Measurement
Module degradation is the gradual decline in solar panel efficiency over time due to environmental exposure, material aging, and weathering. Solar panels typically degrade at 0.5-0.8% per year, meaning a panel producing 100% in year one produces approximately 99.5% in year two, and so on. Understanding module degradation is critical for long-term project performance and investor returns. Over a 25-30 year project lifetime, cumulative degradation can reduce energy output by 15-20%, directly affecting cash flows. High-quality panels from reputable manufacturers degrade more slowly, justifying premium prices. Project developers account for degradation in financial models, and investors should verify that degradation assumptions are conservative and realistic. Modern solar panels are highly durable, with most premium manufacturers offering 25-year performance warranties. For Energea investors, understanding module degradation helps contextualize long-term project performance and the importance of quality equipment selection.