Central Inverter Life-cycle Cost Considerations

The solar PV industry uses a wide range of performance metrics, yet many of those are incomplete and do not address the most fundamental challenge of renewable technologies—lowering the cost of energy produced.

Although the solar industry is littered with notable metrics—such as PV efficiency, panel manufactured cost, and installed cost per watt—ultimately developers earn maximum returns by optimizing the overall system design and lifecycle performance to achieve the lowest levelized cost of energy (LCOE) in dollar/kWhr terms. For commercial and utility-scale solar projects, the central inverter is arguably the most active and critical component. All energy from the PV array is conditioned, monitored, and optimized via the central inverter. The harsh field environment and dynamic operation challenge inverter reliability, uptime, and power conversion efficiency.

As the solar industry matures, developers recognize the importance of the inverter and evaluate its effect on LCOE. Interestingly, while the overall project LCOE is dependent on low installed system cost (USD/W), the LCOE contribution of the central inverter far outweighs the cost of the inverter itself. A challenge for the industry is how to evaluate a critical component in LCOE terms; clearly, a simple metric such as USD/watt is easy, yet incomplete. Every project has unique variables and optimization trade-offs.

Energy harvest & revenue generation
The most obvious metric to evaluate harvest is the inverter power conversion efficiency across load factors ranging from 10% to 100% load; however, the “standard of comparison” is not so consistent. For example, if an indoor inverter is put into an enclosure, energy requirements to move or condition ambient air must be deducted from inverter harvest energy. A 15kW, nominal air conditioning load for a 1 MW power station equates to a 1.5% efficiency loss.

Additionally, uptime (or “availability”) is an emerging metric and a huge factor for overall PV site performance. The central inverter has been cited as a primary cause of lost production. In years past, inverter uptime was sometimes less than 97%. Now, industry leaders have developed uptime guarantees, whereby developers pay for assured uptime and receive penalty cash flows for downtime—an insurance plan that eliminates one variable in a project financial model.

But, what is the value of incremental energy harvest? Each project is unique, but a NPV (net present value of expected cash flows) calculation suggests the value of just one percent incremental inverter harvest may be worth in the range of $20,000 per 500kW inverter*—a high fraction of a typical inverter unit cost. The combination of one percent efficiency advantage, plus one percent uptime advantage may be equal to approximately $40,000 in value. Compare this to a nominal 500kW inverter cost of $100,000, and these harvest factors generate a +-40% value versus the inverter unit cost. As a result, procurement fixation on unit cost dollar/watt without consideration of harvest performance is a severe oversight.

Balance of System (BoS) costs & capital investment
The inverter selection impacts secondary BoS costs beyond the inverter. These costs can be grouped as dollar/watt installed costs, but to properly assess inverter cost, all consequential costs must be accounted for and compared across prospective suppliers. A complete accounting of tradeoffs will equal a high percentage of the inverter unit cost, including: the inverter unit price itself; enclosures; air moving/conditioning equipment; switchgear; transformers; data monitoring; turnkey substation bundling options; etc. Also, not to be overlooked, other details must be assessed such as: warranties; warranty extensions; hardware transportation costs; mandatory maintenance contracts and terms; field labor costs; schedule risks; and, associated cost of delays.

Depending on project specific system design optimization, the BoS cost savings via turnkey power stations and outdoor-ready inverters may range from $30k to $50k per inverter. Compared to a nominal $100k per 500kW inverter, this equates to 30% to 50% leverage verses the inverter unit price.

Life-cycle service costs
Getting excellent long-term performance from the central inverter requires proactive maintenance, and sometimes even reactive high-speed service. Therefore, evaluation and selection of the ideal inverter must not overlook service factors as a complete project life-cycle perspective is necessary to capture long-term costs. Upfront, the inverter standard warranty must be considered carefully, as not all warranties are the same.

Questions to consider: Does the warranty cover only workmanship and materials, or is it comprehensive including “wear parts,” such as fans or blowers? Who pays for technicians to travel to repair? Does the supplier include product training? How responsive is the supplier?

Another often-overlooked aspect of inverter cost is the product lifespan. Today, most PV-project finance models plan for replacement of central inverters in approximately year ten. However, central inverters with a 20-year design life are available via precision cooling schemes and design for serviceability. The financial benefit of not having to replace the inverters in year 10 is equal to the NPV of the year 10 $100k inverter, field of replacement expense, and the associated downtime. The NPV of these may be in the range of $25k, a large percentage of the initial unit cost.

Inverter evaluation: beyond USD/W
The information here provides a framework for evaluating central inverter costs beyond the unit price, and estimates the dollar value of cost variables dependent on the inverter. When assessing performance factors in NPV terms, the value of harvest performance, BoS costs, and lifecycle service expenses can outweigh the purchase cost of the inverter itself. Developers and application engineers must analyze system design optimization for each unique project, and strive to fully assess cost elements beyond the upfront unit price.


* The example cited is for a 500kW inverter with $100k nominal unit cost, and estimated secondary cost variables that may exceed $100k per inverter unit. Those variables include energy harvest ($40k), BoS costs ($30 to $50k), and service expenses ($20k to $45k). Of course, for a 10 MW project, these items are multiplied 20X, translating to a $2M financial impact.


Ed Heacoxis the VP for Advanced Energy, Solar Energy.

Advanced Energy
www.advanced-energy.com