Instyle Solar The Problem of Solar Panel Efficiency Explained

Solar power is the most popular out of all the renewable energy technologies. It’s the easiest out of all the renewables to install and maintain. Once it’s setup, there’s not much else to do but just let it do its thing.

The technology has come a long way from the 1950s when the first solar cell had only a few percentage points of efficiency. But what does efficiency mean when it actually comes to generating power?

At the risk of getting complicated amidst all the technical jargon, we will try to keep it simple and to put it in layman's terms.

When electricity is produced from a power station and it can be fossil fuel-based, nuclear or renewables—there’s always a loss associated with that.

You can put a 100% in terms of fuel usage but you will never get out 100% electricity, plus there are additional losses to the electricity when it’s distributed along the power lines and yet even more losses once it’s reached its actual destination.

A good example here is coal-fired power stations: they are, on average, 32% to 42% efficient. Natural gas turbines are 32% to 38% efficient.

Onto renewables, though—and not many people know this, but hydropower is actually 85% to 95% efficient!

What about solar power, though?

One needs to understand how solar panels work first before going into the details of the challenges of solar power efficiency.

Simply put, solar cells use particles of light from the sun to knock electrons off atoms and generate electricity. Many solar cells make up a single solar panel.

Each photovoltaic cell is a sandwich made up of two slices of semi-conducting material, most notably silicone.

In order to work, photovoltaic cells need to establish a magnetic field, so during the manufacturing process silicone is dipped into other materials to give it either a negative or positive charge.

Solar panel efficiencies vary between the different types of solar panel technologies out there.

The more modern thin-film solar panel technology has an efficiency level of between 11% and 13%. However, the latest developments in the lab have bumped up efficiency levels to 21%.

Monocrystalline panels are the most efficient solar panel technology available at the moment, in the region of 15% to 24%.

Polycrystalline panels have efficiency levels in the region of 13% to 16%. However, as technology advances, they are fast catching up with monocrystalline panels.

The most efficient panels that are commercially available today have efficiency levels of 35%. They’re developed and manufactured by Spectrolab but at a cost of US$100,000 per square metre, so don’t expect to see these panels on anyone's roof soon!

For now, these PV panels are mainly used in the space industry. However, we can expect to see these PV panels go mainstream in the next 10 to 15 years.

The efficiency of a solar panel is impacted by different factors, though. Some are based on the current limitation of the technology, some on the laws of physics, and some on environmental factors that we can control.

But what does it mean when a solar panel is less efficient than other types of solar panels?

Having a lower efficiency solar panel isn’t all that bad—some might say all it means is that you will require a greater number of solar panels covering a larger space than a more efficient solar panel to achieve the same energy output.

So if space isn’t a premium or a major challenge, then it’s probably better to opt for a lower efficiency panel. Likewise if sufficient roof space is a major challenge, then it’s advisable to invest a little more in higher efficiency panels.

Solar panel efficiency can be measured by the number of kWh (kilowatt-hours) of energy produced by an "average" 150-watt solar panel of one square metre in size.

But what impacts the efficiency of a solar panel?

Efficiency levels of solar power are quite low compared to other emerging renewable technologies and fossil fuel based power plants.

According to the laws of physics, photovoltaic technology will never be able to harvest 100% of the sun's rays. The sun puts out a spectrum of radiation and not all of it is light—some is heat.

Silicon also has a maximum theoretical efficiency of 32% and the most efficient mainstream monocrystalline cells that are commercially available are now about 24% efficient.

Other constraints that affect the efficiency of the panel are reflections and the tiny shadows from the metal wires, which are further reducing the amount of sunlight accessing the solar cell.

Now going back to the sun’s rays, the light spectrum is what is used to generate electricity—but radiation doesn’t really serve any useful purpose to photovoltaic technology, apart from actually reducing a panel’s efficiency if it gets too hot.

Of the available solar irradiation, only about 30% is harnessable for photovoltaic energy generation.

Now solar thermal, another form of renewables, is a lot more efficient as it uses the sun’s radiation to heat up water. It's also used in solar thermal electricity plants, which use the sun’s heat to boil a liquid into steam to run a turbine like a geothermal plant.

But no matter what form of energy generation is used, there will always be losses when energy is converted from one form to another form.

The current efficiency levels of solar panels are not an absolute trainwreck though, as they supply adequate clean energy production for the average Australian home.

Now there are some environmental factors that play a role in the efficiency of solar panels that we do have control over, and by keeping these in check we can ensure we are getting the maximum efficiency possible out of our solar panels.

Dirt, snow and dust accumulation on PV panels is what is known as soiling in the PV industry.

It significantly impacts the performance of solar PV systems.

Studies have shown that an average of 1% loss of incident solar radiation is experienced in soiled panels. In the worst cases, a degradation of 4.7% was experienced.

Therefore, it’s advisable to keep your PV panels clean and also ensure they are installed at the correct tilt angle so there’s an element of self-cleaning.

Another factor that impacts solar panel efficiency is what’s known as sun tracking loss.

In the case of fixed solar panels, they don’t take full advantage of the sun’s rays as it moves throughout the day.

PV panels that use sun-tracking technology track the optimal path of the sun throughout the day, thereby harnessing the most energy possible. PV panel tracking technology is mainly used in large-scale utility solar farms though.

Shading also impacts the efficiency of solar panels. Shading can originate from the weather, cloudy conditions, pollution etc. Not much one can do about this aspect, unfortunately! Or hard shading, shading that comes from nearby obstructions such as trees or walls or other buildings.

Before you go cutting down your neighbours’ trees or knocking down walls, however, you should simply ensure when you have your solar PV system installed that the panels are installed in the optimal location.

Request your solar PV installer to conduct a shading analysis of your roof.


The efficiency of solar panels has drastically improved since the early days of solar PV technology.

We are fast approaching the theoretical limit in terms of solar panel efficiency with conventional silicone-based technology.

The most efficient solar panels commercially available are in the region of 35%, but at a cost of US$100,000 per square metre not many people can afford it.

This technology is mainly reserved for the space industry but is most likely to go mainstream in the next decade or so.

The current efficiency levels though are more than enough for the average homeowner.

Other environmental factors such as soiling and shading are in our control, and by ensuring these factors are taken care of we can ensure our solar panels operate at their maximum efficiency.

Next Step

If you want to see how much solar or battery storage could save you over the next 5 years, then take our solar saving calculator quiz below!

Or talk to an Instyle Solar expert about the best solutions for home energy storage or PV-panels.

Otherwise, head back to the solar blog to find even more great educational content.

Photo credit: Depositphotos

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