What is Solar Panel Efficiency? (2023)

Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York's Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.

Solar panel efficiency measures the ability to convert sunlight into energy to power your home. High-efficiency solar panels can convert a higher percentage of sunlight into electricity. In other words, they generate more kilowatt-hours per square foot compared to standard solar panels.

We at the MarketWatch Guides Team have reviewed the best solar panels based on efficiency and other important factors. Read on to learn more about solar panel efficiency and how it works.

Solar panels consist of modules or photovoltaic (PV) cells. You can measure the efficiency of a PV cell based on the percentage of light energy it converts into electricity. Alternatively, solar cell efficiency is the ability of a panel to capture energy from photons or light particles. When light hits a solar panel, it releases electrons that start moving and create an electrical current.

For example, a solar panel with a 20% efficiency can convert 20% of sunlight into usable energy. Most commercially available solar panels have an efficiency of less than 23%, with an average range of 15% to 20%. SunPower and Canadian Solar currently top the industry with 22.8% efficient panels.

These numbers may seem low, but keep in mind that solar cells use a free energy input with zero emissions (sunlight). Fossil fuel power plants can reach efficiency levels of around 60%, but the energy input is not free and generates constant emissions.

The individual efficiency of a solar panel is not the same as the overall efficiency of an installed solar system. Like with an electrical system, a small portion of the energy generated gets lost in wiring. Solar power systems also rely on inverters to convert the direct current (DC) from PV cells into the alternating current (AC) needed to power your home appliances. The best solar inverters are more than 97% efficient, but you can still expect minor losses during transmission.

Due to wiring and energy conversion losses, the individual efficiency of solar panels will always be higher than the system efficiency. For example, a home solar system with 22% efficient panels might operate at an overall efficiency of 19%.

There is a common misconception that solar panel efficiency equates to product quality. Efficiency is simply a product feature, like power rating and module dimensions, and you can find high-quality panels of all efficiency levels.

The main factor that determines efficiency is a solar panel’s material:

As you can see, monocrystalline solar panels are the most efficient type of solar panel compared to other options. The main advantage of high-efficiency panels is generating more electricity using less surface area — but they are also more expensive. If you have plenty of space for your PV system, using a higher number of less efficient panels is also a viable option.

Although high-efficiency solar panels are more expensive, they offer several advantages. Plus, your electricity savings from going solar can help you recover the higher upfront cost over time. Here are a few benefits of high-efficiency solar panels:

Since high-efficiency modules convert a higher percentage of sunlight into electricity, they allow you to use roof space more effectively. For example, compared to 10% efficient panels, 20% efficient panels can generate twice as much electricity per square foot. In other words, high-efficiency solar panels produce more energy using fewer panels.

If the area available for your PV array is limited, you can achieve maximum power output with monocrystalline solar panels.

Monocrystalline panels have a higher efficiency and wattage than polycrystalline panels of the same size. For example, when comparing 60-cell solar modules, you might find a 300-watt (W) poly panel versus a 370 W mono panel. Here’s an example of how solar panel wattage can impact your system size and energy savings:

The average cost of solar panels is $2.85 per watt, according to our March 2023 survey of 1,000 homeowners with installed solar. Since monocrystalline panels have a higher wattage, they also cost more than polycrystalline panels. However, the price difference is minimal when you compare both panel types in terms of cost per watt.

All solar panels suffer a small loss in wattage as they heat up. This effect is temporary — panels recover the lost productivity once they cool down. However, when you constantly expose solar panels to hot weather, the loss of production can add up over time. As a result, hot temperatures can result in a 10% to 25% decrease in solar panel efficiency.

Solar panels have a metric called the temperature coefficient, which describes the negative effect of heat. For example, a panel with a coefficient of -0.40% per Celsius degree will lose 8% productivity with a temperature rise of 20°C. On average, monocrystalline panels have lower temperature coefficients than polycrystalline panels, which means they are less affected by heat. This is a major advantage in warm regions where hot temperatures can impact solar panel performance over time.

Many solar benefit programs calculate financial incentives by the per-watt capacity of your solar system. Since high-efficiency panels have a higher wattage, they can qualify for higher incentive amounts. However, this does not apply to incentive programs with fixed rebates.

The federal solar tax credit is a nationwide incentive that allows you to claim 30% of your solar system costs as a tax credit for the year you install panels. Since monocrystalline panels cost more, your total system cost will likely be higher than if you used polycrystalline panels. As a result, you will see a higher tax incentive per panel.

There are several ways to maximize the conversion efficiency of your solar system.

Professional installers properly wire your solar panels according to the manufacturer’s instructions. If not wired correctly, solar panels can have voltage and current issues that negatively impact their durability and productivity.

The best solar panels come with a 25-year warranty, but most companies only offer this benefit with a professional installation. In other words, you will void your warranty if you attempt a DIY installation. A warranty can conserve the overall efficiency of your solar energy system by replacing defective panels for free.

Photovoltaic cells can only generate electricity when light reaches their surface. So if dust and other particles accumulate on the surface of your panels, less sunlight reaches the PV cells and electricity production drops. The cleaning needs of your solar array depend on site conditions, but many solar installers recommend cleaning your panels at least twice a year.

Several manufacturers are developing ceramic coatings for solar panels to reduce the accumulation of dust and other particles. These products are still relatively new but have promising applications.

Cleaning your solar panels is important, but the wrong tools and methods can shorten their lifespan. Here are general guidelines to keep in mind:

Solar panels tend to lose efficiency when damaged, and in worst-case scenarios, may stop working completely. Generally, a solar panel warranty will not cover damage due to incorrect cleaning methods.

Shading can greatly reduce the efficiency of your solar panels. Since all the PV cells in a solar panel are wired together, a single shaded cell can lower the productivity of all others. If your solar panels are wired in string circuits, a single shaded panel can decrease the electricity output of the entire array.

Avoiding shadows during a solar panel installation can be challenging. Since the sun’s position in the sky is always changing, shadows constantly move. An area that seems ideal for solar panels in the morning may experience complete shade in the afternoon.

However, a professional solar installer can help you find the best placement for your solar system. Solar companies use simulation software to analyze shading conditions on your site throughout the year and can identify the ideal spot for solar panels.

Even if you follow all the recommendations above, the rated efficiency of your solar panels is the main factor that determines overall system efficiency. Even if cleaned regularly, a 15% efficient panel cannot match the productivity of a 22% efficient panel. For this reason, it is important to talk with a solar installer to determine the right solar panel brand and efficiency for your energy needs.

As we’ve discussed, monocrystalline panels generally have the highest efficiency. Comparatively, polycrystalline panels have an intermediate efficiency and thin-film solar panels tend to be the least efficient. But thanks to recent advancements in photovoltaic technology, some thin-film cells can now match the efficiency of crystalline silicon panels.

If you’re looking for specific product recommendations, the following manufacturers produce some of the most efficient solar panels in the industry.

As of 2023, there are no commercial solar panels with a rated efficiency above 23%. However, solar cell technology is constantly evolving and this could change in the near future. Some PV cells have achieved an efficiency of nearly 50% in laboratory conditions.

Several factors can reduce the efficiency of your solar panels. Some factors (like weather) are unavoidable, but you can control others, like debris accumulation.

High temperatures can negatively impact the productivity of your solar panels. There is nothing you can do about the weather, but you can look for solar panels with a low-temperature coefficient to mitigate the effect of heat. You can find panels with a coefficient below 0.30% per °C, which means they lose less than 3% productivity with a temperature rise of 10°C (18°F).

Dust accumulation and shading are also detrimental to solar panel efficiency, but unlike temperature, there is more room for control. Regular cleaning can help keep your solar panels operating at full potential, and you can avoid shading by using a professional installer to ensure adequate system placement. For example:

Efficiency measures the ability of a solar panel to convert sunlight into usable, clean energy. High-efficiency solar panels generate more electricity per square foot compared to standard panels. This is an advantage for homeowners with limited roof space, as you can use fewer high-efficiency panels to generate the energy you need.

However, high-efficiency panels tend to cost more, and paying the extra price only makes sense if you properly install and maintain your system. Dust accumulation and shadows can negatively impact energy production, even if you have the most efficient panels in the market.

There is a common belief that solar panel efficiency directly indicates product quality, but this is not always true. Monocrystalline panels are generally more efficient, but you can also find high-quality polycrystalline panels despite their lower efficiency.

You can check out our guide to the most efficient solar panels to learn more.

The most efficient solar panels range from 19% to 22.8%. This includes SunPower’s Maxeon panels, which are some of the most efficient on the market. Most solar panels have an efficiency rating of 15% to 20%.

Yes, but efficiency decreases very slowly. High-quality solar panels have an annual productivity loss that is typically less than 0.5%. Some solar manufacturers, such as SunPower, have achieved a degradation rate as low as 0.25% per year. However, the best solar panel manufacturers offer 25-year warranties, which cover repairs if you have issues with your panels over time.

Keeping your solar panels free of debris can help maintain efficiency. Solar companies recommend you clean your solar panels at least twice a year. Dust and other particles reduce the amount of sunlight your panels absorb, which can negatively impact their efficiency. It is also important to install solar panels in unshaded areas. Even a small shadow can reduce the energy output if it covers one PV cell completely.

No, most commercially available solar panels are less than 23% efficient. The National Renewable Energy Laboratory (NREL) achieved a solar cell efficiency of nearly 50% in 2020, but it used specific solar cells and a concentrated light source under highly controlled laboratory conditions.

Solar manufacturers test the wattage and efficiency of PV modules under controlled laboratory conditions known as Standard Test Conditions (STC), which include:

When installing a residential photovoltaic system, actual site conditions differ from controlled laboratory settings. As a result, solar panels may not operate at their full rated wattage and efficiency. However, nameplate values are useful when comparing solar panels since each brand gets tested under the same conditions.

Leonardo David is an electromechanical engineer, MBA, energy consultant and technical writer. His energy-efficiency and solar consulting experience covers sectors including banking, textile manufacturing, plastics processing, pharmaceutics, education, food processing, real estate and retail. He has also been writing articles about energy and engineering topics since 2015.

Tori Addison is an editor who has worked in the digital marketing industry for over five years. Her experience includes communications and marketing work in the nonprofit, governmental and academic sectors. A journalist by trade, she started her career covering politics and news in New York’s Hudson Valley. Her work included coverage of local and state budgets, federal financial regulations and health care legislation.