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> solar panel cost accounts for ~20% of the overall installed cost in the U.S.[2]. So reducing panel prices by this incremental cost doesn't impact the overall cost as much as you'd think.

So where does the other 80% of the cost come from? Maybe we should be figuring out how to cut that instead.

There's a nice pretty chart on the DOE's soft costs website.

http://energy.gov/eere/sunshot/reducing-non-hardware-costs

It's from 2010, so stuff has shifted since then, but ~50% soft costs, 15% installation labor, 15% non-module hardware, and 20% module. The DOE's really been focused on soft costs (customer acquisition, overhead, engineering, financing, etc.). We recently got a big grant to drive down the cost of getting a customer's bill/usage history for the initial quote, which can impact the overall cost by 5-10%.

Wow these soft costs seem so huge. I was hoping technological innovation would bring down the overall cost of solar but now it looks like that accounts for only 1/3 of the costs. I hope the soft costs can be brought down significantly over time.

There is scope for optimism as the Germans are much more efficient on soft costs. Several studies have looked at why the gulf exists between U.S and German costs so people are focused on narrowing the gap. I think it'll happen, maybe from late 2016 when the industry gets super competitive for business as demand drops due to the Itc expiry.

It should come down with time, no?

I can look in my phonebook and find 500 people to install new electrical wire in my house. I doubt I can find that many people that know how to install solar.. but given a few years, it could/should eventually become fairly common knowledge.

There's something wrong when "customer acquisition" is your biggest expense....

Customer acquisition costs should go down as the overall value proposition improves.

Good PR on efficiency and domestic manufacturing helps, as will availability of Tesla's Powerwall (10 kWh battery for $3,500).

There must be wide differences in these costs from one installer to another. I recently saw two solar installations in western Massachusetts: One was mounted on very sturdy-looking frames bolted to concrete bases. One right next to it was mounted on tubular aluminum "skids" with a stack of three cinderblocks on top of each skid.

The cinderblock and bent tubes arrangement looked like a fraction of the cost of the welded frames bolted down. Both were in what looked to be formerly a pasture or hayfield. Both were fenced in with a chain link fence, which I imagine could also be cost-optimized.

>There's expected to be a solar panel shortage coming soon because the industry is growing so fast[1], so if you don't make your own panels, you can expect panel prices to go up. The fact that SolarCity can make its own modules, means it won't be affected by the shortage nearly as much as others.

Why not? Even if you make your own solar panels, you still face an opportunity cost if you use them yourself instead of selling them, and that opportunity cost is identical to the regular old cost everyone else has to pay. So while it would benefit you if you happen to be making them when the price spikes, it wouldn't make you immune to the shortage I wouldn't think.

"Opportunity cost" is not a thing that affects operational cashflow, and doesn't appear in SEC filings, whereas delays in project completion do.

20% of Rooftop solar costs, grid connected solar has far lower overhead.

Yep, sorry, SolarCity is mostly residential and commercial, so the cost breakdown is based on their sector.

> There's expected to be a solar panel shortage coming soon because the industry is growing so fast

The Chines companies haven't caused panel shortage in the past. Quite the contrary. They ruined many producers in Europe with their dumping prices.