The GlobalData’s latest report states that this decline, which represents a negative Compound Annual Growth Rate (CAGR) of 12.3%, will be primarily due to the continuing decrease in solar PV BOS costs. BOS refers to all of the components of a solar PV system, excluding the modules. The hardware components of BOS include inverters and structures, as well as cabling and transmission equipment.
Prabhanjan Kumar Singh, GlobalData’s Analyst covering Power, explains: “As the solar PV market gained momentum, the optimization in component manufacturing industries led to large-scale manufacturing and reduced costs, including labor and service costs. Although labor rates have been increasing in several countries, with more optimization and standardization of installation procedures, the number of labor hours has been decreasing, influencing the overall BOS cost.”
The BOS cost fell from $1.96 per Watt (W) in 2010 to $0.98 per W in 2015, and with further standardization expected in the structure-manufacturing industry and in installation procedures, GlobalData expects this cost to decrease further to approximately $0.5 per W by 2020.
Despite its significant decline, the APAC market will still maintain its position as the largest region. Its share of the global BOS market is expected to decline from 57% in 2015 to 45% in 2020. This is due to the relative increasing strength of the BOS market in the Americas, with its market share expected to increase from 25% in 2015 to 41% in 2020.
Singh adds: “The solar PV BOS market in the Americas will reach its peak at just over $19.5 billion in 2016 and will decline steeply the following year as investment tax credits to support solar PV deployment expire in the US, which is the biggest market in this region. However, beyond 2017, a gradual fall is expected in market size, due to falling BOS costs and the slow increase in annual capacity additions.”