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Cost of California Solar Installations in Spotlight, Following WSJ Article

Posted by Adam Sewall In Wednesday, August 18 2010 under: California Solar Initiative, solar cost, Cost and Financing, California Solar

Did some Californians get ripped off on their solar panel installations? Maybe.

The Wall Street Journal last Friday ran an article on the California Solar Initiative (CSI), a multi-year roadmap that aims to boost in a major way the amount of electricity the state gets from solar energy systems. Among the article's main takeaways was the fact that some home solar installations cost far more than the statewide average:

Two installers in particular, Sungate Energy Solutions Inc. of San Diego and Stout & Burg Electric Inc. of Tustin, Calif., had costs for solar projects that were much higher than average, according to data collected by California Solar Initiative. Those companies are among hundreds of contractors that installed solar systems for residential and small commercial customers in California in the past year and a half. Stout & Burg began doing significant amounts of solar installation work in mid-2008, and Sungate got into the business in 2009.

Between early 2009 and through the first half of this year, the average cost per watt, measured in direct current for small projects of 10 kilowatts or less that registered with the California program was about $7.15. There were about 19,000 such projects.

But Sungate Energy Solutions listed an average cost of $13.33 per watt for its 557 projects, according to an analysis of the data by Dow Jones Newswires. Stout & Burg had average installation costs of $12.43 per watt for the 583 projects it submitted to the program.

What's going on here? Highway robbery? Or is there a logical explanation? A few things to consider:

For one, the two installers in question did do an unusually large number of small projects; according to the article, their solar electric installations averaged fewer than 2.5 kilowatts (kW) in size. The cost of solar panel systems is measured in dollars per watt. Since general administrative and related costs don't vary all that much from residential project to residential project, smaller projects often do, in fact, tend to have a higher per-watt cost. Fair enough.

Second, as noted in the article, some of the higher-cost systems were installed with battery backups. This, too, can increase per-watt costs. While no one system is the same, a rough estimate of this additional outlay might be to the tune of $4/watt. Read here for more on solar photovoltaics (PV) and batteries.

Third, the high-cost numbers are taken from a pool of, as noted above, some 19,000 projects. It's natural to expect some cost variation. Just as some projects came in at above the $7.15/watt average, some undoubtedly came in under. Given the WSJ's usual focus on the numbers, I'm surprised the article didn't analyze whether the data showed major distribution irregularities. Perhaps that's coming.

Despite these explanations, CSI staff are still scratching their heads over the numbers. Merideth Tirpak Sterkel, manager of the CSI, told the WSJ she was "mystified as to why some of the projects would have much higher costs than others."

While it seems too soon to say whether some California homeowners got ripped off, the story demonstrates why it's always a good idea to get more than one quote for your solar home project.

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