Setting Up A Solar Power Plant: Cost And Components

cost of solar power plant system

In this article, Insolergy gives the reader an insight of the solar power plant cost structure and how each component of the solar power plant contribute to the setting-up cost.

Our objective here is to help you understand:

  • Percentage-wise breakdown of solar power system component cost.
  • Important and less tangible aspects to be looked at while selecting key components of a solar power plant.

A quick note on component quality

The expected life of a solar power plant is 25+ years thus it is important that one chooses quality over cost while selecting the components of a solar power system. Having said so, low cost doesn’t necessarily mean poor quality; sometimes the user may opt for a lower cost option considering overall project economics.

Even though the Ministry of New and Renewable energy (MNRE) routinely issues guidelines on various IS/IEC standards that solar equipment in the markets has to adhere to, this isn’t a sufficient criterion to judge quality and long-term performance of your solar PV system. So even if you shortlist top solar companies for the solar PV installation, we suggest you still take out few minutes and familiarize yourself with these less tangible aspects of solar components.

What is the cost break-up of a solar power plant system? 

The solar power plant cost depends on how much electricity has to be generated to meet the given requirement, the quality of components used as well as the solar subsidy and incentives available.

In one of our earlier posts, we shared solar power plant parts and functions. Here, we are sharing the structure of the cost of setting up the solar power plant or the cost percentage breakdown of solar component.

1. Cost contribution of solar panels (PV modules)

Solar panels constitute almost 50%-60% of the total solar power plant cost.

About the component

PV stands for Photo Voltaic. The Solar Panels uses silicon cell to convert energy from sunlight (photo) to electricity (voltage). Solar Panels account for almost 50 to 60% of the cost of Solar Power Plant, and it is critical that these are chosen with prudence.

Manufacturer’s Profile

With growing demand for Solar Panels, a lot of new manufacturers have come up in the market. While all of them claim to produce best quality solar panels, one should always look closely at their experience, the volume of solar panels sold, and financial health. The financial health of the manufacturer is key here, given the warranty on solar panels (25+ years), it is important that the company survives for at least the comparable duration, to be able to honour the warranty conditions in case of failures. Some manufacturers do offer insurance backed warranties that allow fulfilment of warranty conditions in event of the manufacturer closing down their business.


All commercially available PV Modules come with Product Warranty of 10 to 12 years (against manufacturing defect) and Power Output Warranty of 25 to 30 years. Power Output Warranty means the Output of Solar Panel under Standard Testing Conditions (in test facility) is assured to be above certain values/trend pre-defined by the OEM.

This might also interest you: What is the most efficient solar panel

2. Solar Inverter

Solar Inverters constitute 10%-15% of the total solar power system cost.

About the component

Solar Inverters convert DC Power generated by Solar Panels into AC Power which can be used to power up your appliances and is compatible with grid-supplied electricity (voltage and frequency). The inverter also ensures that Solar Panels are generating maximum power possible under given sunlight conditions.

The Inverter is also capable of monitoring various parameters which indicate the health of the plant, allowing your solar power installer to analyse trends and performance of the solar plant. The most important task of an inverter, however, is to produce AC power of right voltage and frequency, as well as synchronize with the grid-supplied power for seamless usage of solar power being generated.

Manufacturer’s Profile

Solar Inverters are specialized products and a lot of Research, Development and Market Experience goes into producing these. It is therefore critical that the manufacturer is chosen based upon their Experience, Volume Produced and Quality Control. The Solar Inverter market has been dominated by European Manufacturer’s for long, as they are known for their quality and R&D. However, recently, many non-European manufacturers have also come up in the market, with a good track record.


Inverters typically come with a 5-year warranty, but most of the manufacturers let the user buy extended warranties, up to 20 years. Inverters are typically expected to last for 10+ years, but their operating life varies considerably upon site conditions, specifically with operating temperature (electronic circuits have a higher failure rate in higher temperatures) and quality of electricity supplied by the grid.

3. Solar Panel Mounting Structure

solar power system cost

Mounting Structures constitute 5%-10% of the total solar plant cost.

About the component

The module mounting structure provides structural support to solar panels enabling them to face specific direction and inclination. The mounting structure is available in structural materials like Mild Steel, Galvanized Steel and Aluminium.


Typically, galvanized steel (with 80 µm thickness) and anodized aluminium are chosen for long life (30+ years), especially in sites with heavy rains, salty mist (near sea shore) or presence of corrosive vapours (near factories). Structure made of painted mild steel are typically used in drier places, where maintenance (scraping and re-painting) is possible.


A good design of mounting structure considers long-term operability, access to maintenance and cleaning of panels. The overall weight of structure should also be optimized, and wind-loading analysis is a must, to ensure safe operation during high winds.

4. Balance of System

The Balance of System (BoS) constitutes 5%-10% of the total cost of setting up a solar power plant in India.

The Balance of System includes Cables (AC and DC), Switchgears (MCB, RCCB, Isolators), Protection Devices (Fuses, Surge Protection, Lightning Protection) and Earthing Material (grounding conductor, rod, chemicals).


The cables should be selected for minimum acceptable voltage drop (typically <1% for DC side and <1.5% for AC side).

Protection Devices

Protection devices are necessary for safe operation of the solar power plant. Fuses help in limiting maximum current in the system, whereas the surge protection device protects the system from voltage surges (AC or DC). Lightning protection device diverts is critical to protecting solar power plant and connected electrical circuit from a lightning strike.

5. Design and Workmanship

Proper electrical design and workmanship of the solar power plant is by far the most important aspect, and thus it is important to select the installer of solar plant wisely. The proper plant design ensures that the components (solar panels, inverters, mounting structure, and balance of system), their ratings and the makes are selected considering the optimal performance of the plant. The quality of workmanship is also critical from safety and operability point of view.

Go solar with Insolergy 

Insolergy has partnered with IDBI Bank Ltd. on pan-India basis, to assist eligible users to avail solar loan, and has helped many happy customers to realize their goal of adopting solar energy. The company also facilitates the application for solar subsidy in India.

To inquire about solar panel installation cost, call / whatsApp 9082786504 or contact here.

Insolergy is one of the top solar companies in India. The company provides solar EPC services and has successfully installed solar for home and commercial solar panel system across the country.

solar panel installation cost in india

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