Regarding solar panel degradation: Is it true that efficiency decreases annually? What is the typical degradation rate, and how much generation capacity will my system retain after 25 years?

This is an excellent question that directly relates to the "durability" and "value retention" of a home solar system as a long-term investment. Many users worry that solar panels might stop working effectively after just a few years. Understanding the concept of "efficiency degradation" can give you much more confidence in this investment.

Yes, the power generation efficiency of solar panels does decrease year by year. This is a normal physical phenomenon known as Light Induced Degradation (LID). The good news is that this process is slow, predictable, and guaranteed.

1. How Does Efficiency Degradation Occur?

Simply put, when sunlight (especially ultraviolet light) continuously shines on silicon-based semiconductor materials, it causes minor changes in the material's internal microstructure. This slightly reduces its efficiency in converting light energy into electrical energy.

This process can be divided into two stages:

Initial Degradation: This is the most "significant" stage of degradation. When brand-new solar panels are first exposed to sunlight and begin operating, a relatively rapid degradation occurs within the first few hundred hours.
Linear Degradation: After the first year, the degradation rate becomes very slow and stable, decreasing by a nearly fixed, small percentage each year.

2. What is the Typical Degradation Rate? – Look at the "Warranty Terms"

The most reliable way to understand a solar panel's degradation rate is to check its Manufacturer's Warranty. Currently, mainstream, top-tier brands in the industry offer a Linear Performance Warranty, which has become a key standard for measuring product quality.

A typical, high-quality solar panel's linear performance warranty will promise:

First-Year Degradation Rate: No more than 2%.
Subsequent Annual Linear Degradation Rate: No more than 0.5% ~ 0.55%.

This means the manufacturer guarantees that the annual power degradation will not exceed these values during the warranty period (usually 25 or 30 years).

3. How Much Power Generation Capacity Remains After 25 Years?

We can make a simple calculation based on the typical warranty terms above. Suppose we choose a solar panel guaranteed to have an annual degradation rate of 0.55% over a 25-year warranty period.

Power at End of Year 1: 100% - 2% = 98%
Total Degradation over Next 24 Years: 24 years * 0.55%/year = 13.2%
Remaining Nominal Power at End of Year 25 ≈ 98% - 13.2% = 84.8%

The conclusion is: After 25 years, your solar system will still retain at least 84.8% of its original nominal power generation capacity.

Many top brands (like SunPower, LG, Panasonic, etc.) offer even better warranties, with annual degradation rates as low as 0.25%~0.4%, guaranteeing over 90% power generation capacity after 25 years.

What This Means for You

Long-Term Stable Return on Investment: This data tells us that a solar system is a remarkably "resilient" asset. When calculating your payback period (typically 7-10 years), you can factor in this slow degradation rate, but its impact on the overall return is much smaller than you might think. After the system pays for itself, it will continue to function as an efficient "power plant," creating value for you for decades to come.
"Warranty" is a Crucial Selection Criterion: When choosing a solar panel brand, don't just look at price and peak power. Carefully compare the Linear Performance Warranty terms of different brands. A brand willing to promise a lower degradation rate and a longer warranty period usually signifies greater confidence in its product's technology and quality.
Beyond 25 Years: A 25-year warranty period doesn't mean the solar panel's lifespan is only 25 years. It's merely the performance baseline guaranteed by the manufacturer. In reality, many panels installed 30 or 40 years ago are still working today, albeit at lower efficiency. Your solar system is likely to serve your home for much longer than 25 years.

In summary, solar panel efficiency degradation is real, but it is a well-understood, tightly controlled, and long-term guaranteed process. You can confidently trust that the core value of this "sunshine investment" will remain robust, enduring for decades to reliably provide power for you and your home.