Solar focuses on nuts and bolts to cut costs

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Solar installation cost reductions highlight falling panel prices, BOS savings, micro-inverters, factory preassembly, quick fasteners, standardized mounting, and streamlined wiring to cut labor, reduce price per watt, and speed rooftop and utility-scale deployments.

Inside the Issue

Process tweaks cut BOS labor and hardware, complement panels, and lower price per watt for rooftop and utility systems.

Panel costs fell over 50% since 2008, near $2/W; some at $1.85/W.
First Solar leads thin film costs at about $1.50-$1.55 per watt.
Installers target 5-15% BOS savings through streamlined labor.

Even as solar companies cook up high tech ways to cut costs, the next push to make the renewable energy source more economical could come from workers who bolt panels onto rooftops and mount them across empty fields.

So far, panels — a system's most expensive piece — account for the biggest drop in the total cost, and solar power has never been cheaper as prices have fallen more than 50 percent from about $4.20 a watt in 2008.

Most U.S. and European makers are now selling panels near $2 per watt, while some low-cost Chinese players sell panels at about $1.85, said J.P. Morgan research analyst Christopher Blansett, while thin film maker First Solar Inc, following a cost breakthrough that reshaped its pricing, is the cost leader at about $1.50 or $1.55 per watt.

That decline has put a spotlight on installation, which now makes up a greater share of the total cost, and has prompted installers, developers and even panel makers to look for low-tech tricks, like quick fasteners and predrilled holes.

"There's no rocket science. It's literally doing things better and more efficiently," Blansett said.

After the shiny blue and black solar panels leave the factory, technicians have to bolt the panels into steel or aluminum frames, mount them to rooftops or across fields, connect them to inverters and string the wiring to feed electricity to homes, businesses or a power grid.

The big challenge for installers is that "there is no single item that moves the needle," said Lyndon Rive, chief executive at SolarCity. The privately held company designs, installs and finances systems for homes and businesses in California, Arizona and Oregon.

"It's doing one thousand little things better," Rive said, such as managing inventory so crews don't make extra trips to a hardware store.

The U.S. solar market is on track to grow 35 to 45 percent in 2009, reflecting top solar trends across the sector, and reach about 460 to 500 megawatts, said Alfonso Velosa, a research director at Gartner.

Residential systems are expected to remain about a third of the total U.S. market this year as homeowners find solar more affordable nationwide, Velosa added.

While companies like SunPower Corp and Suntech Power Holdings Co Ltd are working on cutting-edge technology to make more efficient solar cells, with a handful of players dominating the sector today, Velosa said they are "starting to hit the limits of what the materials can do."

The solar sector leans on government incentives to compete with traditional power sources, but industry experts believe it will be economically viable in the near future.

Toward that goal, installation costs could drop 5 to 15 percent next year, executives from Suntech, Solon and other companies said at the Solar Power International conference in Anaheim, California.

Akeena Solar Inc sees even more promise, with its roadmap to cut installation costs by more than half in 2010.

Akeena's new Andalay branded panels have built-in micro-inverters to convert the direct current electricity produced by solar panels into alternating current rather than requiring a separate unit, as most systems do.

Heavyweight panel makers have also gone back to the drawing board to design products, a kind of solar panel makeover that means more work that used to happen at the construction site is done in the factory.

Solon and Suntech both recently launched new systems for the U.S. utility market that the companies say shave time and money off the installation costs.

U.S. based SunPower Corp and Energy Conversion Devices have also introduced new products to make rooftop work easier as thin-film cells fatten the market for utility and commercial projects.

"If you have to have to weld something or construct something (in the field), it's quite expensive," said Olaf Koester, chief executive at Solon's U.S. unit.

Koester cited Solon's new Velocity system, which uses built-in rails instead of a frame, as an example of a design that streamlines the installation work.

Companies that install solar systems are also moving to more standard systems instead of customizing each site, which takes time and money and can create new problems every time.

"We almost used to pride ourselves on all the custom work we did. But it's too expensive. We need to be able to compete with the retail price of electricity," said Mike Hall, chief executive at privately held Borrego Solar Systems Inc.