Balance-of-Systems Drives Solar System Capex Down as much as 30% by 2020
Racking and mounting cost reductions and electrical innovations will cut balance-of-system costs, with biggest drops in the residential segment, Lux Research says
BOSTON, MA –January 23, 2014 – Falling module prices have helped to bring down the cost of solar installations, but now balance of system (BOS) components like racking and mounting are key targets of cost reduction, as distributed generation system prices fall by between 15% and 30% by 2020 depending on geography, according to Lux Research. Along with continuing module efficiency improvements, these advances will make the levelized cost of electricity (LCOE) for solar between $0.04/kWh and $0.08/kWh cheaper in 2020 than it is today.
“Balance-of-systems costs are in developers’ crosshairs as the pressure to reduce costs extends downstream. Incremental cost reductions from racking and mounting, coupled with innovative system electronics changes, will accelerate system cost reductions and help reduce LCOE,” said Matthew Feinstein, Lux Research Senior Analyst and the lead author of the report titled, “The Squeeze: Trends in Solar Balance of Systems.” “Project volumes will also continue to drive M&A activity in the BOS industry, with plenty of opportunity for new entrants,” he added.
Lux Research analysts evaluated the factors driving BOS cost reductions in varied geographies and application segments. Among their findings:
- Residential segment is poised for biggest gains. By 2020, residential BOS costs are set to drop more than any other application segment, driven largely by cuts in labor costs, thanks to ever-increasing adoption of time-saving best practices. Commercial systems will see cost reduction due to new, lower-cost racking and mounting hardware.
- Thin-film systems’ costs fall fastest for utility scale solar. Standard utility-scale BOS costs fall fastest for CdTe systems, thanks largely to increasing module efficiency lowering the cost of racking and mounting hardware on a per-watt basis.
- Electrical innovations hold out hope for further reductions. Innovations targeting the electrical side of the BOS industry have the highest potential for cost reduction. In distributed generation, the high-voltage trend will go as far as code allows, up to 1,500 V, while utility-scale system developers will pursue automated installation technologies and high-voltage configurations.
The report, titled “The Squeeze: Trends in Solar Balance of Systems,” is part of the Lux Research Solar Systems Intelligence service.