Global residential solar demand performed strongly in 2020, but costs vary widely

According to the latest report from Bloomberg New Energy Finance, the residential solar industry is performing strongly
worldwide.
Lockdown restrictions due to the pandemic have given customers more reason to focus on their energy bills and more time for home renovations
such as solar.

In Germany, the capacity of solar systems under 10kW installed between January 2020 and August 2020 increased by 22%
compared to all of 2019, according to Bundesnetzagentur.
In Australia, a quarter of households already have solar energy
.
Data from clean energy regulators suggests that the residential solar industry is poised to hit another all-time high
.
Installations in the first eight months of 2020 were higher than in all of 2018 and more than 30% higher than
in the same period in 2019.

In the U.
S.
, data from the Energy Information Administration showed that installations in the first seven months of 2020 increased by 21 percent
from the same period last year.
In 2020, more than 1.
8GW of new residential solar systems were commissioned as U.
S.
households increasingly switched to rooftop solar to save energy and improve resilience
.
After the City Permit Office resumed normal operations, there was a large backlog of rooftop solar permit applications, most of which have now returned to normal activity levels
.

In Europe and Australia, most solar systems are sold and installed by small companies in the homeowner's location, usually home companies
that also do roofing or electrical engineering.
This means relatively low sales and marketing costs and higher
competition.

Although solar systems in Europe are cheap, they are often less economically efficient because the electricity output rates paid to the system ("grid-tied electricity prices") are much
lower compared to electricity buyers.
In addition, Northern Europe has fewer
sunny days than Australia or California.
The calculated payback period is usually 9 years, but is usually based on unrealistic estimates
of how much electricity users will be able to use when generating electricity to replace electricity purchased from the grid.

In Australia, home solar is in much better shape thanks to a generous government subsidy program, plenty of sunshine, and high export duties on electricity and solar
.
By 2020, the average Australian can expect a solar system that has been in use for 25 years to pay for itself within 7 years
.

Meanwhile, residential solar systems in the U.
S.
are much more expensive, and unlike Europe and Australia, there are large national installation companies such as Sunrun or Vivint (recently merged).

One reason for the relative consolidation of the U.
S.
market is that U.
S.
tax incentives favor solar owners who can make the most of the tax gains to monetize, rather than homeowners or businesses
that use electricity.
Larger installers are able to assemble portfolios and attract investors to extract more value from rooftop solar systems, being able to charge higher prices to justify spending large amounts of money on customer acquisition and management fees
.

In addition, the tax credit creates a market for major generators and other intermediaries, driving up the final price for homeowners while still providing a 5-8 year payback period
in California and most other active U.
S.
solar markets.
A relatively small factor in high U.
S.
capital spending is import tariffs on U.
S.
modules, meaning that U.
S.
customers typically pay $0.
33/W for modules, compared to $0.
21/W or less
in other markets.