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Why Solar Installations Cost More in the U.S. than in Germany
- pavel_lishin 14y agoSo, 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 14y agoI 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 14y agoSolarCity 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-ppa.aspx http://www.solarcity.com/residential/solar-lease.aspx http://www.solarcity.com/residential/solar-lease.aspx
- tsotha 14y agoI 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 14y agoThese 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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- DannyBee 14y agoI have a solar city PPA. I suspect what you see on their website is just to grab customers. They don't try to snow anyone, at least IME. They will give you sheets that show exactly what they estimate and are willing to guarantee a year, and show exactly how all the numbers are derived. 5 of my friends (all engineers, actually) are doing PPA's as well. A few things: 1. Sadly, a lot of folks try to compare generation charges vs what solar city is asking you to pay. For example, in my area, Pepco's generation charge is 8.9 cents, and my PPA with solar city is 6.5 cents. Not so great, right? However, when you include pepco's distribution charges, various tariffs and taxes that i don't have to pay solar city, etc, the actual pepco cost is closer to 14 cents a kwh (i'm going by my actual power usage divided by actual utility bill cost). I am probably a weird case, but i have saved plenty this year. Since i'm on a PPA, as long as the PPA rate stays below pepco's rate, i will always save money. 2. The PPA numbers they guaranteed me vs actual generation amount is pretty spot on. They are very good at calculating the actual power generation of the panels. They do not overpromise and underdeliver (and as i'll get to, they guarantee this by contract). For this year, I was guaranteed 10400kwh of power at 6.5 cents, and so far, i've generated ~10320kwh with 4 days left. For example, I know they calculate historical cloud coverage using real data (google earth, et al) The PPA contracts have two sets of performance guarantees: Under and over: First, for every kwh they guarantee but do not deliver, you get exactly the right amount of money back. IE i was promised 10400kwh this year, and paid 6.5 cents per kwh for it. If i do not generate that much, they pay me exactly 10400-actual generation * 6.5 cents. So you always at least get your money back (though yes, this is effectively giving them a loan). In some PPA's they do the refund price is greater than the actual price, so that there are teeth to them not meeting the guarantee. The other underperformance guarantee is that if they are under performing by more than 10%, they are required to do whatever is necessary to ensure this does not happen the next year, or they are in breach of contract (and there are plenty of penalties on their side for this). I know of cases where they've installed tracking systems, etc, in order to make this happen. They also have overperformance guarantees. If my system overgenerates (which for me, is profitable, as i'll get to), I pay 6.5 cents per kwh, up to 20% of the yearly number guarantee. Over 20%, I don't pay them unless i am able to sell the power myself. So you do have upper/lower bounds on the numbers, set by contract, though historically solar city installs are within a very small percentage of the guaranteed numbers 3. At least for me, overgeneration is profitable. Maryland is a net energy state, and pepco is required to pay me the residential generation rate. It comes in the form of net energy credits that carry over month to month, and any remaining excess is paid out in real money at the end of each year. So if i were to generate 100000 kwh on my panels (let's assume this is under the 20% number i gave above), but only use 10000kwh a year, i would owe solar city 90000kwh6.5 cents. Pepco would then be required to pay me 90000kwh8.9 cents. So you can actually make money on the deal if solar city messed up the numbers. 4. Because it's a PPA, i am not responsible for anything but giving them access to my roof. They are also willing to guarantee all roof penetrations, and any repairs needed because the panels are there. If the panels explode, break, etc it isn't my problem. Any defects/failures that are in the panels does not suspend their performance guarantee. Note that I am also a prepay PPA, so my PPA rate never increases. If you can float the money, and will stay in the house for a long time, you should always be able to make your money back, unless your local utility suddenly decides to start charging people a lot less. The real case it doesn't make sense is if you are going to need to break the lease. Rereading the above, I realize it sounds a bit like a commercial, but it's really not. Other than the lease length issue, it's often a pretty good deal. The funny thing is, i'm moving, so I will end up transferring the PPA when I sell the house. Even though i prepaid, it looks like i'll still make the money back that I spent in increased home value. (People value homes in funny ways)
- mrb 14y agoOne 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 14y agoAnd, 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 14y ago> underinvestment in wind estimated electricity production for Germany in 2012: * Wind: 45 Billion kwh * Solar: 28,5 Billion kWh
- sliverstorm 14y agoBut isn't it better to put all your eggs in one basket?
- jakeonthemove 14y agoWell, exactly - if there was more incentive for wind power, that number would be much higher.
- walshemj 14y agowell 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 14y agoNo 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?
- tsotha 14y ago>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. That's even better than a tax break. Who can turn down free money?
- arrrg 14y agoThat’s not the point. The point is the ignorance on display here. If you don’t even know the basics of a policy you have no right to talk about it.
- uvdiv 14y agoThere'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-idUSL5E8KP22V20120925 http://www.reuters.com/article/2012/09/25/eu-oettinger-idUSL...
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- jcampbell1 14y agoI 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 14y agoWell 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 14y agoI 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.
- Xylakant 14y agoYou can use otherwise unused space - that's the theory. Now if you install solar heating panels on your roof you can actually heat your house and warm your water with that, even in winter. They're fairly efficient. Nobody does that in germany though, since it's more economical to sell the power generated by solar panels.
- ufo 14y agoHeating panels are also simpler and cheaper then the eletricity generating ones.
- mtgx 14y agoIntegrating solar panels into rooftops seems to be a big opportunity in the future: http://gigaom.com/cleantech/building-integrated-solar-panels-set-to-boom-over-the-next-5-years/ http://gigaom.com/cleantech/building-integrated-solar-panels...
- pge 14y agoOne 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 14y agoYou 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.
- jakeonthemove 14y agoThe 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).
- redwood 14y agoRed 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.
- brudgers 14y agoVirtually every jurisdiction in the United States has adopted the National Electrical Code [NFPA 70]. Nearly all construction is governed by the International Building Code or a derivative state code (e.g. the CBC). What varies are enforcement standards and local conditions. Some local conditions such as earthquakes and hurricanes are environmental. Others such as zoning and other land development regulations are political (and some of the most extreme regulations are private in the form of covenants upon title to the land). There are sound reasons for regulation and enforcement (and unsound ones as well). Among them are life safety issues. Unlike grid power, solar panels have no disconnect. They remain live while exposed to sunlight. This creates a hazard during fires and similar emergencies. It creates a new class of hazard during electrical repairs and unrelated tasks such as re-roofing or cleaning gutters. Wealthy and suburban tends to correlate with all construction projects being difficult to permit because such jurisdictions have more vocal and resourceful citizens with a concern for maintaining property values. If one goes to the sticks, there are still places in the US which don't require a building permit.
- jusben1369 14y agoMy 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.
- carlosgg 14y agoArticle on Business Week: "Solar Energy Is Ready. The U.S. Isn't" http://www.businessweek.com/news/2012-10-25/solar-energy-is-ready-dot-the-u-dot-s-dot-isnt http://www.businessweek.com/news/2012-10-25/solar-energy-is-...