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Why are turnkey Solar PV systems so ridiculously overpriced?

Discussion in 'Energy, Environment, and Policy' started by nwdiver, Mar 16, 2016.

  1. nwdiver

    nwdiver Active Member

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    Trying to figure this out... all the PV installers around here appear to be colluding or something... $5/w seems to be the popular price... It's ridiculous... the materials cost ~$1.20/w... even paying $100/hr only bumps the price to ~$3/w... what gives?
     
  2. rolosrevenge

    rolosrevenge Dr. EVS

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    Warranty on the work perhaps? $100/hr is actually pretty cheap for installers of anything around here (Seattle area), I tried getting all sorts of quotes for various home projects on Red Beacon and was quoted around $150-$300/hr plus materials. Then consider they're on rooftops so more hazardous. Then they need a PE to sign off on the design. Plus all of the time to make the designs. The cost seems about right.
     
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  3. nwdiver

    nwdiver Active Member

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    gchart-US-vs-German-solar-cost-2012.png
     
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  4. beeeerock

    beeeerock Active Member

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    That just seems odd... I thought we were taxed more heavily in Canada, but my installation went in for around $3.50 a watt. Not exactly a huge economy of scale advantage over what the chart models either. And don't forget, that's CANADIAN dollars, which are worth about 70 cents US these days. So in current USD terms, my installation was about half of what is suggested in your chart.
     
  5. TheTalkingMule

    TheTalkingMule Active Member

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    The install market is not to scale anywhere outside CA and consumers have no information. Here in PA you'd get the same $5 quote from a lot of installers,meanwhile there's a top quality installer doing $2.85/W for a group install in the western Philly suburbs.
     
  6. nwdiver

    nwdiver Active Member

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    Right... in areas that aren't to scale the installers need to accept that PV installs can't constitute their entire income. By jacking prices to $5/w to maintain overhead due to low demand they are further suppressing demand. It's a self-defeating cycle. I've trying to pool some co-workers to do PV installs on the side for $3/w. With any luck we can stimulate demand and destroy this artificial price floor of $5/w.
     
  7. rjcbox

    rjcbox Member

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    agree, ~$4/watt installed here in NJ
     
  8. roblab

    roblab Active Member

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    The law of demand determines price in any market. Californians are aware that solar repays in less than six years at even ridiculous prices, and are willing to pay. So solar companies will proliferate until profits are more evenly shared, and then, who knows?
    I put my own solar in: I bought the panels from Arizona, the racks from northern California, had a part time electrician wire the whole thing while upgrading my dink panel to 200 amp -- should have gotten more. You don't have to pay turnkey prices if you have the key, desire, intelligence, competition, time, etc. I was not retired when I got my panels a dozen years ago. 11 kW now, haven't paid an electric bill since.
     
  9. nwdiver

    nwdiver Active Member

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    Agreed; But we need the adoption curve for solar to go vertical... now... if that's going to happen the demographics needs to expand beyond the wealthy and the skilled. For some reason in the US most PV installers appear content to sit back and install 2 or 3 systems per month for $5/w instead of charging a fair and compelling price that could actually spur some demand.

    Solar PV is still viewed and priced as a niche luxury product instead of the moral imperative it actually is...
     
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  10. eye.surgeon

    eye.surgeon Member

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    You forgot one important comparator...electricity prices in Germany are double (or more) what many pay in the US.
     
  11. ohmman

    ohmman Maximum Plaid Member

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    I'm not sure of the reason for this, but I think it's less nefarious than is being implied. While markets aren't completely efficient, why wouldn't a new entrant come to market and sell panels at $4.75/watt in California? Especially if the cost of doing business is in the $2/watt range? I have to think there's more to it than we're thinking. I know for sure in California, employment is very expensive - construction includes a high priced workers comp insurance among other things. I don't think they're cleaning house - I think we're just overlooking the cost of salespeople, service, warranty, etc.

    It's maybe like going to a restaurant, paying $80 for dinner, and thinking "I could have made this dinner for $20 at home." The restaurant probably makes a 7-10% profit on you. Everything else goes into rent, employment, insurance, marketing, etc.
     
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  12. Cyclone

    Cyclone Active Member

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    We pooled in Charlotte and the price pooled was still a little over $5/w. I ended up passing vs. getting it since I will move within 10 years.
     
  13. nwdiver

    nwdiver Active Member

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    #13 nwdiver, Mar 19, 2016
    Last edited: Mar 19, 2016
    It's more like most PV installers fancy themselves as Ruths Chris instead of Outback Steakhouse. They charge $5/w because they can... For whatever reason a true competitive market doesn't appear to exist in most places...

    I tried to work out a partnership with a local PV installer as a lead generator. I have the PV knowledge and he has the electrical knowledge and the license. My primary goal was to see more panels on rooftops his was to see more $$$ in his pocket. I thought $4/w would be a good middle ground but he insisted on $5/w. None of his arguments made much sense. He was basing his cost structure more on what other installers were charging than on what his costs would be. Even at $3/w the low overhead would have been covered by the first 12 systems. A price point of $5/w is counter productive... the payoff is ~21 years... most people I made that pitch to would simply walk away infected with the idea that solar PV is cost prohibitive.

    A new roof is ~$3k in labour... a new service panel is ~$3k in labour; Installing 8kW of panels and an inverter is much easier... why does the cost jump from $6k to $28k? It's insane... guess I'll find out in a few months if I can at least fix this in my area...

    When the ship is sinking... it's wrong beyond measure to place a premium on buckets for people that want to help bail...
     
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  14. ohmman

    ohmman Maximum Plaid Member

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    Absolutely. Shocking to me that this is the discrepancy, but I trust your knowledge better than mine. Hey, maybe your new local competitive market can turn into a more widespread one.
     
  15. rolosrevenge

    rolosrevenge Dr. EVS

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    I think the subsidies also play a big part. If the government will pay 30% back quickly, then other production subsidies, it makes the system cheaper. Who's getting that money, the installers. I payed $4.70/W for my system, but with a 5-8 year payback in the cloudy Northwest, and flexible financing so that paying it off is at the rate it generates me money (thus it's costing me nothing), I am quite content with the deal. And who wouldn't be content with something that costs nothing, will become revenue positive in 5 - 8 years, and has a guaranteed production life of 25 years? I'd have paid $1,000,000 for the system if it had the exact same cost and payback structure. Who wouldn't?
     
  16. nwdiver

    nwdiver Active Member

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    .... people without access to $1M or financing for $1M.

    There's still a very decent profit to be made at $3/w... Solar PV is being held back by reckless greed...

    I've helped install ~50kW of solar now... I'm always shocked when I think of how much some installers charge; It ain't rocket science.



    Of all the DIY projects I've done... installing solar is one of the easiest.
     
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  17. TheTalkingMule

    TheTalkingMule Active Member

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    I have no panels on my roof because I refuse to pay a price 60-100% above what was being charged in Germany 2 year ago. It makes no sense to. The hardware is the same, the installation process is the same, we just aren't Germans. They are an efficient people who wouldn't dream of paying an installer $.75/W in marketing and customer acquisition costs. It would simply never happen. As a result, folks in Germany could call an installer and have panels up a week later for $2.10/W with zero subsidy and plenty of installer profit. They've been at this level for like 2 years now as we fail to get up to scale.

    As a semi-socialist nation they don't have to worry about utilities pulling the same nonsense that we see, so that's an advantage. Corporate money doesn't play nearly the role in government that it does here, so the idea of sitting around waiting for beneficial rulings from supposedly "public" utility commissions is foreign to them as well. When solar took off and hit 4% of total, utility stocks immediately lost 70% of their value. There was no anti-solar option that some vague utility commission could pass, the legislation for renewables was in place and utilities had to comply. These major utils fought for a minute then capitulated to the inevitable future of solar and wind dominance.

    What do we see in Germany now? Forward thinking utilities are addressing TODAY's needs, they're selling residential solar/battery combos and focusing on grid services. Helping to manage the next phase of things will likely net them more profits than the good old days of coal/nuke production.

    Solar obviously won't be stopped in the US and we'll certainly get to $2/W soon, we just need to deal with the disruptive death throes of a lot of monied interests between now and then.
     
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  18. Camera-Cruiser

    Camera-Cruiser Fully Charged

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    I understand what you want. A less expensive solar system installed, but I'm confused, if you have helped others, then why not do it yourself? Maybe even start your own solar installation business.

    I think you would soon find out why any given market charges what they charge. It is not greed. If you charge to much you lose customers, and go broke. If you charge to little, you get customers at first, but then fall behind in scheduling and then lose customers, and then go broke. Besides, who would want to do twice the volume of work for the same return if they didn't have to?

    It is really about market forces.
     
  19. nwdiver

    nwdiver Active Member

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    I am... should be up and running in May...

    I doubt having a full order book will chase too many people away. At $3/w there's more than enough profit to ramp up quickly and indefinitely.

    The installers that are charging $5/w are lucky if they do 2 or 3 installs per month... they're certainly up the other side of that equation. 2/week should be easy.

    Someone who cares more about saving the ship from sinking than getting rich selling buckets ;)
     
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  20. Camera-Cruiser

    Camera-Cruiser Fully Charged

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    I don't know if you mean you'll have your own system done, be in the solar business, or maybe both, but good luck!

    We'll have to disagree about the greed aspect. Running a business is tough, especially in California. If your doing it all by the book, payroll, taxes and liability are going to kill you. Workers comp for the guys on the roof isn't cheap and maintaining your vehicles and equipment is non-stop.

    You have multiple weeks invested with a potential customer and it can all go belly up. They may get cold feet, find out that their roof will require thousands of dollars of upgrades, or find someone cheaper. Leaving you empty handed and staff to pay.

    So the higher install costs you see might be because those companies have learned that is what it takes to stay in business, and for it to be worthwhile too.

    Good luck and post updates about your project or venture.
     

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