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Residential solar power in the U.S.: Why is it more expensive than Europe?

Residential solar power in the U.S.: Why is it more expensive than Europe?

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Solar power in residential areas is growing somewhat, but has hardly become the norm in the U.S. Why has residential solar power in Europe gained momentum relative to the U.S.?

Solar power in residential areas is growing somewhat, but has hardly become the norm in the U.S. Why has residential solar power in Europe gained momentum relative to the U.S.?

A panel of experts at the Jefferies Clean Technology Conference in New York didn't have ready answers, but there were a few good hunches.

The most notable explanation came from Steve Chadima, vice president of external affairs at SunTech Power, which designs and manufactures photovoltaic modules and other solar products. Chadima said that Europe has progressed on better installation techniques and more standard parts.

In the U.S., there are multiple moving parts when it comes to installing residential solar power systems. Among the largest are fire codes, building regulations and other rules to follow. Simply put, the U.S. is just larger than Europe and buildings typically carry unique engineering. Toss in city, state and federal regulations and there are multiple hurdles for installing solar systems in the U.S. in your home.

Meanwhile, solar installations in Europe, notably Germany, are more standardized and that cuts costs. "There are a lot of lessons to be learned about how to install systems and that knowledge can be transferred here," said Chadima.

Other odds and ends from the solar panel:

  • Solar costs need to come down: The panel, which featured mostly solar equipment suppliers, agreed that the costs of complete systems need to come down. Dr. Silvia Roth, director of marketing and investor relations at Roth Rau, said that costs need to come down by about 30 percent to 50 percent over the next five years. "The vision of the future will require (solar) cell manufacturing to be more professional," said Roth. She likened solar cell manufacturing to semiconductor makers in the 1980s.
  • Europe's role in solar technology. The Jefferies conference had an international flair with many solar players from Europe in attendance. Meyer Burger CEO Peter Pauli was asked whether Europe could maintain its leadership position given that manufacturing would be cheaper elsewhere. Pauli said "it would be a disaster if European players disappeared." European companies have to keep investing in research and development to stay ahead of the likely volume players emerging from Asia.
  • Grid parity a moving target: Much of the discussion on the panel revolved around grid parity---building solar grid systems that are as cheap as their natural gas rivals. Francois Henley, CEO of Silicon Genesis Corp., said that grid parity is a moving target, but a key concept if the solar industry wants to build out more infrastructure. Henley said cost parity between solar and natural gas plants will depend based on location. For instance, in the southwest and other desert areas solar plants are cost competitive. In other areas, solar has a ways to go to become more efficient to compete.

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Larry Dignan

Editor-in-Chief

Editor-in-Chief Larry Dignan is editor-in-chief of SmartPlanet and ZDNet. He is also editorial director of TechRepublic. Previously, he was an editor at eWeek, Baseline and CNET News. He has written for WallStreetWeek.com, Inter@ctive Week, New York Times and Financial Planning. He holds degrees from the Columbia University Graduate School of Journalism and the University of Delaware. He is based in New York but resides in Pennsylvania. Follow him on Twitter. Disclosure