We got a call last Tuesday from a developer in Texas who couldn't figure out his own quote. Module prices were down 20% year-over-year. His EPC had told him to expect savings. Instead, his 500kW commercial system came in $0.07/W higher than the identical design from six months ago.
The culprit wasn't the modules. It was everything else.
The Numbers
Wood Mackenzie's Q2 2026 Solar Market Insight report — the industry benchmark — confirms what we're seeing on the ground:
- Module prices: $0.34/Wdc in Q1 2026, down from $0.43/Wdc in Q1 2025. That's a 21% drop.
- Residential system prices: Down 7% year-over-year. Residential benefited from both cheaper modules and lower customer acquisition costs.
- Commercial system prices: Up 4% year-over-year to $1.67/Wdc. The module savings were more than wiped out by balance-of-system inflation.
- Utility-scale prices: Down 3% for fixed-tilt, flat for tracking. The module savings partially offset structural and electrical BOS increases.
Where the Money Went
Commercial BOS — balance of system, everything except the modules — increased by roughly 60% year-over-year in Q1 2026. That's not a typo.
Steel and aluminum: Section 232 tariffs on steel and aluminum hit 50% for aluminum in June 2026. Racking systems are steel and aluminum. Tracker manufacturers we work with have raised prices three times since January.
Electrical BOS: Conduit, wire, disconnects, combiner boxes — all up. The electrical BOS category increased roughly 8% year-over-year, driven by copper price volatility and tariff exposure on imported electrical components.
Labor: Up 15% annually. Prevailing wage requirements under the IRA are part of the story, but the bigger driver is simply scarcity. Qualified electricians who can work on solar projects are in short supply, and EPCs are bidding against data center construction for the same crews.
EPC overhead and margins: Up nearly 40%. Developers are paying risk premiums because of policy uncertainty — tariff changes, FEOC rules, interconnection delays. EPCs aren't absorbing that risk for free.
What This Means for Contractors
If you're a residential installer, you're in a decent spot. Module prices are down, and the module is 30–35% of your system cost. The savings show up in your quotes.
If you're doing commercial, you're in a tougher spot. The module is only 20–25% of your system cost, and the other 75% is getting more expensive. Your customers see "solar is cheaper than ever" headlines and don't understand why their quote went up.
Our advice: reframe the conversation around total cost of ownership and energy savings, not upfront $/W. A $1.67/W commercial system with a 25-year PPA still beats utility rates in most markets. But the days of selling on "solar module prices are plummeting" are over for the commercial segment.
What We're Stocking
We've expanded our BOS inventory to match the demand we're seeing. More racking (IronRidge, QuickMount), more wire and conduit (Cerro, Service Wire), and more electrical hardware (MidNite Solar combiners, Littelfuse protection). The module is the headline, but the BOS is where the margin is — and where the shortages are.
Need a full BOS bill of materials for your next commercial job? Send us the string design and we'll spec wire, racking, combiners, and disconnects to match.
