What Is Solar Panel Efficiency, and Why Is It Important?

Jordan Grimmer

Last Updated: January 25th, 2023

So, you want to go solar. But before you make the decision to buy, loan, or lease, there are a few things you want to know about the company and the system it provides: what's the warranty like? How long does the contract last? Do they service the state you live in? There are several small decisions that go into your big solar decision. But when it comes to most important quality of a solar system, you might find that it has less to do with contracts and financing, and more to do with raw data.

What You Want to Know about Solar Panel Systems

We conducted  a survey among over 1,000 respondents ages 35 and older, and asked them what they felt was the most important quality a solar energy provider could offer them as consumers. The general consensus was overwhelmingly in favor of one main feature:

what do you consider the most important quality of a solar energy provider, pie chart: solar panel efficiency, number of payment options, warranty length of the system, length of a contract, number of states serviced

Solar panel efficiency. More than contract length, or warranty, or even the number of payment options a company could provide, consumers are mostly interested in just how efficiently their solar panel systems are actually performing, which is sunderstandable. In an age where consumers are looking for more fuel-efficient cars, making more efficient internet searching by visiting sites like this one, and overall are looking for ways to get more bang for their buck, it's only logical that they would have similar expectations from a costly solar panel system.

Why Is Efficiency So Important?

It's no secret that, despite the monumental steps taken to make solar panel systems more affordable, buying or leasing a solar panel for your own home can still be quite expensive. And for those individuals who are choosing to go the purchase/loan route, making sure they buy a system that can immediately start paying for itself is crucial to the success of their investment. This is where solar panel efficiency comes in: the more efficient your system is, the faster the system will begin paying for itself, not only saving you money in the short-term, but even possible making you money in the long-term through the sale of solar credits.

How Is Solar Panel Efficiency Measured?

solar cell efficiency 101

Simply put, solar cell or solar panel efficiency, represented as a percentage, is the ratio of energy gathered from sunlight that a panel can transform into electricity. "η" represents the percentage, "Pm" represents the wattage an individual cell actually produces, "G" is the input light from the sun (measured in watts per square meter), and "Ac" represents the surface area of the solar cell itself (measured in square meters). In other words, when the value for Pm is larger in proportion to the value G x Ac, then the solar cell is more efficient, because it requires less input sunlight and less surface area to produce electricity.

For example, in Standard Test Conditions (STC), which have been defined as a clear day with incident sunlight at 41.81º above the horizon hitting a 37º-tilted panel (it also assumes 25ºC and a G of 1,000 W/m2), a solar cell measuring 100 square centimeters and producing 2 Watts of energy would rate about 20% efficient.

What Is Considered "Good" in Terms of Solar Panel Efficiency?

Now, while you probably didn't need (or even want) to know the complex math behind the efficiency percentage, you probably do want to know whether that 20% in the example is any good. The answer to that question can be complicated, as it depends greatly on the type of solar cell being evaluated. Not all solar cells are created equal. Literally: the material used in some solar cells is much more expensive and much more effective at capturing incident sunlight and transforming it into electricity. Consequently, for some cells, 20% is not only fantastic, but it's also an impossible goal for the material those cells employ; for others, 20% is about industry average; and for the rest, 20% is not even the minimum expected efficiency.

On an added note, while cells that can produce 44% efficiency are insanely good, they are definitely not the most economical choice; the materials used in these cells are incredibly expensive, and the cell as a whole can carry a price tag up to 100 times the cost of some of the lower-efficiency cells. Really, the trick is finding a company whose solar cells' efficiency is worth the cost that comes with it.

In the table below, you'll notice we've run the number for a few different types of solar panels, which can be used across a number of applications (for example, the Mars rover devices use multi-junction solar cells, while solar farms tend to use GaAs or single-junction cells). Other solar cell types (such as CZ silicon, CIGS, Cadmium Telluride, and CZTS) have more commercial and residential uses, and they are often sold by solar companies. As you can see, some cell types, while less expensive in terms of cost per watt (cost per watt includes depreciation, manufacture and labor costs, as well as costs of material), they also tend to be less efficient (note: the projected cost per watt is for one individual panel measuring 1 square meter):

cell efficiency vs cost per watt chart

Conclusion: if you're looking for a solar panel system for your home, something in the 10% to 20% efficiency range will keep you from breaking the bank too much. And if you find something north of 20%, you'll want to pay attention, because that efficiency could make the difference in how soon your solar system can pay for itself in the long-term.

When We Searched for Panel Efficiency Ratings

Oddly enough, when we conducted an in-depth search of the type and efficiency of the solar panels used by the solar companies reviewed on our sitewe could hardly find anything. In fact, we could only find information on a few companies:

Sungevity: 18.4% (using panels manufactured by LG)

SunPower: 21.5% (manufactures their own panels)

Solar City: 22% (manufactures their own panels)

And in terms of cost per Watt for a full system, this is where each of these companies fall according to freecleansolar.com:

Sungevity: $4.69/Watt

SunPower: $5.16/Watt

Solar City: $4.91/Watt

Meanwhile, last year SunEdison drove down their cost to $0.50/Watt per panel.

Other than these few price points and efficiency ratings, we could find nothing. For some reason, many companies aren't necessarily eager to share this information, which got us thinking:

Does Efficiency Really Set a Company Apart?

The question is, does this information really mean anything? In a recent press release, Solar City announced that it had built the most efficient residential solar panels of their kind, clocking in at a whopping 22%. But does that matter? What does System A at 22% get you that System B at 21.5% does not? For starters, the 22% system will generate 2% more electricity each year than its 21.5% counterpart. While 2% may look small now, over the course of 20 years, System A will have produced approximately 40% more electricity than System B, which could easily translate to more SREC income or less money spent on utilities! So you can see, for those who are truly invested in their systems, every percentage point counts.

Why Companies Aren't Telling You

When nearly half of our survey respondents identified solar panel efficiency as being the most important thing to know about a prospective solar energy provider, why aren't more solar companies releasing the numbers on their panels' efficiency to the public? In fact, we had to to go a third-party blog, energysage.com to get most of these numbers:

We've identified a few possible reasons why this information is hard to find:

1. They Don't Know

As you may have guessed, not all solar companies build their own solar panels. In many cases, they will outsource manufacturing of the panels to another company like LG, Hyundai, or Itek. It's possible that certain information - such as solar panel efficiency - may not ever leave the warehouse.

2. They Know, but Don't Want to Tell

Of course, one obvious answer is that not all companies can necessarily boast a 22% efficiency rating, let alone a 21.5%. With top businesses releasing this information as a selling point, you could understand why a company with only 12% to 15% may not be so eager to do so.

3. They Know, but Don't Think It's Important

A third possibility is that companies simply don't think publishing this information will necessarily affect the customer's view of the company.

If You Want to Go Solar

However, efficiency is important, and because it's important, potential solar energy consumers want to know at what efficiency their new solar system will be running. That much was made clear by our survey. If you have decided that you want to get in on the solar action, don't be afraid to ask what the solar panel efficiency is. While this metric should not be the be-all-end-all number around which you should make your decision (there are many other qualities of the system and the company that you should consider before making your decision), it's certainly an important one if you are planning on keeping your system a long time.

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