Degradation Rate

Degradation rate is the annual percentage decline in a solar panel’s power output over time. All solar panels gradually lose a small amount of their electricity-generating capacity each year due to natural aging of the silicon cells and materials.

The industry-average degradation rate for modern solar panels is approximately 0.3–0.5% per year. This means a panel producing 400 watts in its first year will produce about 398 watts in its second year, and so on. After 25 years at 0.5% annual degradation, a panel retains roughly 88% of its original output — still generating substantial electricity. Higher-quality panels from premium manufacturers often degrade more slowly (0.25–0.3% per year). Panel warranties reflect expected degradation: a typical warranty guarantees at least 84–87% of original output after 25 years. First-year degradation (called Light-Induced Degradation or LID) is slightly higher (1–3%) as the cells stabilize. When modeling long-term solar production and financial returns, your installer should factor in the specific degradation rate of the panels being proposed.