Solar Is Half as Cheap in Germany Because . . .

By Editors

Zachary Shahan of CleanTechnica blew it all out this week with a two-part series on the economic advantages of renewable energy. With over 25 charts and graphs, he provided ample material for more than a few Charticles.

Shahan’s whole point is that wind and solar are becoming much cheaper on a per-installed-kilowatt basis. He cites Germany as a role model and shows that even though the US now has a lot of installed capacity, it ranks rather low for installed capacity of wind and solar on a per-capita and per-GNP basis. He claims that even though renewables are receiving the lion’s share of tax breaks and subsidies, government assistance for fossil fuels and nuclear was actually higher during the first 15 years of their development. He asserts that “feed-in tariffs” (actually just price supports) are a better strategy for subsidizing renewables than production or investment tax credits. The sum total of all this is: “Solar and wind are now economical and why aren’t we subsidizing it better?”

As you can see, CleanTechnica’s arguments contain all the internal contradictions inherent in the overall push for more renewables. They also reveal a few key oversights. But let’s first look at some of the specifics he presents.

One of the most interesting is the chart above that shows the comparative costs of solar installations in Germany and the United States. CleanTechnica borrows this from an article entitled “Cut the Price of Solar in Half by Cutting Red Tape,” published in Forbes last July by Barry Cinnamon, former CEO of Westinghouse Solar.

CleanTechnica begins by asking why the price of an installed watt of solar is $4.44 in the US and only $2.44 in Germany. The reason has nothing to do with the hardware but the regulatory burdens. In the Forbes article, Cinnamon notes that the costs of equipment and installation amount to $10,000 in both Germany and the US. But the full price of installation in the US is $20,000. “Studies by the National Renewable Energy Laboratory and by the University of California, Berkeley both confirm that these higher prices are almost exclusively related to the paperwork it takes to `officially’ install a standard rooftop system in the U.S," he writes.  "That’s right, government red tape - local, state and federal.”

The chart illustrates the point.  While the costs of the panel, the inverter and the electrical hardware are almost identical in Germany and the US, costs here mount for labor, permitting, the supply chain, overhead and sales tax.

“I won’t bore you with the litany of forms, special requirements, web page data entry, complex calculations and multiple inspections required in the U.S," write Cinnamon.  "Compare this to Germany, where they have historically used one form, front and back of one piece of paper. And now, the whole rooftop solar registration process in Germany is done online with the Federal Grid Agency. Zero red tape.

“The resulting complexity in the U.S. means that the solar salesperson needs to be a highly trained spreadsheet expert and it takes specialized engineering to design systems to be compliant with the plethora of local building/fire/utility codes and even the smallest solar installer needs a full?time employee just to process all of these documents. The 150,000 established electrical contractors in the U.S. – who are well-qualified to install rooftop systems – have virtually no interest at all in dealing with the hassles of installing solar”

The point may be well made.  One PV installer, responding in the comment section, however, complains that the comparison is not accurate because it does not include several other factors, including Germany’s 19 percent Value Added Tax.

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