Why are turnkey Solar PV systems so ridiculously overpriced?

[nwdiver]

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.

Agreed; Which is why initially this won't be anyones day job. All that other stuff will be covered by our primary employers. But once there's a sufficient customer base to help with word-of-mouth marketing we'll have to see. $3/w or bust

The analogy I gave earlier is what gives me the confidence that $5/w is way... way... to high... I know roofers that operate above board and charge $3k + materials for a new roof. I know electricians that operate above board and charge $3k+materials for a new service panel. An 8kW PV system shouldn't cost >$6k + materials but it's typically >$20k + materials...

 

[TexasEV]

Austin is more competitive. We paid $3.35/W for a 7.5 kW system with LG 290W panels and SolarEdge inverters two years ago, and that quote was in the middle of the range.

 

[nwdiver]

Austin is more competitive. We paid $3.35/W for a 7.5 kW system with LG 290W panels and SolarEdge inverters two years ago, and that quote was in the middle of the range.

That's about right... I'm targeting $3/w budgeting ~$1.50 for materials... LG panels are spendy as are solar edge inverters AND Austin has stricter code enforcement. Sounds like you got a good deal. Is that $3.35 before the ITC?

 

[TexasEV]

That's about right... I'm targeting $3/w budgeting ~$1.50 for materials... LG panels are spendy as are solar edge inverters AND Austin has stricter code enforcement. Sounds like you got a good deal. Is that $3.35 before the ITC?

Yes, that was the full price before the federal tax credit and Austin Energy rebate. Net we paid about $1.35/watt I think.

 

[ohmman]

Yes, that was the full price before the federal tax credit and Austin Energy rebate. Net we paid about $1.35/watt I think.

Having moved from Austin to California, I can say that overall, construction is massively more expensive here. Most of that has to do with the liability and workers' comp insurance required by the state here, as well as Austin's unique situation with construction and installation labor.

That said, $1.35/watt! Awesome!

 

[FlasherZ]

Locally, in the St. Louis area, there are only 3 firms that I'm aware of who do the design work. They then farm it out to a handful of contractors to install. Everything is $4/W, and there's no competition between them. Frankly, the biggest problem is that we have very cheap power ($0.09/kWh) and most of the subsidies went away. Illinois' 25% rebate is one of those, so now all you get is the federal credit. At $4/W, you're looking at payback over 20 years. It's just not economically viable, and people around here don't have the disposable incomes to throw money at it for the hell of it.

With nwdiver's consulting help and pointers, and some very, very cheap panels ($0.49/W), I'm going to put a system on our hunting lodge's shed that will cost us about $1.10/W using our own labor. Lots of savings because it's going on a steel shed that doesn't need flashing feet.

 

[omgwtfbyobbq]

Having moved from Austin to California, I can say that overall, construction is massively more expensive here. Most of that has to do with the liability and workers' comp insurance required by the state here, as well as Austin's unique situation with construction and installation labor.

That said, $1.35/watt! Awesome!

Do you have a source for that? Workers comp and liability is more expensive in CA, but I always though of it as a small part of the different in construction costs.

 

[strider]

As someone who is in the process of building a house in the Bay Area I can tell you I've spent more money on engineering, consulting, and permitting fees than most houses cost to complete and I haven't even broken ground yet. EVERYTHING is more expensive (and takes longer) here.

The good news is that since we're building, new state solar rebates are still available so that will help some. But I'm going to spend a bundle just to have all of the paperwork filled out in order to apply for the credits.

 

[ohmman]

Do you have a source for that? Workers comp and liability is more expensive in CA, but I always though of it as a small part of the different in construction costs.

I don't have a source, except that we've done two remodels and are building a small addition right now and it's outrageously expensive.

Like @strider, permitting, engineering, permit engineering, engineering permits, and the like have cost us more time and money than it would cost to build something fabulous in Austin. I seem to recall one of our first contractors telling us that his lowest paid sub cost him something like $28.50/hr - most of which was liability and workers comp. I realize he could have been less than truthful.. but we've competitively bid stuff and it's shocking how expensive it all is.

In Texas, construction is very cheap but the workers aren't as well protected (or paid as well), and neither is the consumer. There are always trade-offs. I'm happy to live in a state that cares for the worker, but I do think some of the consulting and engineering processes are way too much.

 

[miimura]

As someone who is in the process of building a house in the Bay Area I can tell you I've spent more money on engineering, consulting, and permitting fees than most houses cost to complete and I haven't even broken ground yet. EVERYTHING is more expensive (and takes longer) here.

The good news is that since we're building, new state solar rebates are still available so that will help some. But I'm going to spend a bundle just to have all of the paperwork filled out in order to apply for the credits.

As someone who completed building a house in 2012 in the Bay Area, I know exactly what you're talking about. I built a modest house on a small vacant lot and spent $100,000 before the shovels even hit the dirt. At the time I started construction there was a program called the "New Solar Homes Program". It provided a huge subsidy to building solar with new construction, even when the standard Solar California PG&E rebates had gone down to less than 25c/W. However, the funding was never stable and the paperwork was onerous. It also required the whole home to be certified 25% over Title 24 requirements. The solar installer chickened out because he could not guarantee that we would get the rebate. I was going to get a 9.7kW system with NSHP, but without it, I had to cut it down to 4.3kW.

 

[omgwtfbyobbq]

I don't have a source, except that we've done two remodels and are building a small addition right now and it's outrageously expensive.

Like @strider, permitting, engineering, permit engineering, engineering permits, and the like have cost us more time and money than it would cost to build something fabulous in Austin. I seem to recall one of our first contractors telling us that his lowest paid sub cost him something like $28.50/hr - most of which was liability and workers comp. I realize he could have been less than truthful.. but we've competitively bid stuff and it's shocking how expensive it all is.

In Texas, construction is very cheap but the workers aren't as well protected (or paid as well), and neither is the consumer. There are always trade-offs. I'm happy to live in a state that cares for the worker, but I do think some of the consulting and engineering processes are way too much.

I wouldn't say he was lying, but I don't think he was being as truthful as he could be. I found this link, which puts workers comp for the riskiest position (roofer) at $73 for every $100 of wages.

https://www.asee.org/public/conferences/32/papers/10462/download

That's not an insignificant amount of money, but in terms of installing a PV system, most of the $3+/W markup (https://emp.lbl.gov/sites/all/files/german-us-pv-price-ppt.pdf) isn't from paying an extra $400 for liability insurance. Since roofing has the highest liability rates, I'm guessing your contractor is paying less for liability on additions/etc... That could be offset by a project requiring more man-hours, but if that's the case I'm thinking your contractor and their sub-contractors aren't as efficient as they could (should?) be.

In general, construction labor costs in CA are ~20% higher than in the rest of the US, which probably translates into something like a 10% increase in total costs (assuming 50/50 labor/materials). That's not insignificant, but if you could've built a whole house in Austin for what you're paying for permitting/engineering on an addition here, someone's making a lot of money. Granted, part of that is because permitting fees are a percentage of home valuation (Labor + Materials), but if a general contractor and sub-contractors are making a pretty penny off of a project, that'll inflate the costs of new construction permits.

California’s High Housing Costs: Causes and Consequences
Cost to Build a Single-Family House - Estimates and Prices at Fixr

My guess is that high construction costs in CA have more to do with lack of competition than the cost of insurance. That's IMO due to the boom/bust cycles in construction, the high cost of living in the state, and corporate home builders/construction firms that act more like OPEC than competitive businesses.

 

[SageBrush]

NWdiver -- All the best!!
I would love to do something similar, although my socialist/collective roots imagine more of a setup wherein a person gains from the help of another and then pays for it by helping two others.

Please keep us informed

 

[FlasherZ]

The good news is that the more you help educate, the better things get. I took advantage of a pointer that nwdiver gave us a couple of months ago. Sun Electronics offered a $0.49/W price for 240W panels, and I scratched up enough money to buy 2 pallets' worth (60 panels). They get delivered on Tuesday.

I'm placing the order for the rest of the system within the next couple of days from another supplier that nwdiver helped point out for me.

It'll be my first two self-installs, but will also serve as a training ground to show a couple of electrician acquaintances how it's done and how easy it can be.

 

[Cyclone]

The good news is that the more you help educate, the better things get. I took advantage of a pointer that nwdiver gave us a couple of months ago. Sun Electronics offered a $0.49/W price for 240W panels, and I scratched up enough money to buy 2 pallets' worth (60 panels). They get delivered on Tuesday.

I'm placing the order for the rest of the system within the next couple of days from another supplier that nwdiver helped point out for me.

It'll be my first two self-installs, but will also serve as a training ground to show a couple of electrician acquaintances how it's done and how easy it can be.

If you ever want to visit Charlotte and do an install here, you have a place to stay!

 

[FlasherZ]

If you ever want to visit Charlotte and do an install here, you have a place to stay!

You may want to wait to hear the results of poking holes in my own roof and my brother's roof first.

 

[Park2670]

I am in too. Both my F-I-L and I were quoted over $50k for systems. That puts us in the 25 year ROI range. Just doesn't make sense at all for it to be effective. I am thinking we could purchase systems and install it on our own (both have done extensive wiring for our homes, and he built his house). If we could get solar for $15k we would both be in faster than I can sign the paperwork.

 

[SageBrush]

While I was in Albuquerque I found a wonderful electrician who was an advocate of PV willing to hook up a system I installed for $500.
Panels are 50 - 100 cents a watt
Inverter is ~ 30 - 50 cents a watt
Mounting hardware is around 20 cents a watt for a pole mount; I think roof is even cheaper.

Add a few doodads, wiring, a trencher rental for a day, and the junction box. You should still fit easily under $2/watt before tax credit.

 

[TheTalkingMule]

I am in too. Both my F-I-L and I were quoted over $50k for systems. That puts us in the 25 year ROI range. Just doesn't make sense at all for it to be effective. I am thinking we could purchase systems and install it on our own (both have done extensive wiring for our homes, and he built his house). If we could get solar for $15k we would both be in faster than I can sign the paperwork.

Just wait a few months, this summer will be a big turning point for solar. Plenty of us are willing to give installers a nice chunk of change fora decent install. If you can't get less than $3/W right now, just wait. It'll fall in your lap shortly once these installers get their act together.

Could always be done yourself for fun, but I'd rather pay a bit more for the peace of mind. I want to call someone when there's a leak or warranty issue rather than deal myself.

 

[FlasherZ]

Could always be done yourself for fun, but I'd rather pay a bit more for the peace of mind. I want to call someone when there's a leak or warranty issue rather than deal myself.

At our power price, even $3/W stretches out the payback window to about 18 years, and for people who don't have large disposable incomes, that's not reasonable. Here, solar needs to be $2/W or less installed before most people will consider it.

 

[TheTalkingMule]

At our power price, even $3/W stretches out the payback window to about 18 years, and for people who don't have large disposable incomes, that's not reasonable. Here, solar needs to be $2/W or less installed before most people will consider it.

Nearly everyone should soon be able to finance solar without having to increase your out of pocket each month. One great installed around me is doing $2.75/W as part of a group install and this market is minutes old. Can't image you'll have a tough time finding a deal before the summer is done.

SolarCity is always an option if one doesn't have the up front cash.