Know the effect of solar panel degradation on savings

Like any other thing in this world, you see solar panel degradation with time.
​
Multiple factors are involved in this and if you want to learn them in detail, read my post, “ What factors degrade the performance of the solar panel?.

Some are reversible, while others are irreversible.
You should consider this degradation while designing the solar power system as it can affect our savings and reduce the financial profitability of the system.

Average solar panel degradation rate in industry

You can find panels with varying degradation rates from as low as 0.25% to 0.8% of the rated power.

In the first year, the panels degrade 2%-3% of their power capacity. It is due to Light Induced Degradation (LID).

In LID, the solar panel loses its output by 2%-3% within the first few hours when exposed to sunlight.

The oxygen reacts with dopant Boron (present in the silicon cell) in sunlight and forms a complex compound that captures the free electrons and holes and makes them unavailable for the photovoltaic effect.

They start degrading at 0.25% to 0.8% of the power output from 2nd till 25^th year.

This degradation is due to many factors like corrosion, breaking of solar cells, failure of the by-pass diode, etc with time.
​
Less degradation means less loss and more degradation means more loss.

Units lost by 5 kW solar power system due to degradation

For example, I take a 5 kW system in California, it produces around 20 units in a day.

When I consider no loss, it will produce:

• In 1 year, it will produce = 20 x 365 = 7300 units
• And in 25 years, it will produce = 7300 x 25 = 1,82,500 units

Let us find the units produced in the lifetime with different degradation rates:

Findings: You can find that the units lost are almost double in High degradation than the units lost in Low degradation.

The monetary value of the units lost due to solar panel degradation

We found in the above para that the units lost are more when the degradation rate is high.

Let us understand the money lost in the different cases.
​
I took the case of California, where the average electricity rate per unit is 18.81 US cents.

• The units lost under low degradation are 11603 units
• Multiply 11603 by 18.81 Us cents we get $ 2183
• Similarly, for the other 2 cases, these are $ 3121 and $ 4200 respectively.

Monetary loss due to grid escalation

Let me ask you a question.

Is your electricity rate remained the same, decreased, or increased in the last 10 years?

All of you will have the same answer; it has increased, although the escalation is different.

If I add the escalation effect on the grid price, it will rise every year with that rate.

For example, the annual escalation in grid price in California was 3.35% (2005-2017).
​
It means the grid price in the future will increase at this rate and they will look at something depicted in the chart below:

You can find that in the 25th year the same unit would cost you 41.48 cents.
(About 2.2 times the present value).

Similarly, the monetary value of the units lost due to the degradation in the solar panels during their lifetime would be more than what we get when we didn’t consider the escalation in the grid price.
​
The Monetary value loss of 5 kW system due to degradation under 3 different cases (Low, Medium, and High Degradation) when the grid price is 18.81 cents and the annual escalation is 3.35%.

You can see that the monetary value loss is maximum when the solar panels have a high degradation rate.

Top solar panels with the least degradation

Low degradation better return

Solar panel degradation affects the financial feasibility of the solar power system.

Therefore, you should look for the panels with a low degradation so that they lose fewer units during their lifetime and you have more useful units to run your electrical appliances.

The high panel degradation rate may make the solar power system financially unattractive.

If you want to find the complete financial feasibility of the solar power system beforehand in minutes, try my Solar Feasibility Spreadsheet.