Degradation Rate

What degradation means

Every solar panel produces slightly less power each year as the cells age. This is normal and predictable. The degradation rate is expressed as the percentage of original output lost per year.

The industry standard for quality panels is around 0.5% per year after the first year (some manufacturers specify a slightly higher first-year degradation of 2–3%, then 0.5% per year thereafter - this initial drop is due to light-induced degradation, or LID, as the cells stabilise under their first exposures to sunlight).

What this means over 25 years

At 0.5% annual degradation:

• After 10 years: ~95% of original output
• After 20 years: ~90% of original output
• After 25 years: ~87.5% of original output

This is why solar panel performance warranties in Australia typically guarantee 80% of rated output at year 25 - they’re building in meaningful headroom above the expected actual performance. A panel degrading at 0.5%/year would still be producing around 87.5% at year 25 - well above the warranty floor.

Higher-quality panels degrade slower

NREL research shows that degradation rates vary significantly by manufacturer and cell type. Poorly manufactured panels, particularly some budget imports, can degrade at 1–2% per year, reaching 60–75% output at year 25 rather than 87%. This is a meaningful difference in lifetime energy production.

Premium panels from manufacturers like Maxeon, REC, and Panasonic typically carry 25-year product warranties and are among the lowest-degradation options on the market. The performance warranty (guaranteed output at 25 years) is often a more meaningful indicator of quality than efficiency.

LeTID in PERC panels

More recently, PERC panels introduced a new form of degradation called Light and Elevated Temperature Induced Degradation (LeTID), which occurs in the first 1–2 years under certain temperature and illumination conditions. Manufacturers have largely addressed this through cell passivation improvements, but it’s worth checking whether the specific PERC panels in a quote include LeTID mitigation.

Inverter vs panel degradation

Panels degrade gradually and predictably. Inverters don’t - they fail relatively suddenly, usually after 10–15 years. It’s common for a solar installation to have its original panels still working at year 20 while having been on its second or third inverter. Budgeting for an inverter replacement around the 12–15 year mark is a realistic financial planning expectation.