Cost Breakdown Structures for Solar PV Projects

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

CategoryDescription
CablingAll 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 mountingComplete 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 connectionAll medium voltage cables and connectors

Switch gears and control boards

Transformers and/or transformer stations

Substation and housing

Metering devices
Safety and securityFences

Camera and security systems

All equipment fixed installed as theft and/or fire protection
Monitoring and controlSCADA monitoring system

Meteorological sensor system

Other monitoring and fiber optic equipment needs

Installation Costs – Table 2

CategoriesDescription
Mechanical and civil engineering and constructionAccess 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 installationDC 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 commissioningEquipment quality control (from the factory floor to installation)

Construction supervision

HSE risk management

Equipment warranty testing and commissioning

Soft Costs – Table 3

PermittingCritical issue analysis to understand which permits and compliance requirements apply

System designSolar 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 acquisitionCosts for securing a PPA or off-take agreement, including any legal type of provisions paid in order to get the project in place
FinancingAll necessary financing costs for short-term construction funding and/or long-term debt or tax equity financing
Incentive applicationAll costs associated with securing with tax and production related incentives, capital grants or subsidies
MarginMargin 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

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 InvertersString invertersMicro-inverters
Power> 100 kWp<100 kWpModule rating
EfficiencyUp to 98.5%Up to 98%90-95%
Global Avg Price0.140.180.38
Power electronics0.0150.0170.069
Control card0.0010.0020.010
Filters0.0060.0060.010
Distribution board and others0.0200.0260.110
Indirect costs0.0750.1000.117
Margin0.0230.0300.063
Chinese OEM Pricing0.03-0.050.06-0.08N/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.

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