There are a number of important characteristics to consider when making a solar panel decision for your business. One of the most critical is understanding the degradation rate of the solar panels you’re evaluating, how it compares among manufacturers and what impact solar panel degradation can have on your organization’s bottom line.
What do the terms “degradation” and “degradation rate” mean exactly—and how much should the degradation rate of your commercial solar panels factor into the decisions you make? Let’s take a quick look.
What is solar panel degradation and what does “degradation rate” mean?
It may sound ominous, but “degradation” is just an industry term used to describe the decline in output that all solar panels experience over time. In fact, were he around today (and wouldn’t he have been electrified by solar technology!), Ben Franklin would no doubt have added solar panel degradation to his famously short list of life’s certainties.
So yes, all solar panels degrade. But they don’t all degrade at the same rate—that’s what matters and warrants a closer look. In their first year of operation, panels generally undergo short-term degradation ranging from less than 1% to 3%. After that, according to a 2016 study, solar panel performance declines by an average of 0.8% to 0.9% each year.
For example, if a panel’s first-year, short-term degradation was 2%, it would be operating at 98% efficiency going into year two. From that point, assuming it degrades at 0.8% per year thereafter, it would still be operating at 78.8% efficiency in year 25 (see example).
Now, you’re probably wondering, “How long do solar panels last anyway?” Good question. Comprehensive testing done by commercial solar panel manufacturers suggests that the lifespan of solar panels is somewhere between 25 to 40 years, depending on the manufacturer. That doesn’t mean they stop working or generating electricity after that time. It simply means their energy production has declined to a point beyond what manufacturers refer to as a panel’s “useful life.”
What impact can commercial solar degradation rates have on your business?
We’ve seen how an average solar panel would degrade. But what if you’re considering a panel that degrades more quickly, say at a rate of 1.0% each year—or more slowly, for instance at a rate of just 0.25% each year? Is that difference a big deal?
It definitely can be. The fact is, those six- or seven-tenths of a percentage point in degradation rate could add up to thousands of kilowatt-hours of energy lost every year, depending on the number of panels and how long they’ve been generating electricity. That means you could end up spending money pulling power from the grid, rather than from your installed solar panels—which, for a large commercial installation, could mean hundreds of thousands of dollars over the system’s lifetime.
That’s why it’s important to consider whether it would make better long-term financial sense to save upfront on lower-quality panels with a higher degradation rate, or invest in higher-quality (and potentially more expensive) panels that degrade more slowly. The potential cost savings should be considered upfront as you evaluate your options:
“The difference in degradation rate can translate into a significant amount of money over the next 10, 15 or 25+ years...”
Causes of solar panel degradation—and how to keep the rate as low as possible
In general, solar panels are extremely durable and built to withstand high winds and heavy snow loads. That said, keeping an eye on your commercial solar panel system—and making sure it’s well-maintained—could lead to a lower degradation rate each year and more output over a longer term. Here’s a look at what causes solar panel degradation and a few tips for keeping that rate low:
- Depending on the quality of your panels’ materials, the more extreme the weather conditions they’re exposed to (e.g., high winds and humidity, scorching rooftop temperatures, annual freeze/thaw cycles), the faster they may degrade. If your panels will be installed in an environment where weather could be a factor, ask about ways they could be protected from the elements.
- Check your panels annually for physical damage, such as trees or bushes blowing in the wind and creating scratches. The more surface scratches on your panels, the faster they degrade.
- While not always necessary, cleaning your panels may also play an important role in making sure they don’t degrade at a higher rate than expected. Monitor changes in the power output of your solar panels before and after cleaning, as well as over different time intervals. Take note and evaluate what works. You may find that the costs of cleaning may, in fact, be greater than the costs associated with a lower degradation rate.
Key takeaways about commercial solar degradation rates
As you compare commercial solar panels for your organization, here are some important points about degradation to keep in mind:
- Understand the degradation rate of the panels you’re considering, as well as what that decrease in energy output would mean in lost power—and dollars and cents—over the life of the panels.
- Assess the financial impact of choosing a lower upfront-cost panel with a higher degradation rate over a higher upfront-cost panel with a lower degradation rate. The providers you’re considering should be able to give you a cost-savings analysis over a 10-, 15-, and 25-year lifespan.
- Find out what steps your provider recommends in terms of placement, ongoing inspections, cleaning and maintenance to keep your solar panel degradation rate as low as possible.