David Dunnison, President & CEO at Global PVQ Canada (formerly Q-Cells) shares his thoughts exclusively to PV-Buzz about a previously featured article: Solar Balance of System (BoS) cost continues to be the focus of cost-reduction strategy.
To answer this question, we should still expect cost reduction in modules though not at the same pace that we have seen over the last few years.
This article cites reduction in module costs since 2008. A large part of that module cost reduction came as a result of expanding polysilicon capacity which alleviated the shortage that had polysilicon costs up to 25x what they are today. In a classic supply versus demand relationship the rush to build polysilicon plants, however, led to an overcapacity which has temporarily held polysilicon pricing lower than a ‘balanced’ supply chain. Poly prices are starting to show signs of recovery.
Going forward, it is reasonable to expect that modules will follow their historic learning curve (~85%) when it comes to cost reduction. Ultmately, the module cost is fundamentally driven by materials cost and modules and their components are already produced in large, highly automated factories.
As the article points out, there are many areas of inefficiency, most notably related to permitting and connection costs. Countries like Germany remain well ahead of North America in their approach to permitting and connection. Even a $1,000 fee for a connection permit can represent a pretty big fundamental system cost on a residential system.
Moreover, some jurisdictions like Ontario, have restricted installation on new construction. A ‘design-in’ solution would be much more cost effective. Given North America’s established building stock and relatively small rate of new construction in proportion, however, more focus on new construction will not affect the average installation cost all that much.
In terms of labor costs, PV installation is still pretty new across much of North America, and unless you are in Southern California, there may not be a lot of experienced installation crews that you can select from. This is true for small and large systems.
On large system installations there remains a considerable amount of legal and engineering charges that a mature industry would not experience or tolerate. These costs can be driven by legislation. Ontario’s domestic content policy, for example, has resulted in millions of dollars of auditing costs being a standard factor in large PV installations. These auditing costs may actually be duplicated or triplicated as different parties – the EPC firm, the owner, and the lender – require separate audits for the same installation.
Hopefully some of these factors help explain why the article cites the non-module costs as offering the greatest leverage for cost reduction.
President & CEO at Global PVQ Canada (formerly Q-Cells)
Extensive Board, CEO, and executive roles in private, public and not for profit organizations. Broad industry and operating experience from Fortune 500 organizations through to multiple successful cold starts. Launched, led and mentored many successful high tech businesses. Recently introduced a new PV solar grade silicon business, developing strong partnerships and billions of dollars in global revenue commitments. Interested in early-stage game changers, changing markets, and opportunities to make a difference. (LinkedIn Profile)