Direction and rate of technological change
As advancements in PV modules continue to increase efficiency and reduce cost, BOS costs, along with operations and maintenance and the cost of capital, will come to play a greater role in the aggregate expense of constructing utility-scale PV. (IRENA 2016) Essentially it is through the BOS components that project developers can control cost, increase efficiency, and modernize utility-scale PV systems. As discussed in the Innovative Outcomes section of the PV Module manufacturing step, it is expected that majority of the future cost reduction potential will likely come from reduced BOS costs via convergence around best practice, as the cost spread of solar modules has recently narrowed and the potential cost savings available through incremental changes to modules will be relatively modest. IRENA estimates that 90% of the BOS cost reduction potential can be met through convergence toward industry best practices. It is estimated that utility-scale PV system costs can be reduced by up to 20% from 2015 to 2025 following a trend towards more modular, scalable power plant development. Combining, hardware, installation, and soft costs, the total BOS cost reduction potential may be as high as 66%, or about $0.20/W (Figure IO.1). (IRENA 2016)
Figure IO.1 Balance of System Costs and Cost Reductions by Source, 2015-2025
Source: Figure 9 from IRENA 2016, original data from deea 2016 and IRENA analysis
Best practices of reducing BOS costs include: streamlined logistics and localized supply chains, increasing market volume with economies of scale, and more integrated installation concepts for efficient use of labor and shorter construction periods. BOS manufacturers can significantly reduce their costs through modularization, preassembly, standardization, and automation, techniques that are commonly utilized in mature industries. (McKinsey) Much of the innovative activity in BOS has focused on the areas of customization, optimization, and software to enable implementation of best practices. Solar customization describes the practice of initially planning out and selecting every aspect of a proposed project (including specific BOS components), as compared to focusing on acquiring modules and procuring BOS later. Recent development in smart solar modules that provide maximum power optimization and plug-and-play functionality greatly reduces the amount of BOS materials needed and installation, therefore lowing system cost. Software development is now playing a more crucial role in the solar industry as software is used to perform a variety of operation-critical tasks including tracking energy production, monitoring whole-system health, gauging panel performance, and programming battery storage and deployment options that can help the system run more efficiently.
Other technological advancements include high-voltage inverters, more power-dense products and next-generation switching materials; these have yet to exhaust their cost-reduction potential and are projected to contribute to further price decline through 2022. (GTM Research 2017) Innovations in the racking industry include preassembled components and parts, integrated grounding solutions, and higher tolerances for foundation-to-rack connections to reduce installation time for racking systems. Many manufacturers have also used wind tunnel tests related to tracker dynamics and stow strategies to enable the use of less steel, thereby reducing costs. (GTM 2018)
Data on Quantity, Cost, and Quality
In attempting to compile a time trend table for inverter and tracking attributes, we come to the same conclusion as IRENA:
“Data collection challenges mean that high levels of disaggregation are difficult to obtain on a comprehensive and consistent basis over time, when examining trends in individual markets. Analysts are typically left with one-off snapshots of the cost structure of solar PV plants and uncertainty about whether data from different sources are comparable. In general, it is extremely difficult to access comprehensive time series data on actual cost breakdowns.”
Figure IO.2 to Figure IO.5 illustrate time series of shipments, production capacity and prices of inverters from various sources.
Figure IO.2 Inverter Shipments and Prices from Public Corporate Filings
Source: Figure 8 from NREL U.S. Solar PV System Cost Benchmark Q1 2017
Figure IO.3 Global Blended PV Inverter Average Sales Prices by Product Type ($/Wac)
Source: GTM Research – The Global PV Inverter and MLPE Landscape: H1 2017
Figure IO.4 Global PV Inverter Market Forecasts by Product Type
Source: GTM Research – The Global PV Inverter and MLPE Landscape: H1 2018
Figure IO.5 Annual U.S. Inverter Production Capacity, Shipments and Installations
Source: Figure 2.41 from SEIA U.S. Solar 2016 Year in Review