What does panel degradation mean for my solar production?

Solar panels lose about 0.4-0.5% of output each year. At 0.5%/year, a system producing 12,000 kWh in year 1 will produce about 10,640 kWh in year 25 — still 88% of original output.

Why is my actual production different from the estimate?

Production estimates use annual averages. Real production varies ±10-15% year to year due to weather, cloud cover, and seasonal variation. Shading, dirty panels, and inverter performance also affect output.

What is the difference between kW and kWh in solar?

kW is power capacity (what your system can produce at one moment). kWh is energy (actual electricity generated over time). An 8 kW system in full sun for 1 hour produces 8 kWh. Annual kWh production depends on sun hours and efficiency.

Solar Energy Calculator

Enter your system size and location — get year 1, 5, 10, and 25-year production estimates with degradation.

System specifications

System size?

Peak sun hours?

hrs/day

System efficiency?

Annual degradation rate?

%/yr

Year 1 production

11,300 kWh

Year 111,300 kWh

5-year total55,940 kWh

10-year total110,495 kWh

25-year total266,192 kWh

25-yr avg annual10,648 kWh/yr

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How to Use This Calculator

Enter your system size

Type your total installed system size in kW. This is the sum of all your panels' rated wattage. A 20-panel system using 400W panels equals an 8 kW system. Not sure of your size? Use the Solar Panel Calculator first to figure out how many panels you need.

Set your peak sun hours

Peak sun hours are the single biggest variable in solar energy production. Phoenix at 6.5 hrs/day produces nearly double what Seattle at 3.5 hrs/day produces from the same system. This is not daylight hours — it measures equivalent hours of full-strength sunlight (1,000 W/m²). Use our Peak Sun Hours Calculator for your exact location.

Adjust system efficiency

No system converts 100% of the sun's energy. Real-world system efficiency accounts for inverter conversion losses (~3%), temperature derating (~5%), wiring resistance (~2%), soiling/dust (~2%), and partial shading (~2%). The default 86% is a realistic estimate. Clean panels in a cool, unshaded location can reach 90%. Panels in hot climates with some shading may drop to 80%.

Set the degradation rate

Solar panels slowly lose output each year as the photovoltaic cells degrade. Most quality panels degrade at 0.4-0.5% per year. This matters for long-term planning — over 25 years at 0.5%/yr, production drops to about 88% of year 1. Some premium manufacturers warranty 0.25%/yr degradation. Cheaper panels may degrade faster at 0.7-1.0%/yr.

Read the multi-year projections

The calculator shows Year 1 production plus cumulative totals for 5, 10, and 25 years — all adjusted for panel degradation. The 25-year lifetime total is most useful for calculating your solar payback period and ROI.

The Formula

Annual solar energy production is calculated as:

Year 1 kWh = System kW × Peak sun hours/day × 365 × System efficiency Year N kWh = Year 1 kWh × (1 − Degradation rate)^(N−1) Lifetime total = Sum of Year 1 through Year N production

The peak sun hours × 365 term converts daily irradiance into annual full-sun equivalent hours. Multiplying by system efficiency (typically 0.86) reduces theoretical output to real-world delivery. The degradation compound factor applies each year, meaning year 25 production is Year 1 × (1 - 0.005)^24 ≈ 0.887 × Year 1.

A key insight: doubling system size doubles production linearly, but moving from a 4.5 to 5.5 peak-sun-hours location increases production by 22% — location matters as much as system size.

Example

8 kW system in Denver, CO

Denver gets approximately 5.5 peak sun hours per day — one of the best locations in the continental US. A homeowner installs a standard 8 kW system with 86% efficiency and 0.5%/year degradation.

System size8 kW

Peak sun hours5.5 hrs/day

System efficiency86%

Annual degradation0.5%/yr

Results

Year 1 production13,540 kWh

5-year total66,850 kWh

10-year total131,860 kWh

25-year total319,200 kWh

25-year avg/yr12,770 kWh

At $0.14/kWh in Denver, 319,200 lifetime kWh equals $44,688 in electricity value over 25 years. An 8 kW system typically costs $22,000-$26,000 installed before incentives — roughly $15,400-$18,200 after the 30% federal tax credit. That's a clear economic win with 12-16 year payback and 25+ year system life.

FAQ

How many kWh does a 10 kW solar system produce per day? ▼

A 10 kW system with 4.5 peak sun hours and 86% efficiency produces about 38 kWh/day on average (13,900 kWh/year). In sunnier locations like Phoenix (6.5 hrs), the same system produces ~54 kWh/day (19,800 kWh/year). Production varies day to day — sunny summer days may produce 60+ kWh while a cloudy winter day might yield only 10 kWh.

What does panel degradation actually mean for my production? ▼

Panel degradation means your system produces slightly less each year. At 0.5%/year — the industry standard — a system producing 12,000 kWh in year 1 will produce about 10,640 kWh in year 25 (88% of original). Most manufacturers guarantee 80% output after 25 years. This gradual decline is already factored into financial projections when calculating payback period and ROI.

Why is my actual production different from this estimate? ▼

Production estimates use annual averages. Your actual year-to-year production will vary ±10-15% due to weather patterns, cloud cover, and seasonal variation. Shading from trees (which grow), dirty panels, inverter aging, or unusual heat waves can also reduce production. Use this calculator as a baseline for financial planning, not a guaranteed number.

How does temperature affect solar energy production? ▼

Solar panels actually produce less power when they get hot — counterintuitive but true. Most panels lose 0.3-0.5% efficiency per degree Celsius above 25°C (77°F). On a 35°C (95°F) day, a panel may produce 3-5% less than its rated wattage. This is already partially captured in the system efficiency field — a lower efficiency value accounts for hotter climates. Ironically, cold sunny days (like Colorado winters) often produce excellent output.

What's the difference between rated kW and actual kWh produced? ▼

kW (kilowatts) is power capacity — what your system can produce under ideal conditions. kWh (kilowatt-hours) is energy — the actual electricity generated over time. An 8 kW system running for 1 hour in full sun produces 8 kWh. But real-world production depends on sun hours and efficiency. The same 8 kW system in Phoenix vs. Seattle produces vastly different kWh annually, even though the kW rating is identical.