What Is Solar Panel Efficiency? Definition and Importance

Solar Panels
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In a single hour, the sun provides enough energy to fuel human civilization for an entire year. Solar panels can only capture at most a quarter of the sun's energy hitting them and convert it into electricity—a great improvement since the first photovoltaic cell was created in 1839—but research is ongoing to increase the efficiency of solar electricity and accelerate the transition to clean, renewable power.

There are many factors that go into creating an efficient solar panel, so knowing what to look for can help you save money on an installation and help you maintain their efficiency over time. Keep in mind, however, that the actual hardware in a solar system is only about one-third (35%) of the total cost of a rooftop solar system. The rest is “soft costs” such as labor, permitting, and design. So while solar panel efficiency is important, it's only one element in a larger package.

Why Efficiency Matters

If you have unlimited space and are ground-mounting solar panels in a field or empty lot, efficiency matters less than if you are installing them on a roof, where getting the most out of limited space is important. Higher efficiency reduces the overall cost of a solar system and decreases the time it takes solar owners to recoup their installation costs. The environmental impact of producing solar panels is also reduced, as panels with higher efficiency can more quickly repay the energy used to produce the panels in the first place, and fewer, more efficient, panels need to be produced to generate the same amount of electricity.

Which Factors Determine Solar Panel Efficiency?

Solar cells convert photons (packets of energy) from the sun into currents of electrons, measured in volts, thus the term photovoltaic (PV). PV cells commonly used in solar panels are made from silicon crystals, though other elements (such as selenium and germanium) also have photovoltaic properties. Finding the most efficient element or combination of elements in the right crystalline structure determines how efficient solar panels can be, but other factors are involved as well.


Untreated, 30% or more of the photons that strike a PV cell will be reflected back as light. Minimizing reflection involves coating and texturing PV cells to absorb rather than reflect light, which is why solar panels are dark in color.


The solar radiation that reaches Earth includes most of the electromagnetic spectrum, from X-rays to radio waves, with about half of that radiation coming in the band from ultraviolet to infrared. As the wavelengths get shorter, the energy of the photons increases, which is why the color blue has more energy than red. Designing PV cells involves taking into account these different wavelengths to maximize the efficiency of generating electricity from photons with different wavelengths and different levels of energy.


Recombination is the opposite of generation. When photons from the sun are absorbed by a PV cell, the photons excite the electrons in the crystals and make them jump to a conductive material, generating a current of “free electrons” (electricity). But if an electron's energy is weak, it recombines with the “hole” left behind by another electron and never leaves the silicon crystal. Instead, it releases heat or light rather than generating a current.

Recombination can be caused by defects or impurities in the crystal structure of the PV cell. Yet impurities in the crystal are necessary to move the electrons in a particular direction; otherwise, no current is created. The challenge is to reduce the level of recombination while maintaining an electric current.


Map of direct normal solar irradiance in the United States

Courtesy of the National Renewable Energy Laboratory, Golden, CO.

Augusta, Maine receives roughly 4.8 sun-hours per day, slightly less than the 5.0 sun-hours per day received in Augusta, Georgia. Yet PV cells work better at lower temperatures, so panels on a rooftop in Augusta, Maine may be more efficient at producing electricity than those on a rooftop in Augusta, Georgia, even if their daily insolation is lower.

What Is Insolation?

Insolation is a measurement of the average solar radiation of an area over a period of time.

Solar panels are at their maximum efficiency in temperatures between 15°C (59°F) and 35°C (95°F), according to EnergySage, but the panels themselves can rise to 65°C (150°F). Panels will be labeled with a temperature coefficient, which is the rate at which they lose efficiency for every degree above 25°C (77°F ). A panel with a temperature coefficient of -0.50% will lose a half percent efficiency for every degree above 25°C.

How Are Solar Panels Tested for Efficiency?

Essentially, testing the efficiency of a solar panel means finding the ratio between the amount of electricity that the solar panel is able to produce and the amount of solar irradiance the panel is exposed to. Here is how that test is conducted: 

Solar panels are tested at 25°C and exposed to 1,000 watts (or 1 kWh) per square meter of solar irradiance—what is known as "standard test conditions" (STC), then their electricity output is measured. 

A panel's power output rating (Pmax), measured in watts, is the maximum amount of power a solar panel is designed to produce under STC. A standard residential panel might have an output rating of 275-400 watts. 

As an example: A 2-square meter panel under STC would be exposed to 2,000 watts. If it has a power output rating (Pmax) of 350 watts, it will have an efficiency rating of 17.50%.

To calculate a panel's efficiency, then, divide the Pmax by the panel's solar irradiance, then multiply by 100%. So, 350 / 2000 = .1750, and .1750 x 100 = 17.50%.

Tips for Maximizing Efficiency

Person cleaning solar panels.

Ian Waldie / Staff / Getty Images

The most efficient panels may not be the best use of your money. Consider the entire system cost for the panels (separate from “soft costs”). Given the panels' efficiency, how many many watts will they generate over the next 25 years (assuming standard test conditions)? How many watts do you need? Perhaps you are overbuilding, while a less efficient system will supply all your needs at lower cost.

Once you've installed a solar system, keep your panels clean. Regular rainfall will do the job, but if you live in a dry climate, use plain water (no soap, which can leave a film) twice a year to remove dust and dirt. Trim back branches if they're over-hanging your roof, and remove any debris between the panels and your roof, since greater air circulation keeps your panels cooler. If needed, get a solar easement to remove shade from neighboring obstructions.

Software that comes with a solar system will monitor its output in kilowatt-hours (kWh). If you find output declining over time, all other conditions being equal, have your system tested. An ampmeter and multimeter are needed for these tests: Consult a professional, as you can damage your panels by doing the tests incorrectly.

Solar's Future Is Bright

Timeline of Development of PV cell efficiency

Courtesy of the National Renewable Energy Laboratory, Golden, CO.

In June 2021, the maximum efficiency of a solar PV panel on the market was 22.6%, while a number of other manufacturers had cells over 20%. That's why research is underway to create more efficient combinations of materials that can be commercially viable. Perovskites or organic PV cells may reach commercialization soon, while more inventive methods such as artificial photosynthesis show promise, even if they are still at an early stage of development. Research in the lab has produced PV cells with efficiencies nearing 50%, but bringing that research to market is key to the future of solar technology.

View Article Sources
  1. Bhandari, Khagendra P., et. al. “Energy payback time (EPBT) and energy return on energy invested (EROI) of solar photovoltaic systems: A systematic review and meta-analysis.” Renewable and Sustainable Energy Reviews 47 (July 2015), 133-141. https://doi.org/10.1016/j.rser.2015.02.057

  2. For a comprehensive discussion, see Jaffe, Robert L. and Washington Taylor, The Physics of Energy. Cambridge University Press, 2018, chapter 23, upon which much of this section is based.