Lower Soft Costs Key to Solar Industry Growth

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For California solar energy to continue growing, there will need to be reductions in “soft costs.”

During the past few years, the price per watt of solar panels has been dropping. As a result, California solar energy installations have grown exponentially, and show little sign of slowing down.

However, the actual cost of a solar panel can only go so low. It will be essential for the solar industry to whittle down soft costs in order to accomplish wider adoption of solar energy in the United States.

Soft Cost Reduction = Lower Solar Installation Prices

There are other costs that go into the final price of installing solar panels on your home or business including labor, marketing, administrative costs and permitting fees.  

Commonly referred to as “soft costs”, they have remained relatively flat when compared to the drop in price of “hard costs” (i.e. solar panels and inverters).

How Soft Costs Have Made Germany a Solar Leader

Though roughly the size of New Mexico and with a population about the quarter of the United States, Germany has been the worldwide leader in solar for over a decade.

By reducing their soft costs, the Germans have lowered the price of solar installations to $2.24 per watt (compared to an average of $4.44 in the U.S., according to GreenTech Media). This is likely a result of easier permitting processes, which allows solar contractors to spend less time on each system and avoid high fees for obtaining permits.

Will the United States Follow Suit?

Even though solar soft costs are higher in the United States, solar panel installation has become increasingly popular in our country. In fact, the solar analysts from SEIA and GTM Research predict that 2013 will be the first time in 15 years that the United States will beat out Germany in total solar capacity installed.

With the Sunshot Initiative, the U.S. Department of Energy (DOE) Solar Technologies aims to make solar energy competitive with traditional forms of electricity by 2020. They fund research projects and market studies that provide solutions for solar price reduction. In time, their efforts could reduce the soft costs enough so that the United States will be competitive with Germany when it comes to price per watt installed.

Even without such reductions, solar power in California is still an excellent way for families and businesses to save money on energy costs. Additionally, those who install a solar electric system will be able to take advantage of the 30% federal tax credit, which is set to expire about two years from now on December 31, 2016. For more information, contact AMECO today at (888) 595-9570 or email gosolar@amecosolar.com.


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