Why are turnkey Solar PV systems so ridiculously overpriced?

[TheTalkingMule]

The ITC rewards highest cost installers, so in a market where there are price setters, the smaller players will price match upwards. result is what is seen in USA residential market.

but in utility scale, the price setter is gas power, so the solar market price match downwards, result is the 3.8 - 4.5c/kWh seen in USA utility market.

same subsidy, vastly different results.

FWIW, professionally installed, domestic solar for a 6kW system using chinese panels and german SMA invertor and no subsidy at all but with a favourable roof should be doable for about USD $7,200.

I'm not seeing anything remotely like that in Philadelphia and we're not even remotely to scale. When people educate themselves they want quality at the best price possible.

Utility scale is cheap because of economies related to size and there's little to no soft cost. Residential will be nearly the same before long. Something like $1.50/$2.00 util/res should be reasonable within a couple years.

 

[FlasherZ]

FWIW, professionally installed, domestic solar for a 6kW system using chinese panels and german SMA invertor and no subsidy at all but with a favourable roof should be doable for about USD $7,200.

That's roughly the parts-only cost for what it's costing me to do a 6.7 kW system right now in the US, labor not included, using older (240W) full-size panels at a discount ($0.49/W). It's a favorable roof in that it's a steel purlin roof and I don't have to pay for flashing feet (which adds about $600 alone).

 

[Nirenk]

I am currently in process of signing contract for my 10.08 kW system in NJ. Total cost of about $32K including installation, permits, PSEG interconnect etc. This is with 280w panels and enphase microinverters. I am applying for PSE&G solar loan program. If approved, they will fund about $14K out of this cost as solar loan reducing my cash cost to about $18K and with federal tax credit this will come down to about $9K out of my pocket. The solar loan is payed off through SRECs as long as the system if producing the anticipated amount of energy....PSEG will have claim on all my SRECs (with a floor purchase price around $290) till the loan is payed off. Unless others are calculating the costs differently, this comes to about $3.2/w initial cost which seems reasonable compared to some others have reported but if I look at the details of the deal, this cost has about $9K of margin (about 30%) for the installer. Is that reasonable for the amount of effort involved ?

 

[FlasherZ]

I think the general consensus that I've seen from this group is that installed-before-subsidy price should be between $2-3/W.

 

[TheTalkingMule]

I am currently in process of signing contract for my 10.08 kW system in NJ. Total cost of about $32K including installation, permits, PSEG interconnect etc. This is with 280w panels and enphase microinverters. I am applying for PSE&G solar loan program. If approved, they will fund about $14K out of this cost as solar loan reducing my cash cost to about $18K and with federal tax credit this will come down to about $9K out of my pocket. The solar loan is payed off through SRECs as long as the system if producing the anticipated amount of energy....PSEG will have claim on all my SRECs (with a floor purchase price around $290) till the loan is payed off. Unless others are calculating the costs differently, this comes to about $3.2/w initial cost which seems reasonable compared to some others have reported but if I look at the details of the deal, this cost has about $9K of margin (about 30%) for the installer. Is that reasonable for the amount of effort involved ?

Jersey is a relatively mature solar market so you should be able to get $3/W flat or perhaps lower, but everything depends on quality of installer and hardware. Microinverters are more, etc.

30% margin is generally unreasonable. HOWEVER, what if your customer pipeline is unreliable and you have sporadic downtime? You need to make much more profit on the business you do get to make up for the downtime where you're making nothing.

From my perspective anything near $3/W is fine on the east coast for now, especially if you're getting the hardware you want from a quality and trustworthy installer. Once these guys are humming along, they should be able to install at $2.25-2.75/W profitably. Like as soon as next spring.

Also keep in mind that Jersey is broke and may have less subsidy in the near future, so who knows. If these are the panels you want and the out-of-pocket is manageable, go for it!

 

[Rockster]

I just signed a contract with Solar City for a 9.88kW system at a total cost of about $28k before incentives. After federal tax credit and a $1000 rebate from my power company, my out of pocket is around $19k .

 

[nwdiver]

I think the general consensus that I've seen from this group is that installed-before-subsidy price should be between $2-3/W.

Yep... $3/w is on the high side of reasonable but still reasonable... The guys charging ~$5/w... really.... REALLY piss me off... it's price gouging of the worst kind and it's suppressing interest in Solar in their area. I refuse to even attempt to sell at >$4/w. I might as well go around telling people that Solar is still prohibitively expensive and not worth their consideration...

If there's not enough PV demand to sustain your business at $3/w then you need to find other supplemental income... jacking your rates to $5/w is self-defeating....

 

[TheTalkingMule]

I just signed a contract with Solar City for a 9.88kW system at a total cost of about $28k before incentives. After federal tax credit and a $1000 rebate from my power company, my out of pocket is around $19k .

Congratulations! Looks like a good deal to me.

As an SCTY investor it pleases me to see them installing well under $3/W. Their margin is likely still more than decent at that price and hopefully can be kept fat as they're a premium product.

Pretty soon people's options will be to purchase from a bare bones installer at $2.40/W, purchase from a premium installer at $2.65/W, or go with a SCTY PPA that is far cheaper than the grid. Those are all amazing options with the 30% ITC credit. Once that tax credit program expires, the costs will have dropped another 30% and solar will be to scale everywhere. Boom!

 

[FlasherZ]

All I can say is... wow...

Sun Electronics sent out notice this morning that they're working on another auction purchase... They're targeting a $0.29/W price for the panels (+ shipping & logistics) for REC-branded 230 and 240W panels. Now, this is advance notice and they typically collect demand in advance. They may not win the auction, but this is insane considering that a $0.49/W was a mind-blowing price for the new SolarWorld modules just a few months ago.

www.sunelec.com

 

[lklundin]

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

I am paying 0.2282€/kWh in Germany (no monthly fee, expected annual use 4MWh).

Btw, around here 1kW solar power installed typically gives an annual production of 1MWh - and the sales are now focused on 'plug&play' (i.e. only self-consumption, nothing is sent to the distribution net).

PS. Fixed serious typo in unit prefix...

 

[TheTalkingMule]

All I can say is... wow...

Sun Electronics sent out notice this morning that they're working on another auction purchase... They're targeting a $0.29/W price for the panels (+ shipping & logistics) for REC-branded 230 and 240W panels. Now, this is advance notice and they typically collect demand in advance. They may not win the auction, but this is insane considering that a $0.49/W was a mind-blowing price for the new SolarWorld modules just a few months ago.

www.sunelec.com

I may have to cross-post this to the SolarCity investors thread, pretty good illustration of how tough it's going to get to make money purely as a manufacturer. People will be extolling the virtue of FSLR as they report earnings this week, but look at the panel sales environment of the not-too-distant future.....

 

[Skotty]

Currently investigating solar PV in my area (Missouri). It's a good place for solar, as we get a reasonably good amount of sun and there is still a lot of coal power, but cost is a problem. It's about $3.75+/W. The only available incentive is the federal 30% credit.

It's unfortunate that rooftop solar power demand and service availability is highest in areas where it has the least benefit. We really need it in places like Missouri.

 

[SageBrush]

I am paying 0.2282€/kWh in Germany (no monthly fee, expected annual use 4MWh).

I pay about $30 USD before I consume my first kWh

 

[FlasherZ]

I may have to cross-post this to the SolarCity investors thread, pretty good illustration of how tough it's going to get to make money purely as a manufacturer. People will be extolling the virtue of FSLR as they report earnings this week, but look at the panel sales environment of the not-too-distant future.....

Typically, Sun deals with the older / lower-efficiency panels, usually stock that's been superseded by the higher efficiency panels. Since rooftops have limited space, the market desires the higher-powered panels. But if you have the real estate and can take advantage of these prices, then you're in luck.

This weekend we're going to be mounting the first of two systems that I'm installing with some SolarWorld 240's, a 6.7 kW system. It's going to have a 4-year payback after the federal tax credits with no state incentives (and free labor). Pictures to come.

 

[cdub]

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.

This is the single biggest reason for me to have single payer and more socialized services like most other civilized countries.... all of the above would be covered and businesses wouldn't have to worry about it.

How much less stressful would it be as an employer and as an employee knowing that you're covered in disability, health care, etc... you can then concentrate on creating great products, providing great services, and doing great work. No more stress over stuff you really shouldn't be stressing about.

People would feel more free to take chances and start new businesses. Workers wouldn't have to worry about health care. Businesses wouldn't have to worry about health care.

Single payer and other social services would be a a HUGE boon to business. But I digress.

 

[FlasherZ]

But I digress.

Indeed. It's irrelevant because someone will pay for it somewhere, whether it's built into the product/service pricing, or my taxes go up, or someone else's taxes go up. That conversation shouldn't take place here.

Bottom line is that we have to deal with labor costs for solar PV system installers. The supply chain seems pretty large and unoptimized (in my $4/W case, there was a design firm, the install/electrician firm, and the engineering firm (roof structural analysis) to go through analysis and details). At least here in the midwest, the incentives have gone away and power is cheap enough that the customer base is pretty much reserved for those customers who can afford the outlay with a long payback (15-20 years).

That doesn't even count the time value of money invested. (EDIT: big long winding NPV calculations deleted...) Based on calculations I've done, if you compare to an 8% investment of your out-of-pocket dollars over 25 years, solar needs to be less than $1.87/W for it to make sense in the most perfect of cases over the entire 25 year span.

I know, detractors will say "yeah, but the environment and think of our kids!" We all think of our kids - I have 4 boys and it's a great emotional appeal. 90% of the people around me aren't going to have the means or outlay to throw money at solar PV, and they won't even consider the environmental benefits until it comes more into the $2/W range. It has to be made more attractive financially for them to act. Most of them will simply wait until there's a utility-grade value in which they can share, or simply wait until government regulation forces a change in it.

 

[dhanson865]

I90% of the people around me aren't going to have the means or outlay to throw money at solar PV, and they won't even consider the environmental benefits until it comes more into the $2/W range. It has to be made more attractive financially for them to act. Most of them will simply wait until there's a utility-grade value in which they can share, or simply wait until government regulation forces a change in it.

I have a hard time thinking in $/W. I see my bill in cents per kWh. Can you give me a good idea of how this translates vs 10 cents per kWh grid power and no time of use and no net metering?

 

[strider]

This weekend we're going to be mounting the first of two systems that I'm installing with some SolarWorld 240's, a 6.7 kW system. It's going to have a 4-year payback after the federal tax credits with no state incentives (and free labor). Pictures to come.

Are these grid-tie systems with string inverters? If you have time can you take pictures of all the cabling, junctions, combiners, disconnects, BOS bits and bobs? This is the thing I'm struggling the most with as I start to lay out my system in my head.

 

[ohmman]

90% of the people around me aren't going to have the means or outlay to throw money at solar PV, and they won't even consider the environmental benefits until it comes more into the $2/W range. It has to be made more attractive financially for them to act.

Correct. It's not as easy to do with solar what Tesla has done with EVs. That is, make them so appealing that people will buy them regardless. Solar does have value outside of the environmental and financial benefits, but it's pretty nuanced. For me, I love the idea of the system just capturing energy that would otherwise dissipate. That fact makes me smile. But like you said, for most people that's not worth the cost. The systems have to be sound financial decisions, and that's it.

 

[strider]

I have a hard time thinking in $/W. I see my bill in cents per kWh. Can you give me a good idea of how this translates vs 10 cents per kWh grid power and no time of use and no net metering?

A solar system is rated at X kW. So if the sun shines on a 5kW system for 1 hour it will generate 5kWh of power. At $0.10/kWh from your grid the system would then offset $0.50 of power for that hour. Now the sun doesn't shine all the time and depending on your latitude, roof direction, roof angle, etc. it will determine how many "sun hours" you get during a day. Also it varies by season.

The NREL has a calculator you can play with: PVWatts Calculator