Dec 6, 2013 - The US will need to make an effort to cut its soft costs, coming at USD 1.22 (EUR 0.89) per watt for residential projects currently, as market growth will depend on that in the future, the Rocky Mountain Institute (RMI) said Thursday.
In Germany soft costs stand at USD 0.33 on average.
In a report released this week, the research organisation explained that between 2008 and 2012 the price of sub-10-kW rooftop solar systems dropped 37%, with more than 80% of the decline resulting from reduced photovoltaic (PV) module costs. However, hardware costs are expected to soon level off and even climb up so reductions in the balance-of-system-related expense, or “soft costs”, as quite important. These costs include installation labour, permitting, inspection and interconnection.
Several enabling factors from German installers and leading U.S. installers can be disseminated throughout the U.S. market in the near term with varying levels of impact. An additional opportunity exists, and by aggressively pursuing new designs and the most efficient installation practices, U.S. installers could dramatically cut installation labor costs to below those of Germany. Holding hardware and non-installation labor soft costs constant, such drastic changes would reduce soft costs by 30%, lowering the installed costs of a U.S. rooftop residential system by 10% to $4.43/W
RMI calculates that the average cost of a rooftop residential PV system in the US -- currently USD 4.93 per watt -- includes more than 60% of soft costs. It points out that there are many opportunities to cut balance-of-system costs. "[..] by aggressively pursuing new designs and the most efficient installation practices, US installers could dramatically cut installation labor costs to below those of Germany," the institute's report says. Even if hardware and non-installation labour soft costs are constant, slashing installation expenses can result in a 30% drop in overall soft costs, which in turn will cut by 10% system costs to USD 4.43 per watt, RMI says.
The Rocky Mountain Institute pointed out that some of the key opportunities to lower solar power installation costs in the US included adoption of technologies and processes enabling one-day installations, use of standardised systems that reduce the need for on-off engineering and design work and overhauling the racking base installation process. Innovating all alternating current-related electrical processes and removing some non-value-add activities from the installation are also major ways for cutting costs, according to the report.
According to a report by Deutsche Bank (FRA:DBK), Germany’s installed solar capacity as of November 1 stood at 35.2 GW. This year, the US is expected to install 4.4 GW of solar capacity, almost the same as Japan and more than Germany.
(USD 1.0 = EUR 0.732)
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