An Analysis of Residential PV System Price Differences Between the United States and Germany

Publication Type

Journal Article

Date Published





Residential photovoltaic (PV) systems were twice as expensive in the United States as in Germany (median of $5.29/W vs. $2.59/W) in 2012. This price discrepancy stems primarily from differences in non-hardware or “soft” costs between the two countries, which can only in part be explained by differences in cumulative market size and associated learning. A survey of German PV installers was deployed to collect granular data on PV soft costs in Germany, and the results are compared to those of a similar survey of U.S. PV installers. Non-module hardware costs and all analyzed soft costs are lower in Germany, especially for customer acquisition, installation labor, and profit/overhead costs, but also for expenses related to permitting, interconnection, and inspection procedures. Additional costs occur in the United States due to state and local sales taxes, smaller average system sizes, and longer project-development times. To reduce the identified additional costs of residential PV systems, the United States could introduce policies that enable a robust and lasting market while minimizing market fragmentation. Regularly declining incentives offering a transparent and certain value proposition—combined with simple interconnection, permitting, and inspection requirements—might help accelerate PV cost reductions in the United States.


Energy Policy



Year of Publication




June 2014


The attached report represents a post-print version of an article accepted for publication in Energy Policy.

Related Documents:
In February 2013, LBNL published a related scoping analysis, Why are Residential PV Prices in Germany so much Lower than in the United States?

In February 2013, U.S. Department of Energy (DOE) SunShot Initiative, in conjunction with LBNL, hosted a webinar during which the results of the survey analysis were presented. For a recording of the webinar, click here.

Findings from this project were presented at the 39th IEEE Photovoltaic Specialists Conference in Tampa, Florida in June 2013. To see the proceedings posted online, click here.

Findings from this project were also presented at the American Solar Energy Society in Baltimore, Maryland in April 2013.  To download the proceedings posted online, please click here.


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