Path-Q Solar

What solar panel degradation rate should I use in a long-term estimate?

Answer

Use the degradation assumption supported by the specific panel's warranty and technical documentation, and test a more conservative sensitivity case rather than relying on a generic industry figure. Separate normal gradual degradation from outages, soiling, shading, and equipment failure.

Key points

  • Check whether the warranty specifies an initial degradation step and a later annual rate.
  • Confirm what output measurement, test conditions, and end-of-term guarantee apply.
  • Apply degradation to production over time, not directly to bill savings without updating future rates and usage.
  • Model at least a base case and a conservative case.
  • Treat inverter replacement, downtime, shading growth, and maintenance separately from panel degradation.

What it depends on

  • Panel model and degradation warranty
  • Warranty measurement and claim terms
  • Climate and installation conditions
  • Model horizon and financial assumptions

Risks and trade-offs

  • A low advertised rate may not reflect the warranty's actual guaranteed output path.
  • Degradation is uncertain and may vary across products and environments.
  • Overly conservative assumptions can understate value, while optimistic assumptions can overstate it.

Information you may need

  • Exact panel model
  • Product and performance warranty
  • Expected operating environment
  • Long-term production and financial model

Your next step

What to do next

Enter the warranty's stated output schedule into the model and run a sensitivity analysis using a less favorable degradation assumption.

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SQ00148