunShot is a $12 million program is aimed at cutting red tape. Earlier this year it announced a $10 million prize to be given to companies that can lower total non-hardware costs of an installation to below $1 per watt. And this month it announced $21 million for the development of a “plug-and-play” system for solar panels that could reduce installation costs (see “Redesigning Solar Power”).

But I would still have to trust that this initiative is on the up and up and being handled in an ethical manner... well damn, now I have to look into it more.

Thanks for the thread!

reply to post by Maxmars


It truly is ridiculous. The prices of solar panels and equipment here in Canada are inflated as well. I recently installed 4 solar panels on the roof of my hunting cabin in Northern Ontario and I was blown away by how much the equipment cost. I was previously using heavy duty deep cycle marine pre-charged 12 volt batteries that I would bring up from my home when visiting my cabin as I have no power. The only way to my cabin is either by ATV or SkiDoo while pulling a sled or trailer that has 4 HEAVY marine deep cycle batteries along with my other gear.

For me the solar panels are worth their weight in gold as now I can run my coffee maker and not worry about eating up to much of the charge.

Here in the UK theres no charge for 4kw or under solar systems all that the installer has to do is sign it and send it to the local electricity company for them to update their records and anything higher requires a site visit to ensure that the local wiring is up to the job

Obviously with construction methods differing in the USA versus a lot of Europe its going to be hard to compare a like for like system installation and the same is true for advertising

There's no doubt that we could become much more energy independent than we are, and the cost very obviously doesn't need to be so high the problem is everyone is doing it wrong... including Germany.

Germany may have the installation costs under control but they started their whole energy revolution off on the wrong foot and now it's coming back to bite them in the ass.

The Renewable Energy Act (EEG) is the biggest cost factor in Germany's energy reorientation. The rules for the subsidies are quite simple: Operators of wind farms, solar arrays and biogas plants get a guaranteed, fixed feed-in price for all electricity they generate over a period of many years. Power companies are required to purchase this energy, but at a price much higher than what they get for it on the market. The difference is paid for by consumers through their electricity bill.

The EEG both guarantees big profits to anyone who invests in renewable-energy plants and makes the construction of such plants attractive. More than a fifth of the electricity produced in Germany already comes from renewable sources. Not surprisingly, this has led 65 countries worldwide to try to copy the German model.

Winners and Losers of the Nuclear Phase-Out

There's only one problem with the EEG: It's been too effective. Green electricity plants aren't being built gradually but, rather, as quickly as possible. Consequently, the costs are rising at a faster-than-expected rate. The average household in Germany currently pays €144 ($181) a year for these subsidies, and that figure looks set to rise to more than €200 in 2013. In all, it has been estimated that the operators of green power plants have been promised more than €200 million.

Source

Had they not babied their '1%' so much the world would be looking at a model to follow but instead will be used as an excuse to remain dependent on fossil fuels. What a ridiculous world we live in.

The biggest problem that i see is converting the dc power from the panels to ac power that most appliances require involves much loss of electricity and could be avoided all together by making dc appliances more common.

reply to post by Maxmars


Crazy world we live in, who would of thunk it.

But on solar I would say it all depends were you are, when I was in Greece visiting and a lot of places/houses had solar panels on there roofs, and that makes sense as its hot and sunny there. Were I am at however we get lots of average cloudy crappy weather, and even in summer we only get like 2 or 3 weeks of straight sun if were lucky, other then that not that much sun. But still a solar panels would come in handy, and if they put half as much effort into making solar energy and the whole process more efficient as they did in keeping the old systems and ways of getting energy going strong, in time it would surpass it by far. But you know, must buy that new car every year which will get a little better miles per gallon then last years model, and so it will be next year. One thing you got to say about things and cars that were made in the 60 or older, they were made to last and you still see them around once in a while, and the sad fact is they will probably outlast most newer cars even. Today everything is just made to break down so you can get that new model and version on the market asap. Our model on how we do things is kind of guaranteed that things will keep going in circles, in fact even if somebody found a way to make free energy tomorrow that will just mean that the majority of people will be out of a job and on the street, you can not switch societal paradigms like that at the drop of a dime without consequences even if those changes are for the better.

Today's model in engineering and creating and selling goods is adding a whole lot of unnecessary things, which will create a lot unnecessary problems. And then off course there is a fee to fix them, and lets not forget about insurance, oh and parts, not to mention labor, and all the little extra kicks, oh and just for kicks lets add some more zeros behind those numbers. Everything is made to be broken and very few things are made to last, but hey it keeps our societies going, and it keeps people in various jobs, and it keeps profits going strong each and every year. But it also keeps our landfills growing strong each and every year as well.

Originally posted by deadeyedick
The biggest problem that i see is converting the dc power from the panels to ac power that most appliances require involves much loss of electricity and could be avoided all together by making dc appliances more common.

We started out with dc current .

During the initial years of electricity distribution, Edison's direct current was the standard for the United States, and Edison did not want to lose all his patent royalties.[2] Direct current worked well with incandescent lamps, which were the principal load of the day, and with motors. Direct-current systems could be directly used with storage batteries, providing valuable load-leveling and backup power during interruptions of generator operation. Direct-current generators could be easily paralleled, allowing economical operation by using smaller machines during periods of light load and improving reliability. At the introduction of Edison's system, no practical AC motor was available. Edison had invented a meter to allow customers to be billed for energy proportional to consumption, but this meter worked only with direct current. The transformation efficiency of the early open-core bipolar transformers was very low. Early AC systems used series-connected power distribution systems, with the inherent flaw that turning off a single lamp (or the disconnection of other electric device) affected the voltage supplied to all others on the same circuit.[3] The direct current system did not have these drawbacks as of 1882, giving it significant advantages.

en.wikipedia.org...

For my two cents I want to argue that America's problem is the lack of trust. The expensive marketing is demanded because of the anti-competitive marketing and basically the habit of taking things to extremes, (whereby a perfectly good product is considered worthless because of a bad write up).

Playing sides with product marketing is a popular pass-time in America. In Germany where people don't go in for extremes things tend to stay level and the preferred product tends to be the preferred choice of the professional.

Could be wrong, but this is my guess.

Hey guys.

I'm afraid it is actually quite simple... the good old USA that is supposed to be the land of the free and home of the brave... and some kind of cradle for innovation...

I can definitively say that is just a whole lot of nonsense!

The USA is TOTALLY corrupt.

It's rotten from the inside.

There is absolutely nothing standing in the way of TRUE innovation in ALL AREAS of energy (and house) technology...

Ceptin... 'They' won't let it in.

The entire paradigm is actively massaged to prevent ANY type of real advancement from simply getting implemented...

There are literally THOUSANDS of ways this is enforced.

It affects everything from basic building designs, energy generation, energy conservation, hot water heating, space heating, water recycling, water management...

I'll pick just a couple of specific areas so you can see the manner in which the TOTALLY FICTITIOUS 'scarcity paradigm' is enforced...

Or more accurately... just shoved down peoples throats!



Let's talk power generation. I live in Washington state.

In Washington, if you are clever enough to create/install a power generating system... The utility companies force the do it yourself to sell at wholesale prices, but are forced to buy power at full retail.

Let's say that you are REALLY clever, have a nice setup and you manage over the course of the year to generate more power than you consume as a household/site...

Instead of paying the sum that you are owed... They just forgive themselves that debt.

YOU GET NOTHING.

So to summarize you went to all the trouble and effort and you do not get dime one.



Washington sells themselves as one of the premiere 'GREEN' states... The reality of it is the State and the utility companies get the 'green'.

Next example... Point of use and/or gas fired tankless water heaters. GE was selling some simply brilliantly engineered tankless water heaters.

My personal favorite put out 9.5 gallons a minute! (The average shower uses something like 1.5 gallons a minute ). This puppy saves you basically a suitcase full of money every year!

And it even had an optional remote control for adjusting the temperature.

I personally estimate the typical household as spending 60% of their energy bill on heating hot water.

So it is serious money.

And it cost about the same INSTALLED as a conventional water heater. (Less than $1,000 )

It became simply no longer available.

Actually it is... (it is the exact same unit) hidden in a different enclosure, different 'manufacturer'. With installation (by 'authorized' dealers/installers), it is typically somewhere between $5,000-6,000... Just out of reach of the average household.

If you understand ANYTHING about manufacturing, you would already understand that this fabulous water heater could be put in the consumers hands when made on a large scale for something around $400. With LOTS of profit to go around.

This type of technology is SO advanced that it should already be installed in every household in America.

It would represent a TRULY SIGNIFICANT savings in resource consumption.

You will probably NEVER see it on that scale... cuz it would reduce the CASH FLOW to the utility companies.

So on to solar cells.

If you follow cell phone battery design, there was a quantum shift in storage capabilities (size and capacity) of cell batteries... using amorphous charging technologies

I'm told the same technology was also implemented in solar cells, freeing it from the horrible archaic and rigid design limits of convention cells...

This thin cell approach is basically supposed to allow you to just nail continuous sheets of it to ANY surface...



It's not a technological reason it isn't everywhere and freeing you from the 'power grid'... And saving the environment, yada, yada yada!

It's what is viewed as a 'disruptive' technology...

Thus you will NEVER see it.

Yeah... Disruptive to Big Energy's cash flow...

(If you guys want more... I was just getting warmed up.)

Can't have the WAGE SLAVES getting loose from the moorings... Can we?

reply to post by Maxmars


Very interesting article. Starred and flagged, and added to favourites to use as a source when the need comes.

About the first part, I think one big part of the problem is that the 'talking heads and political thespians, activist mouthpieces, and the usual parade of media "talkers"' you mentioned are discouraging Americans from using the panels, which is part of the real driving force behind the high prices, which means they can continue ranting about the prices again. It's a chicken-and-egg situation. That could well be why the US companies need to spend so much on advertising (which could be solved by external marketing economies of scale). Also, since all this talking reduces the market size, the energy companies cannot expand to cut overhead costs with technical economies of scale. (Economies of scale) As for the paperwork, permitting fees and taxes, that sounds like the government's problem.

About the second part, government intervention seems necessary. I'm not sure why you said 'energy cartel' because cartels are illegal in the US, but prices in an oligopoly tend to be sticky because lowering the prices will lead to a price war, which isn't a good thing (not from the entrepreneur's point of view, anyway). If there really were a cartel, I think prosecuting those companies will solve the problem easily. I'm sure SunShot means well, but it seems to be attracting too much attention to the hardware costs and not enough to the second part of the reasons. Plus, technology innovations like this are good for the firm: they can cut costs and earn even more. Might it be that your government is colluding with renewable energy businesses much like they are colluding with other environment-destructing firms?

The higher installation costs are a combination of fraud (lots of govt incentives, so why not charge more?) and the fact that DC solar systems are much more dangerous/deadly if they aren't set up properly than regular AC - so the workers they use have to actually be trained - not the usual illegals that build our houses. DC higher than 48 volt will kill and lower than 48 volt requires ridiculously thick (expensive) wires. Just look at the wires in your car coming out of the battery. Fire is also a real hazard if the wires aren't properly sized.

And then there's the liability insurance. Because in the US you can be sued for basically anything and a small mom & pop shop can't afford to hire a full law dept so they get the best insurance they can afford.

The lack of DC appliances is also a problem but it's mainly due to a lack of standards. 48 volt DC appliances would be great but boats and cars use 12 volt so it's not economically viable to manufacture so many variations (12/24/48 Volt) compared to the regular AC which just requires one model. Think about the amount of extra money it costs to ship and restock stores with all of the various voltages.

The buyback tariffs (net metering) are usually dictated by the state but if I had a choice to install a system I wouldn't pay the premium to install that kind of expensive equipment. It's more cost-effective to set up your own isolated system with a batter bank and the net advantage is that you get to keep your power when the network dies.

One opinion...

If the government subsidizes and offers tax beaks to Big Oil companies, then the government
(sorry for the caps) CAN AND SHOULD SUBSIDIZE AND GIVE TAX BREAKS FOR ANYONE
BUYING AND USING SOLAR PANELS FOR ELECTRICITY..

What a powerful presidential platform to run on, eh?

...makes too much sense though....never happen

reply to post by Maxmars

I'd like to add that we have a very high general support for renewable energy by our citizens.
(Maybe this is worth knowing for the discussion at hand)

94% of German citizens believe the development of renewable energy is important or very important (for environmental reasons aswell as for national security and independence reasons).
65% were in favor and willing to support eco-systems in their direct neighborhood.

People here see green technologies as a homegrown investment in their future.

reply to post by DarkSecret

I'm well aware that many things are done differently in the U.S., but this I must inquire:

Originally posted by DarkSecret
[...] DC solar systems are much more dangerous/deadly if they aren't set up properly than regular AC - so the workers they use have to actually be trained - not the usual illegals that build our houses.

Do you really "usually" let untrained illegals build your houses? And this isn't criminal?
*I know this must sound like a stupid question since they are already called "illegals".

I wonder if these prices included the fed,state and local tax rebates and the grid credits. As far as labor costs im pretty sure that Germanys pay scale is equal or better than ours. It is really easy to install one of these systems but the permitting, structural engineers,inspectors and zoning laws are the bitch.

Bill

There was an article in the newspaper here today on how our local US power company is trying to lower payments to solar suppliers and "negative power providers" (solar/wind users backfeeding the grid). They are actually saying that because natural gas has come down so much in price, they are now overpaying for solar and wind with respect to the gas. The state sets the price they have to pay the renewable providers and it doesn't change as fast as markets do in relation to non-renewables. To me it sounds like (and hopefully so) that people are catching on more here and the renewable folks are starting to hurt the power companies' bottom lines.

Originally posted by jonnywhite
reply to post by Maxmars

 

USA is much more cautious how it does these things. It's not rushing. I think Germany needs to be more careful. I think overall quality and freedom in the german energy industry will suffer.

You see greed in the US, I see irresponsible behavior by the german industry. I also think they're taking a big kick in the ***** just to say that they have X amount of solar capacity.

edit on 26-12-2012 by jonnywhite because: (no reason given)

Germany has been only recently overtaken as a NO.1 exporter by China. You thought it was Japan, because of the TV and Audiosystem in your house? No it was Germany. The less they pay for Energy the more profit they can keep.

It is the US whom needs to hold oil hostage to force people to buy dollars. So when it comes to renewable cheap energy the US and Germany have diametrically opposed interests. Except for the fact of course, that Germany needs the US as a consumer nation, for now.