Published on September 23rd, 2012 | by Zachary Shahan25
Solar Much Cheaper in Germany than US for 1 Clear Reason — Soft Costs
As we’ve reported several times here on CleanTechnica, German solar is much cheaper than US solar. Clearly, part of that is due to simple economies of scale (Germany has 301.5 MW of solar power installed per million people; the US has 14 MW per million people). Overall, though, from economies of scale and other matters, it has become pretty clear that soft costs are the major place where Germany and the US diverge. This is why the Department of Energy’s SunShot Initiative focus has switched to brining down the soft costs of solar.
Now, a study has been put out by Lawrence Berkeley National Laboratory (LBNL) further confirming that the soft costs of solar in Germany are much lower than in the US. Herman Trabish of NewEnergyNews recently excerpted some of the key points of the LBNL solar costs study, reposted below:
“The wide disparity between the installed price of residential PV in Germany and the United States has been well documented and can be attributed primarily to differences in “soft” costs (or business process costs). In order to better characterize the nature of these differences, LBNL fielded a survey of German PV installers to collect granular data on the number of labor hours and labor costs associated with various soft cost elements for residential PV in Germany…The comparison focuses specifically on host-customer-owned systems installed in Germany in 2011 and in the U.S. in 2010.
“Key findings from [Why Are Residential PV Prices in Germany So Much Lower Than in the United States? A Scoping Analysis] include… German installers reported average soft costs of $0.62/W in 2011, which is roughly $2.70/W lower than the average soft costs reported by U.S. installers… Customer acquisition costs averaged just $0.07/W in Germany, or roughly $0.60/W lower than in the U.S…”
“… Installation labor requirements averaged 7.5 hours for German systems, leading to $0.55/W lower installation labor costs than in the U.S. (though these survey data diverge substantially from other estimates, suggesting a need for further validation)… Permitting, interconnection, and inspection (PII) processes required 10 hours of labor, on average, in Germany, with no permitting fee, resulting in PII costs roughly $0.20/W less than in the U.S…
“… German residential systems are exempt from sales/value-added tax, while U.S. systems are subject to an average sales tax of roughly $0.20/W (when considering the geographical distribution of U.S. systems and the existence of sales tax exemptions for PV in many U.S. states)… The remaining gap in soft costs between Germany and the U.S. (~$1.15/W) is associated with overhead, profit, and other residual soft costs not captured in the categories above…”