Module Degradation
Module degradation refers to the gradual decline in a solar panel’s ability to convert sunlight into electricity over time. All photovoltaic (PV) modules lose efficiency as they age due to environmental exposure, material fatigue, UV radiation, weather cycles, and chemical changes in the cell structure.
Degradation is one of the most important performance considerations in solar design because it directly impacts long-term energy yield, financial modeling, ROI, and system warranties. In modern workflows, degradation assumptions are built into design tools, proposal engines, and financial calculators such as Solar ROI Calculator and Generation & Financial Tool.
Understanding module degradation is essential for accurate lifetime forecasting, PPA pricing, EPC performance guarantees, and customer expectation management.
Key Takeaways
- Module degradation is the natural decline in solar panel performance over time.
- Most modules degrade around 0.3–0.8% per year, depending on technology.
- Initial degradation occurs in Year 1; linear degradation follows thereafter.
- Shading, temperature, moisture, and electrical stress accelerate degradation.
- Accurate degradation assumptions are critical for financial modeling, warranty planning, and long-term system performance.
What Is Module Degradation?
Module degradation is the annual decline in power output as a solar module ages. For example, a degradation rate of 0.5%/year means a panel that started at 100% output will perform at roughly 95% after 10 years.
It is typically expressed as:
Annual Degradation (%) per year
OR
Total Degradation over 25–30 years
Module degradation affects:
- Energy generation
- System performance ratio
- Financial projections
- Warranty expectations
- Long-term O&M strategies
Related terms include Performance Ratio, Specific Yield, and Annual Degradation Rate.
How Module Degradation Works
Solar modules decline in output due to several mechanisms:
1. Light-Induced Degradation (LID)
Occurs when sunlight first hits the module—typically 1–3% loss in the first few days/weeks.
2. Light & Elevated Temperature-Induced Degradation (LeTID)
Heat accelerates atomic changes in the silicon structure, affecting output.
3. Potential-Induced Degradation (PID)
Voltage leakage causes chemical migration across module materials.
4. Thermal Cycling
Expansion/contraction stresses solder joints and cell interconnections.
5. UV Exposure
Long-term sunlight exposure slowly degrades encapsulants and backsheets.
6. Moisture Ingress
Humidity and water vapor can reduce insulation resistance or cause delamination.
7. Mechanical Stress
Wind, snow load, hail, and installation stress can cause microcracks that worsen over time.
Module degradation is a natural process—and premium modules degrade more slowly due to superior materials and encapsulation technologies.
Types / Variants of Module Degradation
1. Initial Degradation
The performance drop within the first year of operation (LID).
2. Linear Degradation
Annual performance loss over the module’s lifetime (e.g., 0.25–0.8% per year).
3. Rapid Degradation (Abnormal)
Caused by PID, microcracking, or manufacturing defects.
4. Degradation in Bifacial Modules
Often lower due to high-quality cell processing but can be affected by backside UV and soiling asymmetry.
5. Polycrystalline vs. Monocrystalline Degradation
Monocrystalline modules generally degrade slower than polycrystalline.
How Module Degradation Is Measured
Engineers measure degradation using:
Power Output (W or % of Original Rating)
Each year’s performance is compared to the module’s initial STC rating.
IV Curve Tracing
See I-V Curve Tracing for field measurement of degradation.
Performance Ratio Decline
Indicates reductions in overall system efficiency.
Yield Comparison
Annual kWh output is compared to modeled expectations.
Manufacturer Warranties
Most warranties specify:
- Year 1 degradation
- Annual linear degradation
- Minimum performance after 25–30 years
Practical Guidance for Solar Designers & Installers
1. Always use verified degradation rates from module datasheets
Manufacturers publish Year-1 and linear degradation specifications.
2. Use realistic assumptions in your financial projections
Integrate degradation assumptions into models such as the
3. Avoid PID risk through proper grounding & inverter selection
Ensure correct grounding and voltage potential strategies.
4. Prioritize high-quality modules in harsh climates
Heat, humidity, salinity, and snow loads accelerate degradation.
5. Avoid shading where possible
Shading accelerates hotspot formation and microcrack growth—use Shading Analysis.
6. Design string lengths carefully
Improper voltage windows increase thermal stress—see Stringing & Electrical Design.
7. Incorporate module degradation into long-term O&M planning
Performance guarantees and energy contracts depend heavily on accurate degradation forecasting.
Real-World Examples
1. Residential Rooftop System
A monocrystalline array degrades at 0.5% per year. After 10 years, the system operates at ~95% of original capacity, still meeting the homeowner’s predicted savings model.
2. Commercial Flat Roof
A 250 kW system with N-Type modules shows only 0.3% annual degradation, resulting in substantially higher lifetime yield and improved PPA economics.
3. Utility-Scale Solar Farm
Due to extreme desert temperatures, a 100 MW farm uses PID-resistant modules and enhanced encapsulants, reducing degradation from 0.7% to 0.4% annually.
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