addition we are indebted to the helpful comments of our anonymous reviewers. Of course, any remaining errors or omissions are our own.
iv EXECUTIVE SUMMARYResidential 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.
HIGHLIGHTS• Residential PV system prices are twice as high in the USA than in Germany in 2012.• Different cumulative national PV market sizes explain only 35% of price gap.• Installer surveys show that price differences stem from non-module and soft costs.• Largest cost differences stem from customer acquisition and installation labor.• Incentives in the US are less effective in driving and following cost reductions.v