Quantcast
Business

How U.S. Solar Market Can Surpass Germany

By Koben Calhoun and Jesse Morris

A recent Deutsche Bank report projects global newly installed photovoltaic (PV) capacity will reach 50 gigawatts (GW) annually in 2014, a roughly 50-percent increase over anticipated new installed capacity during 2013. Germany’s been the longtime undisputed champion of solar deployment, with 35.2 GW of installed capacity as of Nov. 1, though the installation pace lead has shifted in 2013 to Japan. But the U.S. is accelerating—and is expected to install 4.4 GW of solar this year, about the same absolute amount as the Japanese and more than the Germans.

This growth is impressive, but if the U.S. is to transition to the low-carbon, resilient, and sustainable electricity system of the future outlined in RMI’s Reinventing Fire, we need to install four times more solar capacity annually than we’re currently doing, for the next forty-odd years, with most of the installs coming in the distributed market (residential and commercial rooftops). If we’re going to do that, we need to make distributed solar cheaper, and do so quickly.

PV Soft Costs Now Dominate the Equation

Between 2008 and 2012, the price of sub-10-kilowatt (mainly residential) rooftop systems decreased 37 percent. However, over 80 percent of that cost decline is attributed to decreasing solar PV module costs. With module and other hardware prices expected to level off in the coming years (and in the near term, actually increase), further market growth will be highly dependent on additional reductions in the remaining “Balance of System” costs, otherwise known as “soft costs.”

 Soft Costs are the Major Driver of Cost Differences Between the U.S. and Germany

Graphic credit: Rocky Mountain Institute

Soft costs account for 50–70 percent of the total cost of a rooftop solar system in the U.S. today. These soft costs include installation labor; permitting, inspection, and interconnection; customer acquisition; and other costs (margin, financing costs, and additional fixed administrative and other transactional cost). Setting aside those “other” costs, soft costs for U.S. residential systems are around $1.22 per watt of PV, while German soft costs average $0.33 per watt.

That’s one heck of a spread. How does Germany do it, and how can U.S. installers approach or even surpass those numbers?

Simple BoS Project Searches for Answers

RMI and other groups such as the U.S. Department of Energy (DOE), National Renewable Energy Laboratory (NREL), Lawrence Berkeley National Laboratory (LBNL), Clean Power Finance, and the Vote Solar Initiative have done great work on the issue over the past several years through benchmarking and other analysis on these various soft costs. However, such data remains relatively sparse in comparison to hardware market analysis. The U.S. solar industry has known that German installers are able to install rooftop solar systems at less than half our cost. But we haven’t been able to discern, at the detailed level of specific worker actions, why. Until now.

RMI, in partnership with Georgia Tech Research Institute (GTRI), launched a PV installation labor data collection and analysis effort under the SIMPLE BoS project, which culminated today in the release of Reducing Solar PV Soft Costs: A Focus on Installation Labor. Drawing upon first-hand observations, this report is the first publicly available detailed breakdown of the primary drivers of installation labor cost between German and U.S. residential installs.

The SIMPLE BoS team implemented a time-and-motion methodology for evaluating the PV installation process, collecting data on PV installations in both countries.

Ample Opportunities to Reduce Installation Costs

The results indicated that U.S. installers participating in the SIMPLE BoS project incur median installation costs of $0.49 per watt, compared to a benchmarked median cost of $0.18 per watt for participating German installers. The figure below shows the comparative costs of each component of the PV installation process in the U.S. and Germany, respectively, looking at four categories of installation-related costs: racking and mounting, pre-install, electrical and non-production.

Graphic credit: Rocky Mountain Institute

In addition to providing cost details on the PV installation process, our report outlines several enabling factors from German and leading U.S. installers that can be disseminated throughout the U.S. market. These opportunities range widely in complexity and impact, from redesigning the base installation process and preparing rails on the ground, to implementing a one-day installation process and PV-ready electrical circuits. We’ve shown below the potential impact in dollars per watt of these solutions and how difficult it would likely be to implement them widely the U.S.

Table credit: Rocky Mountain Institute

In addition to highlighting specific opportunities for cost reduction in the U.S., our report also draws upon collected data and analysis to outline one potential pathway for U.S. installers to reduce installation labor costs by up to 64 percent—potentially undercutting German installation labor costs when relative differences in wages are taken into account. This pathway will not be realized overnight. It requires serious product innovation, uniform adoption of best practices and a move to one-day installations from the average three-to-five-day installation process that’s common for U.S. installers today.

Visit EcoWatch’s RENEWABLES page for more related news on this topic.

Show Comments ()
Sponsored

Strange Days: Ex-Hurricane Ophelia Batters Ireland Under Orange Skies

By Dr. Jeff Masters and Bob Henson

Ex-Hurricane Ophelia hit Ireland hard with full hurricane-like fury on Monday, bringing powerful winds that caused widespread damage and power outages. At least two deaths have been reported from trees falling on cars, and The Irish Times said at least 360,000 ESB Networks customers lost power in Ireland because of the storm.

Keep reading... Show less
Runoff from a farm field in Iowa during a rain storm. Lynn Betts / U.S. Department of Agriculture, Natural Resources Conservation Service

Drinking Water for Millions in Rural America Contaminated With Suspected Carcinogen

Drinking water supplies for millions of Americans in farm country are contaminated with a suspected cancer-causing chemical from fertilizer, according to a new report by the Environmental Working Group.

The contaminant is nitrate, which gets into drinking water sources when chemical fertilizer or manure runs off poorly protected farm fields. Nitrate contaminates drinking water for more than 15 million people in 49 states, but the highest levels are found in small towns surrounded by row-crop agriculture. Major farm states where the most people are at risk include California, Iowa, Illinois, Wisconsin and Kansas.

Keep reading... Show less
www.youtube.com

Trump's Approval Rating on Hurricane Response Sinks 20 Points After Puerto Rico

President Trump's approval rating for overseeing the federal government's response to hurricanes fell by 20 points after Hurricane Maria devastated Puerto Rico, a CNN poll conducted by SSRS revealed.

Trump's approval rating for responding to hurricanes Harvey and Irma stood at 64 percent in mid-September. Just a month later, only 44 percent approve.

Keep reading... Show less
Photo taken by Hélio Madeiras, a firefighter in Portugal. Facebook

Wildfires Rage Through Portugal and Spain, Kill at Least 39

Wildfires have killed at least 39 people in Spain and Portugal since Sunday.

Hundreds of fires in both countries are being fanned by winds from Hurricane Ophelia in the north, currently barreling towards Ireland, and encouraged by extremely dry terrain from a scorching hot summer in the region.

Keep reading... Show less
Sponsored
Desperate for water, Puerto Ricans are resorting to any available sources, such as this stream in Cayey. Angel Valentin / NPR

Desperate Puerto Ricans Are Drinking Water From Hazardous Waste Sites

The ranking Democrat on the House Homeland Security Committee called for an investigation into the availability of potable water in Puerto Rico following reports Friday that residents are scrounging for water from hazardous waste sites.

After the U.S. Environmental Protection Agency (EPA) confirmed residents were trying to access water from three Superfund sites, and following a CNN story Friday featuring Puerto Ricans taking water from a fourth site, Rep. Bennie Thompson (D-MS) wrote a letter to acting DHS Secretary Elaine Duke asking if she knew about the situation and calling the reports "beyond disturbing."

Keep reading... Show less
Brant at Izembek Lagoon. Kristine Sowl / USFWS

Groups Slam Zinke's 'Backroom Deals' to Build Road Through Alaskan Wildlife Refuge

Ryan Zinke's Interior Department is working behind the scenes to build a controversial and long-contested road through the heart of Alaska's Izembek National Wildlife Refuge, documents show.

The refuge was established more than 30 years ago to conserve wetlands and habitats for migrating birds, brown bears and salmon and other wildlife. 300,000 of its 315,000 acres has been designated as Wilderness in 1980 under the Alaska National Interest Lands Conservation Act.

Keep reading... Show less
Sponsored
FAO / Giulio Piscitelli

On World Food Day, Pope Francis Says Link Between Climate Change and Hunger Is Undeniable

By Andrew McMaster

Speaking at the United Nations Food and Agriculture Organization (FAO) on World Food Day, Pope Francis addressed the need for governments around the world to acknowledge that climate change and migration were leading to increases in world hunger.

Francis received a standing ovation after a stirring speech in which he said all three issues were interrelated and require immediate attention.

Keep reading... Show less
The pallid bat is native to the western U.S., where the spread of white-nose syndrome is a threat. Ivan Kuzmin / Shutterstock

Why Are America's Bats Disappearing?

By John R. Platt

It's Friday evening in Pittsburgh, and the mosquitoes are out in force. One bites at my arm and I try to slap it away. Another takes the opportunity to land on my neck. I manage to shoo this one off before it tastes blood.

I'm at Carrie Furnaces, a massive historic ironworks on the banks of Pennsylvania's Monongahela River. Stories-tall rusting structures loom all around me, as do the occasional trees poking their way out of the ground. A tour guide, leading a group from the Society of Environmental Journalists conference, tells me the soil here is full of heavy metals and other pollutants from the factory, which operated for nearly a century before closing in 1982.

Keep reading... Show less
Sponsored

mail-copy

Get EcoWatch in your inbox