THE SIGNIFICANCE OF SOLAR SOFT COSTS

Why Are Residential PV Prices in Germany So Much Lower Than in the United States? A Scoping Analysis

September 19, 2012 (Lawrence Berkeley National Laboratory)

“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…[1] 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…[2] Customer acquisition costs averaged just $0.07/W in Germany, or roughly $0.60/W lower than in the U.S…”

click to enlarge

“…[3] 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)…[4] 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…

“…[5] 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)…[6] 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…”

Tweet