Why Your Solar-Powered Home Is Still Light Years Away

A worker stands near solar panels, manufactured by Sharp Corp., at the SoftBank Yaita Solar Park operated by SB Energy Corp. in Yaita City, Tochigi Prefecture, Japan, on Tuesday, Aug. 20, 2013. The 3 megawatt solar power station is scheduled to start operations from Aug. 23. Photographer: Tomohiro Ohsumi/Bloomberg via Getty Images
Tomohiro Ohsumi/Bloomberg via Getty Images

For years, solar power has been long on promise, but short on delivery: Photovoltaic cells -- the building blocks of the panels that you sometimes see on houses -- were available, but the high cost of PV-cell installation and their low efficiency meant that, watt for watt, solar power was much more expensive than that from fossil fuels. For families looking to get off the grid, the economic factor was a big hindrance.

But, as Mother Jones recently reported, that equation is in the process of changing. PV cells are becoming both more efficient and less expensive, a recipe for cheaper electricity. Unfortunately, the "soft" costs -- all the assorted taxes, permitting and installation costs -- have remained fairly steady. Currently, the solar panels and the assorted hardware comprise less than a third of the cost of installation; the rest goes to labor, permits, taxes, overhead, supply chain and assorted other charges.

To get an idea of how much all of these soft costs impact solar usage, it's worth comparing the U.S. to Germany, a country that is widely regarded as the gold standard for solar use. In Germany, PV cells cost almost the same as in the U.S., and hardware costs are about half as much. The big jump, however, comes in soft costs, which are huge in the U.S., making the price of American solar watts nearly three times the price of German ones.

Ultimately, it seems, the biggest barrier for solar energy may not lie in green cells but in red tape.

Bruce Watson is DailyFinance's Savings Editor. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.