Path-Q Solar

How much should panel degradation reduce the long-term production and savings estimates for a solar system?

Answer

Long-term models should include an annual degradation assumption rather than treating production as constant. The appropriate assumption should come from the specific panel warranty or a clearly stated conservative modeling convention, and the effect should be applied year by year to production and related savings.

Key points

  • Degradation compounds over time, so later-year output is lower than first-year output.
  • The model should distinguish initial commissioning or first-year assumptions from the subsequent annual decline.
  • Savings decline may not exactly match production decline because energy prices, bill structure, exports, and self-consumption can change.
  • Compare the modeled degradation assumption with the panel's performance warranty.

What it depends on

  • Panel performance warranty and product type
  • Analysis period
  • Annual production model
  • Future electricity prices, bill treatment, and self-consumption

Risks and trade-offs

  • An overly optimistic degradation assumption can overstate lifetime energy and financial return.
  • A conservative assumption may understate performance but can make comparisons more robust.
  • Warranty capacity does not guarantee exact annual production at a particular site.

Information you may need

  • Panel performance warranty
  • First-year production estimate and analysis period
  • Assumptions for electricity prices, exports, and self-consumption

Your next step

What to do next

Recalculate the financial model with the documented warranty-based degradation assumption and run a more conservative sensitivity case.

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SQ00952