Solar Panel Degradation Rate: What to Expect After 5, 10, and 25 Years
Last updated: 2026-04-08 · Solar Benchmark
Solar Panel Degradation Rate: What to Expect After 5, 10, and 25 Years
Degradation rate is the annual percentage decline in a solar panel's power output. For PERC panels (the dominant residential technology from 2018 to 2023), the median rate is approximately 0.5% per year. TOPCon panels (2023 and newer) degrade at less than 0.3% per year. After 25 years, a PERC panel retains roughly 86-88% of its original rated power.
Definition and How It Works
Solar panel output declines over time due to changes in the semiconductor materials inside the cells. The primary drivers are UV-induced degradation of encapsulants, thermal cycling stress on cell interconnects, and moisture ingress. These processes are slow and mostly invisible year to year, but they compound over a 25-year system life.
One exception is first-year PERC degradation. PERC cells experience light-induced degradation (LID) in their first weeks of sun exposure, causing an additional 2-3% output loss on top of the annual rate. This is a one-time effect that partially stabilizes after initial exposure. TOPCon cells are largely immune to this first-year LID mechanism.
Degradation rate is distinct from a sudden fault or failure. A panel that drops 20% in output in one month is not degrading: it has a defect, shading issue, or hardware problem. Degradation is a slow, steady, predictable decline.
Output Remaining by Year: PERC vs TOPCon
| Year | PERC (~0.5%/yr) | TOPCon (<0.3%/yr) | Why It Matters |
|---|---|---|---|
| Year 1 | ~97.5% (after LID) | ~99.7% | First-year PERC loss is immediate |
| Year 5 | ~95.6% | ~98.5% | Difference starts accumulating |
| Year 10 | ~93.1% | ~97.0% | 4 percentage points separate the two |
| Year 15 | ~90.8% | ~95.5% | PERC nears standard warranty threshold |
| Year 20 | ~88.5% | ~94.1% | PERC systems may show measurable bill impact |
| Year 25 | ~86.4% | ~92.7% | TOPCon retains 6+ points more output |
PERC values start at 97.5% after year-1 LID, then apply 0.5%/yr compounding. TOPCon values start at 99.7%, then apply 0.3%/yr compounding.
What Accelerates Degradation
- UV exposure: The primary long-term driver. UV radiation breaks down the polymer encapsulant that protects cells. There is no practical way to prevent this; it is factored into manufacturer warranty models.
- Thermal cycling: Panels heat and cool every day. This repeated expansion and contraction stresses solder joints and cell interconnects. Hot climates with wide day-night temperature swings accelerate this process.
- Humidity and damp heat: Moisture penetrating the laminate causes corrosion and delamination. High-humidity climates (Gulf Coast, Hawaii) can accelerate degradation above median rates for budget panels with thinner encapsulation.
- Potential-induced degradation (PID): In high-voltage string systems, electrical potential between the cell circuit and the grounded frame can cause ion migration that reduces output. PID-resistant manufacturing and proper system grounding largely prevent this in modern installations.
Warranty Context
Most standard panel warranties guarantee 80% output at year 25, which implies allowing up to 0.8% annual degradation. High-performance panels from major manufacturers now warrant 87.5-92% output at year 25, reflecting their confidence in lower actual degradation rates. If a manufacturer is warranting 87.5%+ at year 25, their actual median degradation rate is at or below 0.5%/yr for PERC and 0.3%/yr for TOPCon.
Frequently Asked Questions
How do I know if my panels are degrading faster than normal? Track your system's specific yield (annual kWh per kW installed) each year. A well-functioning system should decline by no more than 0.5-0.6% per year after the first year. If year-over-year specific yield drops by 2% or more without a corresponding change in weather, the system warrants inspection.
Does degradation affect my payback period? Yes, but modestly. At 0.5%/yr degradation, a system in year 20 produces about 11% less than in year 1. Over a 25-year period, the total energy output is roughly 11-12% less than if the system never degraded. This effect should be included in any financial model for a solar installation.
Are TOPCon panels worth the premium specifically because of lower degradation? Lower degradation is one factor. Over 25 years, the difference between 0.5%/yr and 0.3%/yr is about 6 percentage points of retained capacity. On a 10 kW system, that translates to roughly 600-800 kWh of additional annual production in year 25. Whether that justifies a price premium depends on the specific panel pricing and your local electricity rate.
Data: pvlib physics modeling + Open-Meteo ERA5 weather data | Last updated: 2026-04-08 | Solar Benchmark