10 Solar PV System Losses - How To Calculate Solar Panel Efficiency

Updated on January 26, 2023

10 Solar PV System Losses - How To Calculate Solar Panel Efficiency

PV system losses have a substantial impact on the overall efficiency and output power of solar panel arrays. Good solar design takes into account 10 main PV losses, while best design and installation practices help to reduce solar cell power losses.


It’s an unfortunate fact that solar panels are not too efficient to begin with. The most efficient are monocrystalline type, with polycrystalline panels coming a close second.

Monocrystalline panels are used extensively for domestic and large-scale solar installations, while other, specialized types are used for certain situations needing specific panel characteristics.




Thin Film


One crystal

Multiple crystals

Thin silicon layers


Up to 22%

About 15%

Maximum of 10%


25 to 30 years

20 to 25 years

15 to 20 years





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Solar panels are rated in two common ways (more than that actually, but let’s keep it simple):

  • STC rating
  • NOCT rating

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Although there are other criteria relating to ambient temperature and atmospheric conditions, the main difference to me is the level of irradiance in kilowatts per square meter (kW/m2). When we buy a panel the manufacturer states that it’s a 100 watt, 150 watt or 300 watt panel, but what does that mean?

STC solar panel rating gives the power output at an irradiance of 1000W/m2 which is a pretty high rate. Many locations don’t get this level and certainly, almost no location on Earth will get this level the whole year round.

NOCT rating gives an output at irradiance of 800kW/m2, which is much more reasonable. It means that when we purchase a 100 watt solar panel, the best we can expect in perfect conditions is 100 watt, but mostly we will get 80 watts an average value, probably less all year round.

When I test panels I use a solar power meter to know exactly what energy I have falling onto the panel surface. I can then relate this to the panel area and power output, so I know it’s efficiency.

For example, where I live now in February the irradiance is 335kW/m2 so I can expect only about 35 watts output from my flexible 100 watt panel.

This is the first loss we have to deal with but, of course, there’s nothing we can do about it. The inefficiency is built in. In fact this is a good way to characterize PV system losses – those we can improve and those we cannot.

Overall, solar system losses, including power loss in solar panels account for approximately 26% of the power generated, so whatever we can do to improve output could have a substantial impact on running and payback costs.

Losses in solar PV systems are designed into installations when contracted out to professionals but self-installers will need to take them into account when sizing solar panels and battery storage.

In many cases, for systems lower than 5kW, it could be more cost effective to adjust the number of panels upwards, but if you have a restrictive budget this may not be possible. It’s always prudent to reduce any losses you can.

Cause of Energy Loss

Percentage Loss

Design or Maintenance

Total Losses




23.8% lost

Dust and Dirt






Spectral Losses






Thermal Losses



Array Mismatch



DC Cable Losses



Inverter Losses



AC Cable Losses



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You can see from the above table that most losses are design issues, while none of them are stable – they vary according to temperature, weather and load conditions.

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Explain The Losses That Occur In Solar PV Project

1. Effect Of Shading On Series And Parallel Connected Solar PV Modules

It makes sense that shading the surface of a solar panel from the sun will degrade its performance but this can be more severe than imagined. This is why the issue is given top-priority at the top of the chart.

Good design can reduce this value, while ongoing maintenance will ensure that the panel arrays don’t become overshadowed by structures or plant growth.

Take a 300 watt nominal 20 volt panel with 60 solar cells, Voc of 38 volts Imax of 24 amps. – this is  a typical size that might be used for a domestic solar installation. What would happen if you completely covered just one of the cells?

  • output reduced by 1/36th (2.7%)
  • 10%
  • 25%

Try 75% – yes, in fact the reduction in power could be a whopping 75%! It doesn’t seem to make sense.

Long range cloud cover is known as ‘soft shading’ and is factored in for the geographic location at the design stage. It produces a more diffuse light and is not as serious as shadows cast by objects that are close.

<strong>1. Effect Of Shading On Series And Parallel Connected Solar PV Modules</strong>

Why Are Solar Panels Susceptible To Shading Losses?

Solar cells are connected in series in groups of 20, in the case of a 60 cell panel, so that the same current flows through the cells in a group. If even one cell is shaded partially, blocking a proportion of the current flow, the output of the whole panel will suffer as a result.

As well as severe reduction in power output, panels can become damaged due to the creation of hot-spots, which can happen without electronic protection in place.

Solar Panel Shading Solutions

By-pass diodes

All modern solar panels are fitted with by-pass diodes, which allow current to flow around a group of solar cells that may be blocked due to shading. Unfortunately, the output of that particular group is lost at the expense of saving the other two-thirds.

It isn’t the best solution, but it is the cheapest! By-pass diodes are not known for their long life and are also prone to failure.

A recent study found 47% failure rate mostly due to the fact that the operating conditions of most PV systems are much harsher than laboratory test conditions.

<strong>1. Effect Of Shading On Series And Parallel Connected Solar PV Modules</strong>

There are better ways not only to maximize output due to shading losses but also to protect the solar panels themselves from overheating damage caused by back-feeds and unbalanced loads.

Solar Panels With Micro Inverters Built In

The standard arrangement (up ’til now) to convert the DC voltage generated by solar panels in to AC power we need in our house was to install just one big solar inverter.

A string of  10 to 14 panels might be connected together in series so that the DC voltage could reach 600 volts – this in itself is not a good thing. It’s dangerous for one thing. DC current arcs causing damage and burns.

If one panel in the string became shaded, then the reduction in power output was considerable, due to the nature of series connections.

One solution is to fit a micro-inverter to each panel, which converts to AC and transmits it to a central box for further distribution. In this way, the output of one solar panel doesn’t drag down the others in the same way.

Are solar optimizers worth it?

A DC optimizer for PV panels operates on an MPPT function (Maximum Power Point Tracking) and are fitted to every panel. They do not convert DC to AC but transfer the voltage to a standard string inverter.

When the optimizer detects a reduced current due to shading effects, the panel voltage is converted to current to make up the difference.

Of course, the device cannot recover lost energy due to shading but the impact on overall array production is much reduced.

2. The Effect Of Dust On Solar Panel Efficiency

2. The Effect Of Dust On Solar Panel Efficiency

The impact of dust on solar photovoltaic performance can’t be ignored and the chart gives 2% energy loss as a reasonable figure for industry professionals to use in their design calculations. This really is a broad average value and will vary widely according to geographical location.

2% is about right for a country with all-year round rain, but for locations with long dusty seasons and near industrial activity, this figure could easily be as high as 6 or 7% – this energy loss is not negligible.

Dust builds up on panels mounted at a lower tilt angle, but another enemy of panel efficiency, bird poop, is a very good sunlight blocker. It accumulates quite quickly over time and also hardens, making it very difficult to clean off.

How often should solar panels be cleaned?

Professional cleaning companies recommend that solar panel arrays should be cleaned once every 6 months. This is has been shown to improve energy output by 3 to 5% on average, with gains up to 25% in very dusty areas.

What is the best way to clean solar panels?

Many companies advise warm water and a mild soapy solution, just like washing a car. However, many soaps leave a fine film on panel surfaces. A simple cleaning with ionised water and soft brush is adequate.

One word of warning – solar panels can very hot indeed, up to 70 or 80 degrees C. Check with the manufacturer to make sure there is no danger of damaging them by splashing tepid water over the surface.

Although rain does clean panels to some extent, it isn’t really good enough to remove all surface grime. Regular cleaning should be part of scheduled maintenance.

3. Optical Losses In Solar Cell Arrays

Solar cells generate electricity by the interaction of light photons with the P-N junctions of the solar cell crystalline structure. Optical losses occur when light is reflected off the surface of the panel instead of being absorbed into the panel surface to interact with electrons.

This is definitely a panel design feature and is the subject of ongoing research into improving panel efficiency. The challenge is to reduce surface reflectivity while maximizing light absorption.

This can be done by ‘roughing’ up the surface with granular paint additives or adding another means of light-trapping mechanism.

4. Spectral Response Of Solar Cells

How a solar cell responds differently to different wavelength of light

This is another PV loss that we are not going to get too deep into, simply because as users we can’t impact it or its effects. Solar cells don’t use all of the wavelengths transmitted by the sun. There are many frequencies, mostly 43% visible light, 54% infrared and 4% ultraviolet.

Solar cells can convert most of the visible light and half of the infrared, with just a bit of the rest. Manufacturers strive to optimize panels to give a general broad response to maximize electrical output.

5. PV Loss Due To Irradiance Level

This is averaged out for practical purposes at 1.5% and represents the degradation in efficiency when the irradiance is reduced from the STC rating (Standard test Conditions) of 1000W/m2 to a low irradiance of 200W/m2.

Energy production doesn’t follow a linear relationship – the efficiency drops off and a value is used to compensate for the energy loss in the design phase and over the life of the PV system.

6. Effect of temperature on solar panel efficiency

Thermal Loss Of Solar Cells

Energy loss due to high temperature is one of the biggest losses, mostly because on an inherent characteristic of the solar cell structure – for every 1 degree C  above the STC rated temperature of 25 degrees C a solar cell loses 0.5% of it’s output.

The subject of ongoing research, some innovative ways of reducing thermal loss have been proposed. Many involve drilling holes or long slits in the aluminium framework to allow either natural or forced air circulation.

Other manufacturers are find that polycrystalline panels with their multi-junction structure are not as susceptible to thermal losses.

Perhaps one of the most exciting proposals is the hybrid PV-thermal solar panel, which cools the face of the solar cells with water and recovering the heat for use in the building.

Hybrid Solar Modules – PV Electric and Water Heating

Several European manufacturers (solar2power.pt and dualsun.com) claim an increase in electrical energy production of 15% while also recovering enough heat to zero out the domestic water heating bills. The way of the future?

7. Mismatched Solar Panels – Mismatch Losses In Solar PV Module

Mismatch occurs between solar modules when the energy produced by two or more panels in an array is different. This can happen in two ways, by partial shading already discussed, or because of differences in solar cell electrical characteristics.

Solar Cell Manufacturing Tolerances

Individual panels in an array simply don’t perform the same. Complete strings could be mismatched due to poor orientation or situations where different arrays face different directions. Apart from this, panels are not identical when they are manufactured.

Everything that’s produced in a factory, from a car part to a solar cell, are manufactured to a tolerance. In the case of solar this is between +/-1.5% to +/-5%. Basically this means that modules created from these solar cells are not going to produce identical amounts of electrical energy.

Other causes, such as blown by-pass diodes, partial dirt cover and thermal gradients between modules or across the same panel, have been discussed.

Currently, the best solution is fitting panel-level electronics such as DC optimizers or using panels with built-in micro-inverters (see section 1 – Shading).

8. DC Cable Losses In PV Systems

It isn’t possible to eliminate losses in DC cables – if a current flows then there is a loss of energy. The only thing we can do is to minimize the loss as much as possible.

Designers try to size cables so that the DC cable losses are less than 1% of peak power production of the whole solar panel system, although 2% is acceptable. So how is this done?

The electrical resistance of the cables cause both voltage drop when current flows and also power loss in the form of heating. The heating effect is greater the higher the current and is also a factor across connections.

A high resistive connection will deteriorate under continued load. Correct design and regular electrical maintenance are the main ways to combat DC cable loss.

Volts Drop Across DC Cables

Basically volts drop is a product of the current flowing through a cable and its resistance, shown by the formula:

  • Volts drop (V) = Current in amps (I) x Resistance in ohms (Ω)

For power loss the formula is as follows:

  • Power in watts (W) = Current in amps (I) x Resistance squared (R2)

Neither of these are of much concern to you unless you are installing your own system. In that case, the basic calcs will come in handy.

DC Cable Power Loss Practical Example

In the case of an installation far from the house, choose the highest voltage for transmission, whether that’s DC or AC. In large domestic installations module strings are wired so that DC volts is often approaching 600V so go with that.

It’s also better to install the inverter and associated AC gear closest to the domestic mains use. Cable size is always a compromise between loss of money through energy loss, or wasting money by buying cables that are too think.

The main consideration here is that cables don’t overheat and are safe when in use at peak power.

What is a solar panel string?

Solar modules can be connected together in series or in parallel. In series, the voltages all add together while the current stays the same and when connected in parallel the currents all add together while the voltage stays the same.

8. DC Cable Losses In PV Systems

Assume you have an inverter with start voltage of 150V, that is to say, it needs at least 150 volts DC across its terminals before it will convert DC to AC. Its maximum rating is 600V, which shouldn’t be exceeded.

Check your solar panels for the open circuit voltage value (Voc) – we will use 41V taken from the LG 330 watt solar panel spec sheet. Divide inverter max voltage by 41 to get the maximum number of panels that can be connected in series:

  • Inverter Vmax 600/solar panel Voc 41V = 14.63 panels (or 14 panels)

In practice I would string 10 to 14 panels together:

  • 14 panels x 41Voc = 574 volts

From the LG specification PDF sheet we find that the current flowing throwing each panel is 9.69 amps, so the cable used to connect the string to the inverter needs to be rated at 600 volts and 1o amps minimum. The calculation below is for a cable run of 40 metres:

  • If 2% DC cable losses are acceptable: 1.5mm2 (16AWG) capacity 11 amps
  • If 1% losses required: 4mm2 (12AWG) capacity 41 amps

There’s quite a cost difference – 4mm2 cable is around 70% more expensive than 1.5mm2 cable, so would it be cost effective?

Cost analysis needs to be carried out, but intuition tells us that for systems under the US average size of 5.4KW, the savings are not worth while. For far greater systems the savings can be considerable and should be calculated on an individual basis.

9. Solar Inverter Losses

For the most common form of inverter, the string inverter, efficiency is about 97%, which means you lose 3kWh for every 100kWh generated.

Inverter Loss Calculation

For comparison, an average U.S. solar system of 5kW might generate 7000kWh/yr in Indiana:

  • 3% of 7000=210kWh inverter loss per year

210kWh per year is about the same energy used by a toaster, so not a great deal, but all the other losses mount up. They do do become less efficient as they get older and should be changed once they are 10 years old. Most manufacturers give a warranty of 10 to 12 years.

Two of the most important things affecting solar inverter efficiency are temperature and load. Make sure the unit is well-ventilated if mounted inside and shielded from the sun’s glare if mounted outside.

Like most devices, inverters have an efficiency curve, with maximum efficiency close to maximum working load and generally poorer levels at lower loads. This is isn’t usually an issue until the inverter load drops below 25-30% but below this it falls off dramatically.

The take-away here is to make sure the inverter is correctly matched to the solar panel array i.e. that it is not too big, which could happen if you intend to extend the system in the future, for example.

10. AC Cable Losses In Solar Systems

Regulations allow for voltage drop of up to 3% in both DC and AC cable runs, but designers aim for 1%. In reality the only way we can impact AC losses are by choosing the right components and by installing cable runs of suitable cross-section area and as short as possible.

Other PV System Losses

Engineers also include 2 to 3% loss of energy due to equipment down-time issues, either through breakdowns or grid outage. Even though not strictly related to the system efficiency, it needs to be taken into account.

Solar cells reduce their efficiency over time and while manufacturers offer warranties for up to 25 years, power output is not uniform over that time, generating perhaps 80% of their peak output at the end of their warranty period.

Although solar modules may function for up to 50 years, panel degradation accounts for approximately 0.8% power output reduction each year.

What Is The Approach To Reduce Losses In A Solar PV Power Project?

A quick glance at the check-list of solar PV losses will confirm that most are associated with design issues or component characteristics. The installer can make prudent choices in cabling to maximize output and also pay careful attention to both close and long-distance shading.

Installing the latest micro-inverters or DC optimizers can help a great deal in reducing mismatch loss or similar effects caused by partial shading.

Regular maintenance ensures that shading through plant growth is eliminated and regular cleaning ensures that the maximum amount of the sun’s energy reaches the panel’s surfaces.

How To Improve Solar Panel Efficiency

Before finishing this post I’ll outline briefly two methods of improving the output of solar arrays that bring substantial power gains for a reasonable cost – auto-tracking and reflective mirrors.

Automatic Solar Trackers

Fixed solar panel arrays are normally installed on a sloping roof chosen for the correct orientation as near as possible facing due South (if in the Northern hemisphere.)

The sun moves across the sky in two ways – vertically, as it rises and falls, and horizontally, as it moves from East to West.

As the sun moves across the face of the panel, the angle of incidence at which the sun’s rays hit the surface changes and becomes more oblique. The reduces the amount of energy conversion taking place within the solar cell crystals.

A solar tracking mechanism follows the sun across the sky so that the panels are perpendicular to the sun’s rays thereby maximizing power output. Trackers that follow the horizontal movement are known as single-axis trackers and those that follow both are called dual-axis trackers.

Single axis can recover up to 45% more sun’s energy while the dual-axis models can save a huge 65%, so they work really well.

Unfortunately they are expensive and are not suitable for all situations, but well-worth considering.

Reflective Mirrors For Improving Solar Panel Efficiency

Mirrors have long been used for improving solar panel output with varying success. Over the last few years the cost of solar has come down so much that the focus on efficiency has not been so great, but it’s still a consideration – if a viable method increases output why not use it?

It makes a lot of sense to recover some of the losses we’ve talked about in this post and in many countries low-tech solutions such as solar reflectors are the only ones available.

Test show that it’s possible to gain up to 30% increase in power output using mirrors but of course there is a downside to more sun energy – heat!

A solar panel’s output falls by 5% for every 10 degrees C temperature rise, so a separate means of removing excess heat is needed, further adding to the cost.

In the final analysis, it may not be worth the effort, particularly as prices keep falling and simply adding another panel might be the easiest and most cost-effective option.

For me, I like the idea of getting something for nothing and my feeling is that using mirrors is a good option for small solar systems – I’ll continue to use them!

Related Questions

How is energy lost in solar panels?

Solar panels lose energy in several ways. The two biggest energy losses occur due to high temperature and shading issues, either through trees and structures, or passing clouds. Reflection and dirt also play a significant role in solar panel energy loss.

What are the negative effects of solar panels?

The biggest negative aspect of solar panels is the environmental impact. Raw materials are used which are difficult to recycle and also to dispose of. The rate of solar panel installations is increasing rapidly and with an effective life of 25 to 30 years, there will be thousands of tons of panels to dispose of after that time frame.

Can you lose power with solar panels?

Yes, most homes with a solar power installation can lose power if the grid goes down. The solution is to consider an off-grid solar system, which includes a bank of deep cycle energy storage batteries that can supply a home until grid power returns.

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