Modules, inverters and balance of system costs define the total installed cost of a solar PV system.
The three cost components are very simple in nature. In practice, total cost is defined using a detailed cost breakdown structure. The structure must also be applied consistently across projects and over time. The result can be improved cost modeling and management.
Balance of system costs (BoS)
Tables 1 to 3 define solar PV BoS costs. First, there are hardware costs beyond the modules and inverter. There are also installation costs. Finally, there are vendor specific soft costs. A cost breakdown structure is then use. The structure details the drivers of BoS costs.
Hardware Costs – Table 1
| Category | Description |
|---|---|
| Cabling | All direct current (DC) components , such as DC cables, connectors and DC combiner boxes All AC low voltage components, such as cables, connectors and AC combiner boxes |
| Racking and mounting | Complete mounting system including ramming profiles, foundations and all material for assembling All material necessary for mounting the inverter and all type of combiner boxes |
| Grid connection | All medium voltage cables and connectors Switch gears and control boards Transformers and/or transformer stations Substation and housing Metering devices |
| Safety and security | Fences Camera and security systems All equipment fixed installed as theft and/or fire protection |
| Monitoring and control | SCADA monitoring system Meteorological sensor system Other monitoring and fiber optic equipment needs |
Installation Costs – Table 2
| Categories | Description |
|---|---|
| Mechanical and civil engineering and construction | Access and internal roads Preparation for cable routing (e.g., cable trench, cable trunking system) Installation of mounting/racking system Installation of solar modules and inverters Installation of grid connection components Uploading and transport of components/equipment |
| Electrical engineering and installation | DC installation (module interconnection and DC cabling) AC medium voltage installation Installation of monitoring and control system Electrical tests (e.g., DC string measurement) |
| Inspection and commissioning | Equipment quality control (from the factory floor to installation) Construction supervision HSE risk management Equipment warranty testing and commissioning |
Soft Costs – Table 3
| Permitting | Critical issue analysis to understand which permits and compliance requirements apply |
|---|---|
| System design | Solar resource sensors and assessment Ground truthing and GIS data collection Costs for geological surveys or structural analysis Costs for surveyors Costs for conceptual and detailed design Costs for preparation of documentation |
| Customer acquisition | Costs for securing a PPA or off-take agreement, including any legal type of provisions paid in order to get the project in place |
| Financing | All necessary financing costs for short-term construction funding and/or long-term debt or tax equity financing |
| Incentive application | All costs associated with securing with tax and production related incentives, capital grants or subsidies |
| Margin | Margin for OEM equipment vendors and EPC company. Also includes fees for project developer for development activities, as wella other profits, wages, legal fees, etc. |
International BoS Benchmarks
The chart below compares solar balance of system costs by country and cost category for the year 2015 (cost have fallen since then of course)[source: IRENA]
Solar PV balance of system costs
The data highlight the importance of the structuring of support policies and their impact on competitive pressures, as well as the benefits that accrue to established and mature markets with a wealth of domestic experience in implementing solar PV projects.
Inverter System Costs
Inverters convert the DC electricity produced by solar PV modules into AC electricity. As a result, they are essential for on-site use with AC appliances or for power injection into the grid. There are several types of inverters: micro-inverters, string inverters and central inverter technologies. [ Micro-inverters are module-level power electronics that convert DC electricity into AC electricity at the panel level.] The costs of all three are compared below:[Source: equipment vendor survey]
| Central Inverters | String inverters | Micro-inverters | |
|---|---|---|---|
| Power | > 100 kWp | <100 kWp | Module rating |
| Efficiency | Up to 98.5% | Up to 98% | 90-95% |
| Global Avg Price | 0.14 | 0.18 | 0.38 |
| Power electronics | 0.015 | 0.017 | 0.069 |
| Control card | 0.001 | 0.002 | 0.010 |
| Filters | 0.006 | 0.006 | 0.010 |
| Distribution board and others | 0.020 | 0.026 | 0.110 |
| Indirect costs | 0.075 | 0.100 | 0.117 |
| Margin | 0.023 | 0.030 | 0.063 |
| Chinese OEM Pricing | 0.03-0.05 | 0.06-0.08 | N/A |
Module System Costs
Solar module pricing declined 80% from 2009 to 2015. During Q1 2015, solar PV module prices continued to fall by 15% for crystalline modules and by 4% for thin-film modules.