Why are Americans still paying so much more than the rest of the world for their solar?
While the United States may never intend on completely abandoning fossil fuels, solar power and other forms of green energy are the way of the future.
However, in the United States, regardless of a the continual drop in price, solar installation still cost far more than in other nations such as China, India, Germany and the majority of Europe, in fact.
This is one major reason why solar power is being held back from truly achieving its potential.
In order to manufacture the solar electrical equipment, local installers in both the United States and a nation such as Germany charge around $1.80 per watt to build the paneling.
However, during the installation the true difference in price becomes more evident.
In 2012 German installers added roughly $1.20 to install the equipment, amounting to a total of around $3.00 per watt. In the U.S., electrical installers added on roughly $4.36, for a total of around $6.16 per watt.
When spread over the entire property and the entire solar electrical grid of the home, this can add thousands, if not tens of thousands of dollars to the finished price.
Due to the noticeable price gap between the United States and Germany, Germany has five times as many solar power plants and home electrical units installed compared to the US, despite America having a much larger population.
So, why exactly is it so much cheaper to have solar networks installed in Germany versus the United States?
It is important to point out that Germany is one of the most proactive nations in the world when it comes to solar power, but does this really account for the discrepancy?
Several factors actually come into play when it comes to the price.
First, due to Germany having more solar paneling installed, the contractors have more experience, have greater knowledge on the topic, and can simply do it quicker.
With less experience installing the units, installation times, on average, takes much longer in the US, which inevitably drives up the price. With fewer contractors around providing the solar paneling installation service, costs are increased to a premium. Installers will, for example, also spend more on labor during the installation process than other parts of the world, while higher inspection costs also have a direct impact on the price.
Furthermore, the cost to market solar to customers is another important factor, and also higher in the United States.
Germany pays around 7 cents per watt towards marketing while that amount increases to around 70 cents per watt in the United States
Several other factors also influence the price, including permitting, customer acquisition, and other hardware (supply chain) costs, while environmental factors also play their part. For example, violent wind patterns may require stronger installation materials, which in turn raises the price (although this depends on the location of the installation).
With all of this in mind, though, does it actually make up for the entire price difference?
Even with all of these factors at play, greed actually seems to be the deciding factor why solar power costs more in the United States…
It seems the “soft cost” of solar, which still accounts for more than 60% of the total cost, may be choking the industry. Over the last few years, the price of solar has declined by 50%, but 80% of that can be attributed to the reduction in the price of photovoltaic modules.
As long as these soft costs continue to squeeze the price of solar, we may actually be the ones standing in our own way of successfully converting to a sustainable future.
Sally Blakeway
