Burning questions

Why is solar power so expensive in America?

Solar power is now as cheap as traditional energy sources in Italy and Germany, according to a new report. In terms of LCOE — or "leveled cost of energy," which weighs everything that effects a given energy source's price from installation to maintenance — solar has achieved "grid parity" in those places thanks in part to a combination of cheap installation costs, high electricity prices, and government subsidies.

Meanwhile, the cost of solar power in the U.S., though it has fallen off a cliff since the late 1970s, remains relatively high. So what gives? Why can't we have cheap, clean solar power, too?

A big part of it has to do with demand. In 2011, Germany boasted more than 21 times the solar power, per capita, of the U.S, which helped to drive down the price. And given that imbalance, American companies had a comparatively tougher task recruiting customers, so they spent 10 times as much as their foreign counterparts did on marketing costs.

But the biggest factors keeping American solar from catching up are so-called "soft costs," which include everything from fees and taxes to company overhead. For instance, while German installers added $1.20 per watt to the cost of each panel in 2011, American companies added $4.36 per watt. And according to the Department of Energy, soft costs make up 64 percent of the price tag on installing residential solar systems in the U.S.