Market research firm, Lux Research expects balance of system (BOS) component costs to fall gradually through the rest of the decade, according to a new report.
Lux Research guided BOS costs for distributed generation applications are expected to decline between 15% and 30% by 2020 depending on geography.
However, combined with expected PV module conversion efficiency gains the levelized cost of electricity (LCOE) for PV is expected to decline in the range of U$0.04/kWh - U$0.08/kWh by 2020.
“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. “Project volumes will also continue to drive M&A activity in the BOS industry, with plenty of opportunity for new entrants.”
Not surprisingly, residential BOS costs have the greatest opportunity for falling, according to the report, which expects these to be driven by lower labour costs as markets mature and best practices become widespread.
Germany is regarded by many industry observers to have the lowest residential BOS costs, while the US is perceived to have some of the highest.
Lower-cost racking and mounting hardware are also expected to support installation cost reductions for both residential and commercial rooftop markets.
With respect to thin-film system costs, Lux Research expects BOS costs to fall the fastest, notably for CdTe thin-film technology used in utility-scale PV power plants.
PV Tech's sister publication, Solar Business Focus recently covered the major trends driving modular block PV power plant system adoption and the key role modular build strategies and technology were driving significant LCOE cost reductions.
First Solar and BELECTRIC were highlighted as the two innovators and drivers of lowering LCOE metrics for PV power plants using CdTe thin-film technology.
Lux Research also noted that overall electrical innovations provide the best opportunities for further component cost reductions, while in distributed generation, the high-voltage trend of up to 1,500 V, is expected to gain momentum, while utility-scale system developers will pursue automated installation technologies and high-voltage configurations.
However, not covered was the significant ‘soft costs’ associated with PV system installations, which NREL has recently studied that indicate soft costs comprise up to 64% of the total price of residential systems.