Background
In the solar energy industry, the $/Watt metric has been a cornerstone for assessing the cost-effectiveness of solar modules. This metric originated in the early days of solar technology to provide a straightforward way of comparing different solar module prices. It simply reflects the cost of a solar module divided by its power output in watts, making it an easy-to-understand measure for developers and owners alike.
However, the traditional $/Watt metric presents several challenges:
- Narrow View: It focuses solely on upfront module purchase price and nameplate rating, ignoring crucial factors like installation costs and long-term energy production.
- Static Nature: The metric doesn’t adapt to individual project details, such as local climate, PPA rates, and other site-specific factors.
- Incomplete Comparisons: By not accounting for variations in performance and installation costs, it leads to suboptimal investment and procurement decisions, potentially leaving thousands to millions of dollars on the table.
Effective $/WattTM
Recognizing the shortcomings across the industry, Anza has developed the Effective $/Watt metric, a transformative approach that integrates module price, balance of system (BOS) savings, and production benefits, all in a rapidly accessible format. This metric provides a more comprehensive and project-specific assessment compared to the traditional $/Watt metric, enabling buyers and developers to make better-informed decisions and optimize project value.
In the Anza Essentials package, users have access to the output of BOS Savings, Production Benefit, and comprehensive supporting data. These components of the Effective $/Watt metric provide a foundational understanding of the cost-effectiveness of different modules over the lifetime of the project.
In addition to this information, the Anza Pro and Pro Procure packages offer an enhanced view, where users can access rankings of available module options by Effective $/Watt. This advanced feature allows for more granular comparisons of product options. By modifying financial parameters such as value of energy, project term, and discount rate, users can prioritize modules based on comprehensive value assessments.
What is Effective $/Watt?
Effective $/Watt is a comprehensive metric made up of three components: Module Purchase Price, Balance of System (BOS) Savings, and Production Benefit.
Module Purchase Price
This is the sales price of the module, including estimated delivery to the project site, but excluding sales tax.
Balance of System (BOS) Savings
BOS Savings represent the difference in costs associated with module installation, racking, foundation, and DC wiring. This value considers local labor and material costs as well as the racking type. It is expressed in $/Watt and focuses on the most impacted scopes by module selection, though it does not encompass all EPC costs. The BOS Savings are calculated relative to the Anza Reference Module that serves as a benchmark of median BOS costs.
Production Benefit
The Production Benefit calculates the project value due to variations in performance and degradation. This value also takes into account financial aspects such as the value of energy, Discount Rate, Project Term, and tax credits (e.g. ITC, PTC), also expressed in $/Watt. The Production Benefit is calculated relative to the Anza Reference Module that serves as a benchmark of median module performance.
Anza Engine
The Anza Engine powers our platform with swift, real-time analysis by leveraging advanced algorithms to quickly process big data. It generates precise calculations based on project-specific inputs, ensuring tailored data and recommendations. This combination of speed and customization empowers users to make optimized development and procurement decisions, maximizing profits, minimizing risk, and enhancing project profitability.
Balance of System Savings Methodology
Importance of BOS Calculations
BOS calculations encompass the material and labor costs of different modules and are crucial for accurate cost assessments and optimal project planning. Without a holistic evaluation, a module that appears cost-effective at first glance may ultimately result in higher BOS costs. For example, on the mechanical side, changing a module often necessitates adjustments in racking configurations, including materials and labor for module clamps and racking tables. BOS calculations also account for changes in electrical wiring calculations, such as needing larger wires and special connectors because of different electrical properties. By accurately calculating BOS savings, developers and module buyers can reduce overall project costs and improve installation efficiency.
Anza’s Tools for BOS Savings Calculations
Anza’s platform provides robust tools to help developers and module buyers understand the true value of module selection through comprehensive BOS calculations. The Anza Engine simplifies the calculation of these values, enabling users to rapidly compare and consider various metrics that may change the value of a module. Anza’s model builds upon consultation and quotes from racking partners, site-specific wind and snow loading from ASCE, real-time electrical wire and conduit pricing from Accubid, and site-specific labor wages from RSMeans.This data contributes to detailed calculations within the model to ensure precise and actionable insights for project optimization.
Detailed Breakdown of BOS Cost Estimate:
- Module Count: Total number of modules required for the project.
- String Length Range: The range of possible string lengths to optimize electrical configuration.
- Optimal String Length: The most efficient string length for the specific project.
- String Count: Total number of strings needed.
- Modules per Rack: Number of modules that can be mounted on each rack.
- Rack Count: Total number of racks required.
- Non-standard Clamp Count: Number of non-standard clamps needed, if any. This is only applicable on Single Axis Tracker type projects.
- Source Circuit AWG: American Wire Gauge (AWG) specifications for source circuit homerun wires.
These data points are used to calculate the BOS cost estimate and are displayed rapidly for your specific project directly within the Anza platform in the $/Watt format. This ensures precise and actionable insights for project optimization.
Cost Code Format
Anza provides BOS cost estimates in a detailed cost code format, covering various components such as:
- Foundation Material
- Racking Material
- Mechanical Labor
- Module Labor
- DC Electrical Material
- DC Electrical Labor
By leveraging Anza’s tools, both developers and module buyers can make better-informed decisions, optimizing both cost and performance, and ultimately improving project returns.
Production Benefit Methodology
Importance of Production Calculations
Accurate production calculations are crucial for evaluating project value, impacting both project profitability and long-term performance. Traditional tools like PVSyst are often used during development, but they present challenges such as requiring reliable data, being slow to set up, and taking significant time to rerun with new modules. Anza’s approach simplifies and accelerates this process, providing detailed production calculations that lead to better-informed decisions and optimized project performance.
Anza’s Tools for Production Benefit Calculations
Anza’s platform provides robust tools to help developers and module buyers understand the true value of module selection through comprehensive production calculations. The Anza Engine simplifies the calculation of these values, allowing users to rapidly compare and consider various metrics that may change the value of a module.
The Anza Engine’s production yield estimates are within 0.2% of PVSyst, providing confidence in its reliability and efficiency.
Detailed Breakdown of Production Benefit Estimate:
- LID Loss: Light-Induced Degradation loss.
- Temperature-Based Loss: Losses due to temperature variations.
- Irradiance Loss: Losses due to variations in sunlight intensity.
- IAM Loss: Incidence Angle Modifier loss.
- Yield (kWh/kWp): Specific energy yield per kilowatt peak.
- Year 1 Site Production (MWh): Projected energy production for the first year.
Financial Assumptions Impacting Production
The Production Benefit measures the difference in the present value of project revenue between a specific module and the Reference Module due to variations in performance and degradation. This value takes into account several financial aspects, including Energy Value or PPA Rate, Discount Rate, Project Term, and tax credits, and is also expressed in $/Watt.
- Energy Value/PPA Rate: The price at which the energy produced is sold.
- Discount Rate: The time value of money used to discount future cash flows to their present value.
- Project Term: The duration over which the project is expected to generate revenue.
- Tax Credits: The ITC or PTC value applicable to the project.
At Anza, our finance model is exceptionally detailed and robust, incorporating multiple factors to provide an accurate and thorough analysis. Our model considers the Modified Accelerated Cost Recovery System (MACRS), various grants beyond the Investment Tax Credit (ITC) or Production Tax Credit (PTC), Payment in Lieu of Taxes (PILOT) agreements, reserves, Operations & Maintenance (O&M) costs, insurance, and more. This multi-faceted approach ensures that every financial input is meticulously accounted for, enhancing the robustness of our finance model and its ability to model most projects with exceptional detail.
These data points are used to calculate the production benefit estimate and are displayed rapidly for your specific project directly within the Anza platform.
Example – Rapidly Compare Different Module Technologies
Project Overview
A client is looking to optimize their 120 MW single-axis tracker solar project. They are evaluating two similar solar modules from the same manufacturer: a Mono PERC module and a TOPCon module. While TOPCon modules are often regarded as more valuable, the key question is: how much more valuable are they, and is a one cent per watt price increase justified for this “upgrade”? This example explores this question by leveraging Anza’s Effective $/W analytics to provide a detailed comparative analysis. We aim to determine whether the higher initial cost of the TOPCon module translates into greater overall project value through improved BOS installation costs and long-term production benefit.
Mono PERC Option | TOPCon Option | |
Watts | 550 | 585 |
Width | 1134 mm | 1134 mm |
Length | 2278 mm | 2278 mm |
Module Efficiency | 21.29% | 22.65% |
Module Price | $0.225/Watt | $0.235/Watt |
Installation Cost Analysis
Mono PERC | TOPCon | |
Design string length | 25 to 27 | 23 to 26 |
Optimal string length | 26 | 26 |
Site string count | 8392 | 7892 |
Modules per table | 104 | 104 |
Table count | 2098 | 1973 |
Tracker Motor count | 66 | 62 |
Foundation Count | 32,000 | 30,000 |
Foundation Mass | 3,350,000 | 3,160,000 |
Are non standard clamps expected? | No | No |
Source circuit conductor gauge | 12 AWG | 12 AWG |
Site source circuit conductor total | 1,850,000 | 1,740,000 |
Site combiner box count | 382 | 359 |
Combiner box conductor gauge | 750 kcmil | 750 kcmil |
Combiner box conductor total | 210,000 | 200,000 |
CAB length | 45,000 | 45,000 |
Souce: Anza Platform | Mono PERC | TOPCon | Delta | Change in Cost | ||
Balance of system cost $/w | $0.267 | $0.251 | -5.9% | $0.016 | ||
Foundation material cost | $0.031 | $0.029 | -5.9% | $0.002 | ||
Racking material cost | $0.113 | $0.106 | -6.0% | $0.007 | ||
Mechanical labor | $0.059 | $0.055 | -6.0% | $0.004 | ||
Module labor | $0.009 | $0.009 | -6.0% | $0.001 | ||
Electrical material | $0.025 | $0.023 | -5.5% | $0.001 | ||
Electrical labor | $0.030 | $0.028 | -5.8% | $0.002 |
The installation cost analysis reveals that switching to a TOPCon module on this project provides an additional value of $0.016 per Watt. This increase in value is primarily due to savings in racking material and labor costs, as the TOPCon option requires 125 fewer tables and 4 fewer motors. The optimal string length and wire sizing calculations remain unchanged, minimizing the impact on the electrical scope of the project. However, we observe reductions in the number of combiner boxes, the length of combiner box conductor wire, and the total length of source circuit conductor wire.
Production Benefit Analysis
Mono PERC | TOPCon | |
Module width mm | 1134 | 1134 |
Module length mm | 2465 | 2278 |
Module Wattage | 550 | 585 |
Module efficiency | 21.29% | 22.65% |
Bifaciality percent | 70.00% | 80.70% |
Tilt | 52 | 52 |
Pitch m | 6.51 | 6.92 |
Ground coverage ratio | 34.99% | 32.89% |
Annual module degradation | 0.45% | 0.40% |
LID loss | 0.60% | 0.60% |
Temperature based loss | 5.52% | 4.52% |
Irradiance loss | 0.35% | 0.50% |
IAM loss | 1.08% | 1.406% |
Post unavailability yield kWh per kWp | 2,020 | 2,041 |
Year 1 site production MWh | 242,400 | 244,900 |
Switching to a TOPCon module improves production in the first year due to several key design factors, including higher efficiency, additional energy capture from its bifacial design, and lower performance degradation from temperature variations. While minor opposing effects from Irradiance loss and Incidence Angle Modifier (IAM) exist, they do not negate the overall production benefit.
Over a 25-year project term, TOPCon modules demonstrate a lower degradation rate compared to MonoPERC modules, resulting in a widening performance gap with TOPCon maintaining higher output. From a financial perspective, the energy produced is priced at $0.0635 per kWh, with an annual escalation rate of 1.5%. A discount rate of 6.5% is applied to account for the decreasing present value of future cash flows, emphasizing the greater value of production in the earlier years. TOPCon’s higher initial yield and lower degradation rate provide a compounded financial advantage over time, outpacing the MonoPERC option.
The biggest driver of Anza’s financial model is the value gained with the 30% Investment Tax Credit (ITC). The model also accounts for MACRS depreciation, various funding sources from equity and debt investors, EPC costs, and comprehensive coverage of operational expenses, and the timing of energy production, with peak demand periods yielding higher returns.
All of these inputs were considered to calculate the overall project’s production value, and then divided by the project’s wattage to translate into the $/Watt metric. This resulted in a $0.038 per watt advantage for TOPCon over MonoPERC, demonstrating TOPCon as the more cost-effective solution throughout this project’s lifespan.
Mono PERC | TOPCon | Delta | |
Project Value | $234,400,000 | $229,800,000 | $4,600,000 |
Project Value $/W | $1.953 | $1.915 | $0.038 |
Summary
After a thorough analysis using Anza’s Effective $/Watt metric, it was determined that the increased production and BOS Savings of the TOPCon module outweigh its slightly higher purchase price. Switching to the TOPCon module would result in an Effective $/W that is $0.044/W lower than the PERC module and increases the lifetime net present value of the project by $6.5 million. This example demonstrates how Anza’s platform can be used as a tool for rapid module comparison, enabling developers and module buyers to make informed decisions by evaluating both production and installation costs efficiently.
Conclusion
Anza’s Effective $/Watt metric revolutionizes solar module design and procurement by enabling rapid, total lifetime value site-specific calculations. As a result of the Anza engine, users see BOS savings, production benefits, and Effective $/Watt metric calculations of over 100 different modules in seconds. This holistic Effective $/Watt metric optimizes both cost and performance in one easy-to-use value. This comprehensive integration helps developers and system owners achieve superior procurement and development outcomes, significantly reducing time, enhancing project viability through precise and data-driven insights, and ultimately creating more profitable solar projects.
About Anza
Anza is a revolutionary platform that empowers solar and energy storage equipment buyers and developers to use advanced data and technology to see more options, reduce risk, increase project profits, and save massive amounts of time. By offering real-time pricing, in-depth product and counterparty data and comprehensive analytics, Anza enables users to compare and evaluate over 95% of the U.S. module supply swiftly and efficiently.