Path-Q Solar
How should expected panel degradation be included in long-term savings estimates?
Answer
Model degradation as a gradual annual reduction in usable production rather than assuming the system produces the same amount every year. Use the panel manufacturer's documented warranty assumption or a conservative scenario, and apply the resulting production to future consumption, export, prices, and operating costs.
Key points
- Start with a realistic first-year production estimate, then reduce later-year output according to the selected degradation assumption.
- Separate panel degradation from inverter replacement, shading changes, soiling, outages, and other losses.
- Show a range of outcomes rather than relying on one precise forecast.
- A lower production estimate does not always reduce savings proportionally if it offsets high-value on-site use.
What it depends on
- Panel warranty and degradation specification
- Initial production estimate and system design
- Future electricity prices, export treatment, and consumption
- Maintenance, inverter life, and other replacement assumptions
Risks and trade-offs
- Overly optimistic degradation assumptions can overstate long-term savings.
- A conservative assumption may understate performance if the system operates well.
- Production degradation and financial discounting are separate assumptions and should not be conflated.
Information you may need
- Panel model and warranty documents
- First-year production estimate or measured production
- Ownership period and financing assumptions
- Consumption, export, maintenance, and replacement assumptions
Your next step
What to do next
Recalculate the projection using the documented degradation assumption plus conservative and optimistic cases, and compare the resulting savings range.
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SQ01538