Let’s say you want to install some solar panels on your home. For the average homeowner, that will set you back around $16,000, according to Andrew Birch, former CEO of the solar installation company Sungevity. But in Australia, you would pay about $7,000. And solar panels aren’t cheaper only in Australia. Birch says that the U.S. is an outlier when it comes to how much solar installation costs the regular consumer. Why the difference?
“The difference is red tape,” Birch says.
This might be counterintuitive. After all, America has a reputation for a robust free market with fewer regulations than in many other developed countries.
But it turns out that a complicated permitting process and years of thorny regulations make installing solar panels on an American home tricky, drawn-out, and expensive. In Birch’s experience, getting approval from a local jurisdiction can take weeks or months. During that time, an installation company has to visit the home, create electrical-grade drawings, and deliver a whole mess of paperwork to a government office.
That’s a far cry from the process in places like Germany where, as Birch tells it, you can fill out a simple form online. Which is probably why, according to Birch, in parts of Germany, 30 percent of homes have solar panels, while in the U.S., about 1 percent of homes have solar panels.”
And Birch says the web of regulations in the U.S. does not make us safer, nor does it make our solar panels more efficient. There have been millions of solar installations across Europe and Australia, and no noticeable difference in quality or safety.
So if, as Birch says, the regulations aren’t actually helping consumers and are just jacking up prices, why do they exist?
Birch says there’s a lack of coordination between the government and the energy industry. It’s a legacy of decades of incremental growth, while ineffective local regulations remain on the books. And most American consumers and politicians don’t know that costs are lower overseas, Birch says, so they aren’t even aware of the problem.
Despite the high installation costs, more and more Americans have been exhibiting an interest in adopting solar power. And solar panels themselves have plummeted in price over the past few decades. Birch says in many countries, solar power is the cheapest option around. In January, though, President Trump announced a 30 percent tariff on imported solar panel components. Birch believes that will cost Americans tens of thousands of jobs in sales and installation (there isn’t much of a manufacturing industry here, he says, and much of the manufacturing is done by robots).
