Plunging solar power tariffs have led developers to seek ways to reduce costs and improve efficiencies in solar power generation. Balance of system (BoS) components, which have significant capital and operational cost implications, can play an important role in this regard.
BoS costs can be categorised as hard costs and soft costs. Hard costs include inverters, switches, support racks, wiring and batteries/storage systems, and land. All other costs associated with planning, permissions, customer acquisition, insurance and labour for installation, and interconnection are referred to as soft costs. Both these components vary considerably across regions, technologies and market segments, and are affected by local conditions and the regulatory environment.
BoS refers to all equipment associated with a photovoltaic (PV) system, with the exception of solar modules. Some of the key BoS components are solar trackers, switchgear, inverters and mounting structures.
Solar trackers are one of the most recent additions to the solar plant system and have become an important component in terms of efficiency improvement. This mechanism allows a solar panel to move along the path of the sun during the day and/or according to the season to receive more direct irradiation and thus generate more electricity. Trackers are of three broad types: dual-axis trackers, single-axis trackers and manual trackers. A dual-axis tracker has two rotational degrees of freedom, and hence, two axes of rotation – a primary axis and a secondary axis. These axes are perpendicular to each other and allow for optimum solar energy generation due to their ability to make the PV module follow the sun vertically and horizontally. A single-axis tracker has one rotational degree of freedom and can follow the sun as it moves from east to west during the day. A manual tracker requires the panel to be manually adjusted to follow the solar trajectory.
Recent design innovations are aimed at cost optimisation of the solar plant by integrating the solar tracker with other BoS components. For instance, bringing together solar trackers and string or central inverters can lead to the sharing of communication devices and power and communication cables. Similarly, a combination of solar trackers and customised solar module frames can reduce the installation time and hence avoid delays in commissioning. Other innovations include bifacial PV modules, which, while producing 360-380 W of power from a 72 cell module, can reduce the tracker cost and land requirement by 15 per cent.
The global solar tracker market has been showing significant growth, with a 63 per cent year-on-year increase during the period 2015-16. The Asia-Pacific market performed even better, with a year-on-year growth of 258 per cent during the same period. India had 1.45 GW of solar trackers installed as of 2016-17, with the key players being ArcTech Solar (35 per cent market share), NEXTracker (20 per cent), Scorpius Trackers (13 per cent), Mahindra Susten (12 per cent) and Convert Italia (11 per cent).
Switchgear comprises a combination of components such as switches, fuses and circuit breakers that are used to control, protect and isolate electrical equipment in order to enable continuous and reliable supply of electricity. These are available in low, medium and high voltage levels based on the load-bearing capacity of the switchgear. Medium voltage (MV) switchgear is the most commonly used switchgear in solar plants. It comes in voltage ratings of 12 kV and 33 kV, and is divided into two types – air-insulated switchgear (AIS) and gas-insulated switchgear (GIS) with ring main units.
The AIS category uses ambient air for insulation and has low capital and maintenance costs along with features such as on-site reparability, high degree of safety and environment friendliness. In India, AIS has a large installation footprint. There is also the added advantage of high availability of skilled personnel for AIS operations and maintenance (O&M). GIS uses sulphur hexafluoride for insulation. While it also has low capital and maintenance costs and a high degree of safety, it does not have the option of site reparability and is not as eco-friendly. Therefore, GIS has a smaller installation market in India.
In tandem with other solar plant components, the prices of switchgear too have been falling over time in India. Further, the increasing installation of solar power plants has led to a growing demand for switchgear. Depending on the capacity of the plant, both 12 kV and 33 kV switchgear are used. Also, the use of load break switch and vacuum circuit breakers in switchgear has positive cost implications. Standardised combinations and configurations reduce the lead time and result in faster project execution.
Inverters are responsible for a large part of BoS costs. They are the crucial link between a PV system and an energy offtaker as they convert the direct current (DC) output into alternating current (AC), which is the preferred form of power usage in the country. Various innovations in inverters such as string level management, usage of shortened DC cables and cloud-based systems, and consistent I-V curve monitoring are leading to increased inverter efficiency, resulting in a lower levellised cost of energy (LCoE). Huawei, for instance, claims that its inverters ensure 99 per cent efficiency.
Further, with consistent I-V curve monitoring, maintenance costs can be reduced, leading to higher yields, safer and more reliable operations, and reduced O&M costs. Huawei and Kaco New Energy are among the key players in the inverter market.
According to the Central Electricity Regulatory Commission’s benchmark capital cost norm for solar PV plants for 2016-17, mounting structures accounted for 6.6 per cent of total plant costs. Mounting structures are usually fabricated using galvanised steel (GI) or galvalume (GL). A typical solar plant requires 40-60 metric tonnes of GI or GL per MW of installation. Most of the steel consumed in a solar plant is used in the manufacture of mounting structures, panel support, cable trays and junction boxes. The demand for coated steel (GI or GL) for use in solar plants during the period 2017 to 2022 is expected to be about 1 million tonnes.
GL is a relatively new technology. It uses an alloy of 55 per cent aluminum, 43.5 per cent zinc and 1.5 per cent silicon by weight. GL is more corrosion resistant and has a significantly reduced average corrosion loss compared to other forms of coating. While GI is manufactured by many firms across India, only two firms, JSW Steel Coated Products Limited and Tata BlueScope Steel Limited, are licensed to produce 55 per cent aluminium GL.
The protection provided by coating (whether GI coating or GL coating) depends on the thickness of the coat. The greater the thickness of the coating, the greater is the protection, and the lower the corrosion and project life cost. Thus, the latest innovations have been focused on increasing the thickness of the GI or GL coating. The aim is to produce a GI coating thickness corresponding to 750 grams per square metre (gsm) compared to about 550 gsm at present. As far as GL is concerned, efforts are being made to fabricate a coating thickness of 2.5 mm, up from 1.2 mm used in GL steel.
The demand outlook for BoS component suppliers is strong. Increased solar capacity installations present a significant opportunity for companies operating in this space. However, the effects of reducing BoS costs cannot be emphasised enough. These components are expected to remain the focus of the cost reduction efforts in the segment as tariffs decrease consistently and developer margins narrow. The solar segment can no longer depend on a single component for reducing costs and needs to focus on the integration of components.
The decline in feed-in tariffs by over 84 per cent from 2011 to 2017 makes it incumbent upon the developers to minimise their LCoE. This presents a significant challenge to companies operating in the BoS components market to reduce their own costs and the prices of their products in order to remain relevant in this highly competitive market.