The Aurora Inverter from Power-One Inc. carries a BOM of $641.47, according to information and analysis provider IHS iSuppli Teardown Analysis report . When $47.87 test  and manufacturing and are added in, the total expense to produce the inverter rises to $689.35, as presented above.

Solar power inverters known as photovoltaic PV inverters are half power system and half embedded computer and the essential electronic system needed to convert solar panel DC power into AC power for local use, or power that can feed into the electricity grid.

The solar power inverter market has strong growth prospects, worldwide unit shipments set to rise to 30.2m units in 2015, up from just 4m in 2011. This robust potential has attracted a slew of competitors, with IHS identifying 125 distinct brands participating in the space. The large number of players means price reduction will be the major factor driving market dynamics in the coming years.

“Companies in the solar inverter business will have to engage in aggressive price reductions to remain competitive,” said Greg Sheppard, senior director of PV research at IHS. “With prices to decline by an average of 10% annually for the next several years, continued reductions in inverter BOMs will be needed to keep costs in line with pricing.”
 
Power-One’s market position
Power-One in the second half of 2010 ranked as the world’s second-largest solar power inverter supplier, with a 12.5% share of global market GW share.
With a strong market position, its products provide a good representation of the types of inverters available in the market.

The PVI-4.2-OUTD-S-US is a power inverter intended for outdoor use. Of the various models in the company Aurora product line, this unit features highest-rated maximum AC output power of 4,200W. Surveys indicate that typical dealer prices for the Aurora PVI-4.2-OUTD-S-US range from approximately $2,100 to $2,600.
 
Where the costs are
When looking at the costs of the Aurora PVI-4.2-OUTD-S-US, the most expensive component category is the mechanical segment, which accounts for 33.1%, a third of the inverter’s total BOM. These mechanical components make extensive use of commodity metals whose pricing can vary.

“Inverters have a major opportunity for cost reduction, as prices decline for copper and aluminum,” said Kevin Keller, senior principal analyst, teardown analysis, for IHS. “These commodity metals are responsible for the bulk of the 38lbs of weight of the inverter. Prices already have  come down from highs earlier this year, and could decline more in the future.”

Inverters could also reduce enclosure costs, employing lower-cost sources for heat sinks. The Aurora includes a machined heat sink  (right) made from extruded aluminium, estimated cost of $39.13, representing about 6% of the total BOM. Then the enclosure of the product is made of stamped/formed aluminum and priced at $42.26, or 6.6% of the BOM.

Another prime candidate for cost reduction are passive components representing the second most expensive component group at 29.6% of the total BOM with inductors accounting for a significant portion of this passive expense. For example, the inverter (left) 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 the overall BOM.

“Passive costs in inverters could be reduced as manufacturers make greater use of lower-cost sources for devices like inductors,” comments Keller.