Why We Pay Double For Solar In America (But Won’t Forever)

Editor’s Note: EarthTechling is proud to repost this article courtesy of Institute for Local Self-Reliance. Author credit goes to John Farrell.

I often get flak when I publish research on the cost trajectory for solar (e.g. my Rooftop Revolution report estimates 100 million Americans reaching grid parity by 2021).  About half think I’m too conservative, and half think I’m too overconfident that solar will continue to drop in price by 7% per year indefinitely.

But I’m not alone in perceiving an enormous cost reduction opportunity for solar in the United States.  An article in Forbes recently suggested that we can “Cut The Price Of Solar In Half By Cutting Red Tape“.  It provides a chart (reproduced below) like one I published in March, that shows how a similarly sized residential solar array in Germany costs 60% less than one built in the U.S.

This anecdote from a colleague illustrates the ridiculous disparity in red tape between the two nations (and consequently, the enormous opportunity):

There’s an article in the most recent issue of PHOTON describing a German family that got a 4.6 kW PV array installed and interconnected to their roof 8 days after calling a solar installer for the first time. The homeowner had a proposal from the installer within 8 hours. The installer called the utility the morning of the installation to request an interconnect that afternoon. The installer called at 10am, the utility came and installed 2 new meters and approved the interconnect at 2:37pm– the same day. The online registration of the PV system with Federal Grid agency and approval of the feed-in tariff took 5 minutes.

I’m sure that not every project gets completed that fast in Germany, but an interconnection and permitting process that takes less than a day?! 10 times that…would still be just incredible.

By comparison, New York City’s permitting goal under Solar America Cities was 100 days (before Solar America Cities it took 365 days).

[emphasis mine]

As I’ve mentioned before, the difference is mostly in “soft costs,” not hardware, and these cost barriers are solved by policy, not technological, innovation.  For example, soft costs include an enormous paperwork burden for U.S. solar installers, pictured at the top (photo taken from the Forbes post on cutting costs), and already there are policy ideas that significantly reduce these costs.

So is it too ambitious to assume the price of solar continues to fall by 7% per year?  On the contrary, if the cost of solar continues at that pace, it will take the U.S. until 2025 – 13 years! – to match today’s cost of solar in Germany.  Can anyone honestly claim we’ll remain so far behind for so long?

When you add potential hardware innovations (e.g. like this) to the soft cost reduction opportunity, the cost of solar is likely to keep falling rapidly in the United States.

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    • Thomas J. setter MD

      In Maricopa County it use to be 3 MONTHS[2007]  . Now i believe it is shorter.
      Should be only 8hrs or less. As we get more people and Businesses going SOLAR,
      the time should become shorter.

    • Anne

      My German family (I was an exchange student 40 years ago!) already has solar and their electric company HAS TO PAY THEM for the solar their home produces! I can’t wait for the costs to come down so more people get solar here!

    • Jane Davison

      Solar is a good kind of energy and we need to improve on how we do it and bring down the cost. This can help because there is a lot of sun out there and if we work on this we’ can do more of it and get rid of shale gas and the reasons to explore that. Wind, earth and ocean currants are other ways to do this. The sun is a good source of energy and we need to learn how to do that as well. Jane Davison

    • MAC

      As long as there is the U.S. Congress with their hands in oil or they figure out a way to implement a solar ray tax, solar power will remain expensive in this country and light years behind the rest of the world.