This document discusses the key cost components and considerations for a 25 MW scale solar power project in India. It outlines that the major cost components are solar modules (60% of costs), inverters (8% of costs), mounting structures (5% of costs), and balance of system equipment (12% of costs). Land costs account for 2% of total costs. The document then provides a breakdown of estimated costs per MW for different project components and scales from 25MW to 100MW, showing economies of scale. It also discusses factors that can impact execution costs and ways to optimize costs through rate contracts, backward integration, and prior land acquisition.

1. COST COMPONENTS IN
A MW SCALE SOLAR POWER PROJECT
Execution Perspective in the Indian Context
By Sreeni C, PMP, B.Tech (IITB), MBA20-Aug-2015

2. By Sreeni C (schopakatla@gmail.com)
Generation-Price-Cost Matrix
Key Material Components: Land
Selection Criterion Impact on
Generation (x3)
Impact on
Project Cost (x2)
Impact on
Land Price (x1)
Weighted
Score
Geography (Solar
Radiation)
Highest (5) Lowest (1) Highest (5) 22
Obstacle-free Land High (4) Low (3) Lowest (1) 19
Distance from the
Evacuation SS
Medium (3) Highest (5) Low (2) 21
Soil Conditions &
Terrain
Low (2) High (4) Medium (3) 17
Accessibility Lowest (1) Medium (2) High (4) 13
Weightage (1 to3)
Rank(1to5)
Order of Selection Criteria: Geography, Distance from the Evacuation SS, Obstacle-free Land, Soil
Conditions & Terrain, and Accessibility

3. Key Material Components: Others
 Solar Modules: Mostly imported hence prone to ForEx fluctuations; Minimal
scope for economies of scale; Build to Order hence long lead times
 Inverters: Imported brands (SMA, Bonfiglioli) & domestically manufactured
brands (Schneider, ABB) are available; Stockable item hence rate contracts
& bulk discounts possible
 Module Mounting Structures: Mainly made of GI steel; Easy to design & to
customize; Cost optimization through backward integration; Quality control
is the key
 Balance of the System: Transformers, breakers, DC & AC cables, metering &
protection, SCADA, auxiliary items, civil material; Mainly domestic items;
Bulk discounts & rate contracts negotiable
 Transmission Line: Cost is a function of Voltage Level (0-10MW-33KV; 10-
100MW-132KV; 100+ MW-220KV), Distance from the Evacuation
Substation and the Local Right-of-Way (ROW)
By Sreeni C (schopakatla@gmail.com)

4. By Sreeni C (schopakatla@gmail.com)
 Land Procurement: Land aggregation, registration & NA conversion;
Cost & time risks non-linearly increase with the MW capacity (and
hence the contiguous acreage requirement)
 Liasoning & Approvals: Discom/Transco, CEIG, MNRE approvals;
Cost & time vary from state to state, and with bureaucratic leverage,
liasoning agency etc.
 Module Mounting Structure Installation Works: Cost varies with the
soil conditions; Economies of scale possible; Quality control is the key
 Electrical & Transmission Line Installation Works: Usually contracted
to a govt. approved & a licensed contractor
 Civil Installation Works
Key Service Components

5. By Sreeni C (schopakatla@gmail.com)
 Normalized cost of a 25MW
plant
 Polycrystalline Solar Modules
 Assumed transmission line length
(132KV single circuit)=5KM
 Assumed land requirement (fixed
tilt)=4.5-acres/MW
 Assumed land
price=Rs.3Lacs/Acre
 Assumed domestically
manufactured inverter brands;
Premium imported brands may
command upto 20% premium
MW Solar Project: Indicative Cost Pie
Solar
Modules,
60%
Inverters, 8%
Structure, 5%
BOS, 12%
Land, 2%
Tx Line &
ROW, 2%
Civil
Material, 1%
Installation
Services, 5%
Liasoning &
Approvals,
3%
Logistics &
Overheads,
1%

6. By Sreeni C (schopakatla@gmail.com)
BOQ Item Est. Cost (per MW)
Solar Modules (Polycrystalline) Rs. 33,000,000
Inverters Rs. 4,500,000
Structure Rs. 3,000,000
BOS Rs. 6,500,000
Land Rs. 1,350,000
Tx Line & ROW Rs. 1,200,000
Civil Material Rs. 600,000
Installation Services Rs. 2,500,000
Liasoning & Approvals Rs. 1,700,000
Logistics & Overheads Rs. 650,000
TOTAL (Excl. Modules) Rs. 22,000,000
Est. Finance Costs Rs. 660,000
MNRE Excise Duty Subsidy -Rs. 1,855,000
TOTAL Excluding Modules & with
MNRE Subsidy Rs. 20,805,000
MW Solar Project: Indicative BOQ Cost
Breakup
 Normalized cost break-up of a
25MW solar power project
 Cost breakup from the pure EPC
perspective; It might increase in the
outsourcing scenarios
 Assumed land requirement (fixed
tilt)=4.5-acres/MW; Tracker
systems can increase the land
requirement by 10-40%
 Assumed MNRE’s excise duty
exemption (12.36%) on material
except for solar modules &
consumables

7. By Sreeni C (schopakatla@gmail.com)
MW Solar Project: Indicative BOQ Cost
Breakup at Various Scales (Normalized per MW)
BOQ Item 25MW 50MW 100MW
Inverters Rs. 4,500,000 Rs. 4,410,000 Rs. 4,189,500
Structure Rs. 3,000,000 Rs. 2,850,000 Rs. 2,565,000
BOS Rs. 6,500,000 Rs. 6,370,000 Rs. 6,051,500
Land Rs. 1,350,000 Rs. 1,350,000 Rs. 1,350,000
Tx Line & ROW Rs. 1,200,000 Rs. 960,000 Rs. 1,000,000
Civil Material Rs. 600,000 Rs. 570,000 Rs. 513,000
Installation Services Rs. 2,500,000 Rs. 2,375,000 Rs. 2,137,500
Liasoning & Approvals Rs. 1,700,000 Rs. 1,615,000 Rs. 1,453,500
Logistics & Overheads Rs. 650,000 Rs. 617,500 Rs. 555,750
TOTAL Rs. 22,000,000 Rs. 21,117,500 Rs. 19,815,750
Est. Finance Costs Rs. 660,000 Rs. 633,525 Rs. 594,473
MNRE Excise Duty Subsidy -Rs. 1,855,000 -Rs. 1,787,750 -Rs. 1,688,250
TOTAL Excluding Modules & with MNRE
Subsidy Rs. 20,805,000 Rs. 19,963,275 Rs. 18,721,973

8. MW Solar Project: Risk & Optimization
Factors in Execution Costs
By Sreeni C (schopakatla@gmail.com)
Risk Factors
 Assumed land bank availability or prior
land availability. Otherwise land prices can
easily go-up after a project announcement
 ROW issues and the related expenses can
compound with the land vicinity and the
locational factors
 Liasoning & approval expenses may vary
from state to state
 Cost optimization can be achieved through
backward integration, which might also
increase quality control risks and overheads
Optimization Factors
 Land purchasing costs can be optimized
through holding land banks or prior
purchasing/leasing options
 Rate contracts with suppliers for the items
such as inverters and balance of the system
material (transformers, inverters, cables,
breakers, accessories etc.)
 Structure, civil & electrical installation costs
can be optimized through backward
integrations

9. By Sreeni C (schopakatla@gmail.com)
THANK YOU!