PV inverter teardown identifies price-reduction opps

IHS performed its first teardown of a solar PV inverter on the Power-One Inc. Aurora PVI-4.2-OUTD-S-US inverter, and used this data to suggest areas where PV inverter makers can cut costs in coming years.

December 15, 2011 — Analyst firm IHS performed its first teardown of a solar photovoltaic (PV) inverter on the Power-One Inc. Aurora PVI-4.2-OUTD-S-US inverter. IHS iSuppli Teardown Analysis found the inverter’s bill of materials (BOM) to total $641.47, with an additional $47.87 in estimated manufacturing and test costs.

Solar inverters convert the DC power gathered by photovoltaics panels into DC or AC power that can then be fed into the electrical grid, or put to use locally. The solar inverter industry is expected to see rapid price erosion in coming years, as about 125 brands participate in the market. Prices are expected to fall about 10% annually, on average, for several years, said Greg Sheppard, senior director of PV research at IHS. Worldwide unit shipments could hit 30.2 million units in 2015, up from 4 million in 2011.

Also read: 2011: The rise of solar inverters

An inverter is half power management system and half embedded computer:

IHS found that the most expensive component of Power-One’s inverter is mechanical (33.1% of BOM). Commodity metals, subject to varying pricing, are extensively used here, and indeed are responsible for most of the system weight. With declines in copper and aluminum market prices, inverter makers could reduce costs, said Kevin Keller, senior principal analyst, teardown analysis, IHS.

Passive components represent the second most expensive component group of the PVI-4.2-OUTD-S-US (29.6% of BOM). Inductors are a significant portion: the PVI-4.2-OUTD-S-US integrates two pieces of wound copper foil, double-cut C core inductors from Endela Electronics Co. Ltd., priced at $72.10, or 11.2% of BOM. Lower-cost inductors could bring down the overall inverter cost, Keller notes.

The enclosure, made of stamped/formed aluminum, is also a candidate for price-trimming ($42.26, 6.6% of the BOM). Inverters also could reduce enclosure costs by sourcing lower-cost heat sinks. The Aurora PVI-4.2-OUTD-S-US includes a machined heat sink made from extruded aluminum with an estimated cost of $39.13 (6% of the total BOM).

PowerOne PV inverter price analysis by IHS.
Figure. Cost breakdown of PV inverter by IHS iSuppli. Inverter: Power-One Aurora PVI-4.2-OUTD-S-US

Power-One in H2 2010 ranked as the world?s second-largest solar power inverter supplier, with a 12.5% share of global market share measured in terms of gigawatts. The PVI-4.2-OUTD-S-US is a power inverter intended for outdoor use. Of the various models in the company?s flagship Aurora product line, this unit features the highest-rated maximum AC output power of 4,200 watts. Market surveys indicate that typical dealer prices for the Aurora PVI-4.2-OUTD-S-US range from approximately $2,100 to $2,600.

Cost Type Component Family  Component Cost
Direct Material Cost Mechanical $212.11
  Passive $189.57
  Electro Mechanical $104.71
  Module $38.16
  Integrated Circuit $36.79
  Discrete Semi $22.40
  Accessories $18.89
  Literature & Packaging $8.39
  Display $7.46
  Optical Semi $2.89
  Battery $0.10
Direct Material Cost Total   $641.47
Conversion Cost Test $21.93
  Assembly $10.49
  Amortized Setup, Staging & Allocation $10.21
  Insertion $5.24
Conversion Cost Total   $47.87
Grand Total   $689.35

IHS (NYSE: IHS) provides information and insight in critical areas that shape today?s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost. Learn more at www.ihs.com.

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