Solar Panel Degradation: How Output Drops Over Time

Solar panels don't fail on a set date. They fade. A panel installed today will still be making electricity in 25 years — just a bit less of it than it did on day one. That slow decline is called degradation, and it's one of the few genuinely predictable parts of owning a solar system.

The good news is that modern panels degrade slowly and the manufacturers put it in writing. The catch is that not all panels degrade at the same rate, and the difference compounds over decades. Here's what actually happens, how to read the numbers on a quote, and when a drop in output means something is wrong rather than just old.

What solar panel degradation actually is

Degradation is the gradual loss of a panel's ability to convert sunlight into electricity. It happens because of physical and chemical changes in the cells and materials over time:

• Light-induced degradation (LID) — a small, one-off drop that happens in the first few hours to days of sun exposure as the silicon stabilises.
• UV and heat stress — years of Australian sun slowly affect the encapsulant and backsheet materials that protect the cells.
• Thermal cycling — panels heat up during the day and cool overnight, every day, for decades. That expansion and contraction stresses solder joints and cell interconnects.
• Moisture ingress — over many years, tiny amounts of moisture can work past seals, particularly in humid coastal climates.
• Micro-cracks — hairline fractures in cells from hail, transport, or installation that spread slowly over time.

None of these are dramatic on any given day. Added together across 25 years, they mean a panel that produced a certain output in year one produces meaningfully less in year 25.

The numbers manufacturers publish

Every reputable panel comes with a performance warranty (separate from the product warranty). It's a guarantee about output, expressed as two things:

1. A first-year degradation figure — the initial drop, which is larger than subsequent years.
2. An annual degradation rate for every year after that.

Typical modern panels quote a first-year figure of well under 2%, and an ongoing annual rate that's a fraction of a percent. Premium panels, and especially those using n-type cell technology, tend to publish lower rates than budget alternatives. The warranty usually ends with a guaranteed output percentage at year 25 or year 30.

That end-of-warranty percentage is the number worth comparing. A panel guaranteed to still produce a high proportion of its rated output at year 25 is telling you the manufacturer is confident in its materials. A panel with a noticeably lower end figure is telling you something too.

What degradation means for your power bill

Here's the perspective that matters: degradation is real, but it is slow. Losing a fraction of a percent per year means that after a decade, your system is producing close to what it did at the start — a difference most households would never notice on a bill, especially against the noise of weather, seasons, and changing electricity usage.

Compare that to the things that actually move your solar output year to year:

Factor	Typical impact on annual output
Panel degradation	Very small, gradual, predictable
A wet or cloudy year	Noticeable, varies year to year
New shading (tree growth, neighbour's extension)	Can be significant
Dirty or soiled panels	Small to moderate, usually recoverable
A failed panel, string or inverter fault	Large and sudden
Changes in your own usage patterns	Often the biggest factor of all

If your generation is down sharply from one year to the next, degradation is almost never the explanation. Something else has changed.

Why it still matters when you're buying

Degradation matters most at the point of purchase, because you're locking in a rate for 25 years or more. Two systems that look identical on install day can diverge measurably by the time they're paid off several times over.

It also matters because degradation rate is a decent proxy for build quality. Manufacturers who invest in better cells, better encapsulants and better testing publish better degradation warranties, because they're the ones who'll have to honour them.

When you compare quotes, look at three panel numbers together:

• Product (workmanship) warranty length
• Performance warranty end-of-term output percentage
• Annual degradation rate after year one

A long product warranty paired with a weak performance guarantee is a mismatched offer. So is the reverse.

Australian conditions and what they do to panels

Australia is a demanding environment for solar hardware. Roof-surface temperatures in a Queensland or inland NSW summer are brutal, and heat is the single biggest accelerant of material ageing.

A few local factors worth knowing:

Heat. Panels also lose output instantly in high temperatures — that's a separate effect called the temperature coefficient, not degradation. But sustained heat over years does accelerate long-term degradation too. Good roof-mount clearance for airflow under the panels helps with both.

Coastal salt. Homes near the surf in WA, NSW, QLD and SA need panels and mounting hardware rated for salt-mist corrosion. This is a spec to ask about specifically if you're within a few kilometres of the coast.

Hail. Panels are tested against hail impact, but severe storms — the kind that hit parts of QLD, NSW and Victoria — can create micro-cracks that don't show up as visible damage but reduce output over following years. Worth photographing your array after a big hail event and noting it with your insurer.

Dust and soiling. More of a temporary output issue than true degradation, but persistent soiling in dusty inland areas can mask itself as a gradual decline. Rain usually handles it in most of the country.

Snail trails and hotspots. Brownish discolouration lines on cells ("snail trails") often indicate micro-cracking underneath. Hotspots — where one shaded or damaged cell heats up — can accelerate localised failure. Both are things a technician can check.

How to tell if your panels are degrading normally

Most homeowners never track this, which is a shame, because your monitoring data makes it straightforward.

Compare like with like. Pick a clear, sunny day in a given month and compare your peak output and daily total against the same month in earlier years. Weather varies, so use several days if you can.

Check per-panel or per-string data. If your system has panel-level monitoring, one panel sitting well below its neighbours on a clear day is a fault, not degradation. Degradation affects the whole array roughly evenly.

Look for step changes. Real degradation is a gentle slope. A sudden drop that persists points to a fault — a tripped isolator, a failing optimiser, an inverter issue, or new shading.

Rule out the simple stuff first. Before assuming panel failure: check the inverter for error codes, check whether anything new is shading the roof, check whether panels are dirty, and check whether your export limit or a network setting has changed.

If all of that checks out and output is genuinely well below what the performance warranty guarantees for that year, you have a warranty claim worth pursuing. That usually requires a technician's report and, in some cases, flash testing of the panels.

Claiming on a performance warranty

Performance warranty claims are less common than product warranty claims, and they're harder to prove — you need to demonstrate measured output below the guaranteed threshold under standard test conditions, not just "my bill went up".

Practical steps that help:

• Keep your original installation paperwork, including panel model numbers and serial numbers.
• Keep the performance warranty document itself, not just the marketing brochure.
• Keep your monitoring history if the platform allows data export.
• Deal with an installer who is likely to still be trading in ten years — warranty support runs through them in most cases.

That last point is underrated. A warranty is only as good as the two businesses standing behind it: the manufacturer and the installer who fitted it.

Frequently asked questions

How long will my solar panels actually last?

Well beyond their warranty period, in most cases. A performance warranty of 25 or 30 years is a guarantee of minimum output, not an expiry date. Plenty of systems keep producing usefully after that, just at reduced output. The inverter is typically the component that needs replacing first, well before the panels do.

Do cheaper panels degrade faster?

Often, yes — and more importantly, they're more likely to fail outright. The gap in published annual degradation rates between budget and premium panels can look small on paper, but budget panels also tend to have shorter warranties, weaker materials, and manufacturers with less certainty of being around to honour a claim in year 20.

Will adding a battery reduce degradation?

No. A battery changes what you do with the energy, not how the panels age. Batteries have their own separate degradation characteristics, usually expressed as a guaranteed retained capacity after a certain number of cycles or years — worth asking about separately if you're considering storage.

Should I clean my panels to slow degradation?

Cleaning restores output lost to soiling but doesn't affect true degradation. In most Australian locations, rain does an adequate job. Aggressive or improper cleaning — high-pressure washers, abrasive pads, walking on panels — can cause micro-cracks and actually make things worse.

Getting the specs right before you buy

Degradation is a spec-sheet decision, not a maintenance decision. Once the panels are on your roof, the rate is set. The time to weigh it up is when you're comparing quotes — alongside warranty length, inverter quality, and the reputation of the installer who'll be your first call if anything goes wrong.

Because output, savings and payback all depend on your roof, your postcode, your usage and your retailer, the only reliable numbers are the ones worked out for your specific home. Get your free solar quote and compare offers from SAA-accredited installers who can show you the degradation figures in writing, not just the headline price.