Why are photovoltaic installations more expensive in the USA than in Germany? This was the question posed in a recent study by Lawrence Berkley National Laboratory. Results show that while module costs are nearly equal, the significant price difference between the two countries comes through higher installation and soft-costs present in the USA. Germans pay approximately $1.20/installed watt, whereas their American counterparts pay much more, to the tune of $4.36/installed watt. That is more than three times as much.
This cost difference cannot be ascribed solely to the maturity of the German market. According to LBNL, more than half of the additional costs are due to other factors. For example, marketing costs, while 7cents/watt in Germany, are ten times as much in the US; a whopping 70cents/watt. Permitting and interconnection fees also represent major cost hurdles for Americans, coming in at 20cents as opposed to 3cents in Germany.
The results of this LNBL study place equal importance on labor intensive permitting processes and higher taxes for the permits themselves. Higher labor costs, which entail higher sales-tax and administration fees, are also price drivers.
Inverters cost more in the USA than Germany. Nevertheless, after accounting for this increased hard-cost there is still a $1.30/watt price differential between the two markets. One speculation is that American solar firms demand higher profit margins.
The US Dept. of Energy is aware of this problem, and they partly answer it via the SunShot Initiative, a US Dept. of Commerce program with the objective of reducing these expenditures. A $10 million prize is promised to the first company to bring these costs under $1/watt, and a further $12 million is available for the easing of various specific soft costs. In December, an additional $21 million will be made available for the development of “Plug-and-Play” systems.