According to the National Renewable Energy Laboratory (NREL), most solar panels lose about 0.5% of their output each year. Over 25 years, this adds up to about 12.5% less power than when your system was first installed.
If you’ve invested $10,000 or more in solar, it’s important to know what this means for you.
At PSC Energy, we’ve spent years installing and maintaining solar systems throughout Western Sydney. We know how panels age in real Australian conditions and the concerns homeowners have when their energy bills go up.
In this article, you’ll learn the following:
- Yes, Solar Panels Do Lose Efficiency Over Time
- What Is a Normal Solar Panel Degradation Rate?
- What Causes Solar Panels to Degrade Faster?
- How Australian Conditions Affect Solar Panel Efficiency
- How Long Do Solar Panels Last? Premium vs Budget
- How to Check If Your Solar Panels Are Underperforming
- What Does a 25-Year Solar Panel Performance Warranty Actually Cover?
- FAQ: Solar Panels Losing Efficiency
By the end of this article, you’ll know what degradation is, what causes it, how to spot it, and what your warranty does and doesn’t cover.
Yes, Solar Panels Do Lose Efficiency Over Time
All solar panels lose efficiency as time goes on. This isn’t a flaw; it’s just how the technology works. Solar cells are made from silicon, which reacts to its surroundings.
Hot weather, strong sunlight, and changing temperatures all put stress on the cells. Over the years, this stress adds up, so the panel produces a little less power than when it was new.
The good news is that today’s panels lose efficiency slowly, and manufacturers factor this into their performance warranties. We don’t want to cause concern, our goal is to help you understand your system and spot any issues early if something changes faster than it should.
What Is a Normal Solar Panel Degradation Rate?
The NREL’s 0.5% per year is the usual benchmark for modern panels. Some panels perform better, while others may not. Here’s a simple breakdown:
- First year: Most panels lose a bit more output in the first 12 months, usually 1-3%. This is called light-induced degradation (LID) and happens as the silicon settles after its first exposure to sunlight. This is normal and expected.
- Years 2 to 25: After the first year, the decline becomes steady and slow. For good panels, this is usually between 0.3% and 0.5% per year.
- Budget panels: Cheaper panels often lose 0.7% to 1% of their output each year or more. Over 25 years, this leads to a noticeable difference in how much power they produce.
- Year 25 benchmark: A quality panel should still deliver at least 85% of its original rated output after 25 years.
To put it simply, a 6.6kW system losing 0.5% per year will make about 5.77kW after 25 years. That’s still plenty of power, but you might need to use a bit more electricity from the grid if your usage doesn’t change.
If you want to learn a bit more about how your solar system will work in a blackout, you might want to check out the following article titled, Will Your Solar Panels Work During a Blackout?
What Causes Solar Panels to Degrade Faster?
Degradation is normal, but certain factors can speed it up:
- Heat: High temperatures accelerate the breakdown of the materials inside the panel. Panels generate electricity more efficiently in cooler conditions, and repeated exposure to extreme heat shortens their lifespan.
- UV exposure: Prolonged UV radiation degrades the encapsulant, the clear layer that protects the solar cells. When this layer yellows or cracks, it lets in moisture and reduces light transmission.
- Moisture and humidity: Water ingress can damage cells and corrode internal wiring. This is more common in panels with poor sealing or damaged frames.
- Thermal cycling: The daily cycle of heating up during the day and cooling down at night causes the materials in the panel to expand and contract. Over thousands of cycles, this can cause micro-cracks in the solar cells.
- Potential-induced degradation (PID): This occurs when voltage leaks from the cells through the frame to the ground. It’s more common in systems with poor earthing or cheap components, and it can cause dramatic drops in output.
- Mechanical stress: Panels that aren’t mounted correctly, or that sit at an angle where water pools, can suffer physical stress over time. This includes damage from hail, debris, or poor installation.
- Dirt, dust, bird droppings, and leaves don’t cause lasting damage, but they can lower your panel’s output if not cleaned off. In some places, this can reduce output by 5-25%.
How Australian Conditions Affect Solar Panel Efficiency
Australia is one of the top places for solar power, but there’s a trade-off. The strong sun and heat that make solar work so well here also put more stress on panels than in cooler, cloudier countries.
In Western Sydney, summer temperatures often hit 40°C or higher, and roofs can get hotter than 60°C.
Most panels are built to handle up to about 85°C, so they’re still within their limits. However, these high temperatures cause panels to degrade faster than in cooler places like Germany or the UK.
This matters when you compare Australian data to international studies. A 0.5% yearly degradation rate in Europe could be 0.6% or 0.7% in Australia, depending on the quality of the panels, roof design, and how much air flows under the panels.
A good installation considers these factors. Panels with enough airflow underneath stay cooler and last longer. That’s why how your panels are installed is just as important as the panels themselves.
If you’re interested in learning a bit more about how weather affects solar panels, you might want to check out the following article titled, How Does The Weather Affect Your Solar Panels?
How Long Do Solar Panels Last? Premium vs Budget
Most solar panels will keep producing power for 25 to 30 years or more. The main thing to consider is how much power they’ll make by then, and whether that will meet your needs.
Here’s the key difference between premium and budget panels:
- Premium panels typically carry tighter degradation warranties, often guaranteeing less than 0.4% per year. They use higher-grade silicon, better encapsulants, and more robust frames. In Australian conditions, these characteristics make a real difference over a 25-year system life.
- Budget panels often lose 0.7% to 1% of their output each year or more. Some only guarantee 70-75% output after 25 years, instead of the usual 85% or higher. If you’re watching your budget, cheaper panels might look attractive, but it’s worth thinking about the long-term difference in power before you choose.
The gap between a 0.4% and 0.8% yearly degradation rate really adds up. Over 25 years, this could mean losing thousands of kilowatt-hours of electricity.
How to Check If Your Solar Panels Are Underperforming
If you suspect your panels are losing efficiency faster than expected, here’s what you can do:
- Review your monitoring data: Most modern inverters come with an app or online portal that shows daily, monthly, and annual production. Compare your current output to the same period in previous years.
- Account for weather: A drop in output isn’t always a degradation. Check if the low-output period coincides with more cloudy or rainy days than usual.
- Your installer should have provided a production estimate when your system was set up. If your actual output is much lower than that estimate, even after accounting for weather, it’s worth investigating further.
- Check for shading changes: Trees grow. Neighbours build extensions. New shading on even one panel can drag down output across the whole string in a traditional string-inverter system.
- Book a professional audit: A qualified installer can test each panel, check for PID, and find any hidden faults. This is the best way to know exactly how your system is doing.
If you’re interested in learning a bit more about solar panel efficiencies, you might want to check out the following article titled, How Efficient Are Solar Panels? Shade, Heat, and Seasonal Considerations in NSW, Australia.
What Does a 25-Year Solar Panel Performance Warranty Actually Cover?
The 25-year performance warranty is one of the most cited selling points in solar, and one of the most misunderstood.
Most performance warranties guarantee that a panel will produce at least 80% of its original rated output at the 25-year mark. Some newer premium panels have raised this to 85 or even 90%. Here’s what that means in practice:
- What it covers: Output falling below the guaranteed threshold due to normal degradation. If your panel drops below 80% of its rated output before year 25, the manufacturer should replace or compensate you.
- What it doesn’t cover: Damage from physical impact, flooding, incorrect installation, or failure to maintain the system. It also typically doesn’t cover labour costs for removing and replacing a faulty panel.
- Who you claim with: The warranty is with the manufacturer, not the installer. If your installer has gone out of business, you have to deal with the manufacturer directly, which can be difficult for overseas brands without a local presence.
- The workmanship warranty: Separate from the performance warranty, it covers installation defects and typically lasts 5 to 10 years. It’s issued by the installer, not the manufacturer.
That’s why it’s important to pick a reputable installer with a strong local presence. A warranty only helps if the company behind it is trustworthy.
If you’re interested in learning a bit more about solar panel maintenance, you might want to check out the following article titled, How to Clean Solar Panels.
Wrapping Up: Still Shining After All These Years
Solar panels do lose efficiency over time, but it happens slowly and predictably, so you can plan for it.
A quality panel, installed well, should still produce about 85% of its original power after 25 years. The biggest factors are panel quality, installation design, and Australia’s heat. Budget panels, poor airflow, and cheap parts can make panels degrade faster.
Know what’s covered, who to contact, and what isn’t included. If your system is aging or your bills are going up, a professional audit is the fastest way to find out if the problem is degradation, dirt, shading, or a fault.
At PSC Energy, we’ve been helping Western Sydney homeowners get the most out of their solar for years. If you’re not sure how your system is performing, we can help you find out. It’s what we do.
If you’re interested in learning a bit more about solar panels and energy systems, you might want to check out the following article titled, Are Solar Panels Worth It in NSW, Australia? A Price Breakdown for 2026.
FAQ: Solar Panels Losing Efficiency
Do solar panels lose efficiency over time?
Yes. All solar panels degrade gradually. The average rate is around 0.5% per year, meaning a panel produces about 12.5% less power after 25 years than it did when new.
What is a normal solar panel degradation rate in Australia?
For quality panels in Australian conditions, expect 0.5-0.7% per year due to high UV and heat. Budget panels can degrade at 0.8-1% per year or more.
How long do solar panels last?
Most panels continue generating power for 25 to 30 years or longer. Output declines slowly over that time, but the panels don’t simply stop working.
Does heat make solar panels degrade faster?
Yes. High temperatures accelerate the breakdown of materials inside the panel. Australian summers, with roof temperatures regularly exceeding 70°C, put more stress on panels than cooler climates.
How can I tell if my solar panels are underperforming?
Compare your current output data to previous years using your inverter monitoring app. If output is significantly lower and you can’t explain it with weather or shading, book a professional system audit.
What does a 25-year solar panel warranty actually guarantee?
Most performance warranties guarantee that the panel will still produce at least 80% of its original rated output at the 25-year mark. They don’t cover physical damage, installation errors, or labour costs for replacement.
Do more expensive solar panels degrade more slowly?
Generally yes. Premium panels typically degrade at 0.3-0.4% per year and come with tighter warranty terms. The long-term output difference between a premium and budget panel can be significant over a 25-year lifespan.
Can I slow down solar panel degradation?
You can’t stop it, but you can reduce it. Good installation with adequate ventilation, regular cleaning, quality components, and correct system design all help panels age more slowly.
