Understanding Solar Panel Efficiency: What Does It Really Mean?

Michael Tobias
Author : Michael Tobias
September 7, 2021
3 Minutes Read
  
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    KEY TAKEAWAYS

    - Solar panels have a low conversion efficiency compared with many other generation systems. However, this is not a major issue considering that sunlight is free.

    - As of 2021, the top-performing solar panels have achieved efficiency values slightly under 23%.

    - If you’re considering solar power for a building, other metrics are more relevant than efficiency: the installed cost per kilowatt, the annual electricity output, and your tariff.

    - Solar panel efficiency only becomes an issue when space is limited. You may not reach the optimal capacity for your building, but they will still offer an attractive ROI.

    - Under favorable conditions, solar panels have a typical payback period of less than 6 years, while having a service life of 25 years or more.

    When you review the technical specifications of solar panels, their efficiency values may give a negative first impression. As of 2021, monocrystalline solar panels are in the range of 20-23%, while polycrystalline panels are below 20%. However, conversion efficiency is not a critical factor when using sunlight - a free and virtually limitless resource.


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    On the other hand, when the energy inputs for power generation are fossil fuels, efficiency becomes much more important. Coal power plants are typically 30-40% efficient, while combined cycle gas plants are around 50-60% efficient.

    • These generation systems have a higher efficiency than solar panels, but looking only at this metric can be misleading.
    • Solar panels are less efficient in terms of energy conversion, but their input is free and they operate with zero emissions.

    Solar panel efficiency is only an issue when space is limited, since you may not reach the planned capacity in kilowatts. The solar panels used in commercial and industrial roofs have typical dimensions of around 80” x 40”, and the most efficient models exceed 400W. If you want to install 400 kW, you need 1000 - this represents more than 22,000 sq.ft. for the solar panels alone, plus the spacing required for maintenance purposes.

    What Determines Solar Panel Efficiency?

    solar cell parts

    The top solar manufacturers are constantly investing millions in research and development, with the goal of improving their photovoltaic cells. However, this has paid off over time:

    • Back in 1990, solar panels could only convert around 10% of sunlight into electricity.
    • As of 2021, the most efficient solar panels in the market are approaching 23% efficiency. 
    • In other words, solar panels can now produce 2.3 times more energy with a given space, compared with how they performed 30 years ago. 

    The efficiency of solar cells is determined by the photovoltaic material, and also how the module is wired and designed overall. Monocrystalline cells are more efficient, since they’re made of single silicon crystals of high purity. On the other hand, polycrystalline cells are made of multiple crystals, and this impacts their efficiency.

    This does not mean that polycrystalline solar panels have a lower quality. They have a lower conversion efficiency due to their material properties, but there are high-quality solar modules of both types.

    What Are PERC Solar Cells?

    perc solar cells

    Many of the top-performing panels that are currently available use PERC technology, which increases productivity by up to 12%. PERC stands for Passivated Emitter and Rear Contact, and these cells have many design features that boost their efficiency. 

    • PERC cells have a reflective layer below them - sunlight that goes through is reflected back into the photovoltaic material, generating more power.
    • They also have anti-reflective coatings and surface textures that maximize the sunlight captured and converted into electricity.

    PERC cells are often cut in half to reduce their electrical resistance losses, further increasing their power output. You will notice that many solar panels are now using 120 or 144 half-cells, instead of the traditional 60-cell and 72-cell designs. Since solar cells are cut in half, their total space requirements are almost the same and panel dimensions are not affected significantly.

    How High-Efficiency Solar Panels Save Space

    As the efficiency of photovoltaic cells continues to increase, solar panels will be capable of generating more watts per square foot. 

    • A 400W solar panel that measures 80” x 40” is producing 18W per sf. 
    • With an efficiency increase of 33%, it would be possible to generate 24W per sf.

    Generally, having space for solar panels is not an issue in buildings like shopping malls and distribution centers. However, multi-story buildings have a large floor area relative to their roof area - and plenty of the available space is already used by HVAC equipment. In these cases, high-efficiency solar panels will maximize the kWh output per square foot covered.

    R&D has also reduced the cost of solar panels. You could expect to pay more than $10,000 per kW of capacity 20 years ago, but now home solar systems cost less than $3,000 per kW in many parts of the US. Even lower prices are possible in the utility sector, where solar arrays are being installed for less than $1,000 per kW.

    Tags renewable energy | Solar Power | solar energy | solar panels | solar cells

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