Solar panel degradation: what to actually expect over 25 years

Published July 2026 · SolarVerdict methodology series

Panels don’t die; they fade. The fade is slow, well-studied, and routinely left out of savings projections — which is one of the quieter ways calculators overestimate. Here is what the evidence supports and what it does to the math.

The headline number

NREL’s long-running degradation studies of fielded systems put the median degradation rate at roughly 0.5% per year, with most systems falling somewhere in the range of a few tenths of a percent to about 1% annually. Individual results vary with climate (heat accelerates it), mounting, and product quality — but 0.5%/yr is the defensible planning number for a mainstream installation.

What 0.5%/yr does to lifetime energy

Compounding matters less than people fear, but more than calculators admit:

So a projection that multiplies year-one production by 25 overstates lifetime energy by about 6%. On its own that shifts a payback estimate by several months to a year; combined with the other standard omissions it compounds into the systematic optimism we’ve documented. The correction is trivial: apply the (1 − d)^t−1 factor per year, as in the payback method.

What warranties actually promise

Modern panel warranties have two parts:

• Product warranty — against defects, commonly 12–25 years depending on manufacturer tier.
• Performance warranty — a guaranteed minimum output trajectory, typically ending somewhere around 85–92% of nameplate at year 25 depending on the product line.

Note what the performance warranty is: a floor on catastrophic fade, not a prediction. A panel degrading at the median 0.5%/yr sits comfortably above most warranty floors its whole life, so the warranty rarely pays out for ordinary degradation. It protects against defective product, which is real but uncommon from established manufacturers. Treat the warranty as insurance, not as the production forecast.

Early-life effects worth knowing

Light-induced degradation (LID) causes a small one-time output drop in the first days of sun exposure for many silicon technologies; manufacturers generally rate panels net of it. Potential-induced degradation (PID) is a system-design fault that can cause faster losses; modern equipment and proper grounding largely prevent it, but it’s a reason to prefer established installers — degradation risk is partly workmanship risk.

The part that actually breaks: the inverter

The component most likely to fail during your panels’ life is the inverter. String inverter warranties commonly run 10–12 years (sometimes extendable); microinverter warranties commonly run to 25. A 25-year cash-flow model should include one string-inverter replacement — a real four-figure line item that free calculators almost never include. When comparing quotes, the inverter warranty difference is part of the price difference.

How to monitor your own system honestly

1. Record monthly production from your monitoring app from day one.
2. Compare year-over-year after adjusting for that year’s weather (how) — a cloudy June is not degradation.
3. Expect a gentle drift of around half a percent a year. A sudden step down is not degradation either — it’s a fault (string down, failed optimizer, tripped breaker) and is fixable.

Degradation is the most predictable of all the corrections an honest solar analysis needs — there’s no excuse for a projection that omits it. Ours never do.