Solar had one main goal for two decades: make the panel cheaper and it worked. Panels are now a small share of what a solar project costs. As products commoditize, competitive advantage shifts to the surrounding ecosystem. Solar has reached that stage. Most of the money in a project now sits in the balance of system, i.e. the gear around the panel. That is the part worth looking at now.
Understanding Balance of System
A solar project is much more than panels. It needs wiring, switchgear, combiner boxes, connectors, and the steel that holds it all up. Together these are called the balance of system. The electrical side has its own name, the electrical balance of system, or EBOS.
The Cost Moved Here
For two decades, the panel was the expensive part. As panels got cheap, the balance of system took its place. Today these components make up the majority of a project's price, by some counts 50 to 60%. It is a large market in its own right, worth about $67 billion in 2025 and heading toward $75 billion in 2026.
But The Industry Focus Has Not Moved
The attention never followed the money, though. Two decades of engineering, factory spending, and cost-cutting went into the panel. The components around it never got the same work. So the part of a project that costs the most today is also the part that has been improved the least. That gap is the real story in solar right now and that gap matters because it’s also where the opportunity sits.
The panel can't get much cheaper; most of that work is done. The wiring, switchgear, connectors, and other gear around it are still expensive and inefficient, which means that's where the next round of cost reduction has to come from: better manufacturing, smarter design, leaner supply chains.
There's another angle too, and it's a fast-moving one. Solar is increasingly the power source behind AI data centers, and data centers need power now, not eventually. If the balance of system stays slow and expensive to build, it could hold back how quickly new solar supply comes online, just as demand from data centers is surging. That turns speed into a competitive edge. Whoever fixes that bottleneck will save money but may also be positioned to lock in large, long-term contracts with the data center companies racing to secure power.
Two Things This Changes
The first is timing. What holds a project back used to be the cost of panels. Today it is often whether the electrical gear arrives in time. Some switchgear takes more than 72 weeks to ship, with major makers quoting 18-month backlogs and buyers ordering two years ahead. A project can have its panels ready and still wait on a switchboard.
The second is materials. For years the supply worry was silicon. Today it is copper, which runs through nearly all of these components. Its price hit record highs near $12,000 a tonne in late 2025, up more than 40% in a year, and a possible US tariff on imported copper in 2026 could push it higher. Copper now has as much pull on a project's cost as the panel ever did.
What This Means for the People Who Supply It
The takeaway depends on where you sit. If you build projects, the lesson is to watch the balance of system as closely as you once watched panel prices, because that is where your cost and your schedule are decided now.
If you make or supply these components, the shift is even bigger, and it shows up somewhere less discussed than engineering: working capital. Demand for your gear is rising, and you're buying copper at record prices, holding it as stock through long lead times, and waiting on payment after the job ships. You carry a lot of cash for a long time before any of it comes back.
We've seen this pattern repeatedly across industries: as products mature and commoditize, value shifts into the surrounding ecosystem. Solar appears to be reaching that stage, and we're starting to see signs of it downstream, in how long suppliers wait to get paid and how much cash they need just to keep gear moving.
The companies that handle that well will take the work their competitors cannot fund. That last point is where the money pressure really sits, and it's worth being honest about it. The cost of solar moved to the balance of system. So did the cash.
