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Solar Panel Efficiency

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Solar Panel Efficiency: Should You Stop Overthinking It?

If you follow any of the latest news in the solar industry, you may see the phrase solar panel efficiency come up very often. 

I think (around) every 6-8 months there is a new world record for the ‘most efficient solar panel’. 

Just by jumping on google and searching I can see there is so much information on new “highest efficiency solar cells of up to 30%”. 

But what does it all mean… 

What is solar panel efficiency? Why are people making such a big fuss over this thing?

Honestly, there are arguments for both sides here. Some people may tell you that you don’t need to worry about solar panel efficiency, whereas others might tell you it’s actually more important than you think. 

I’m here to give you my honest opinion on why it shouldn’t matter as much as you think… However, I’ll also explain the other side of how it could potentially save you more money. 

Now, I’ve actually gone into detail about the 6 most efficient solar panels in 2022, which you can read here

If you’re interested in efficiency, then I’ve also got the best and most efficient solar inverters here as well. Don’t hesitate to give it a read. 

If you’re ready to start requesting a solar proposal you can contact my team of solar design engineers here

Let’s get straight into what the hell solar panel efficiency is, and what you should think about it.

Table Of Contents

solar panel efficiency is how much sunlight a solar panel can covert into energy to use in a home.

What Does Solar Panel Efficiency ‘Actually’ Mean?

Ok, in the most simple terms solar panel efficiency is how effective a solar cell can convert sunlight into electricity using photovoltaics. 

In much longer (and nerdy) terms: It’s a measurement of the amount of energy that is captured by the solar cell and transferred through the panel where it is converted into electricity. 

The higher the solar panel efficiency the more electricity you will generate. This will mean that you are getting more overall energy from your solar panel system.

On average in 2022, solar panels have around 19-22% conversion efficiency. This is the industry standard. To be honest, we don’t really bother proposing any solar panels that are less than 18-19% solar panel efficiency. 

Mainly because there are better options for a similar price and it just seems like those might not be the best option for homeowners unless you are looking for something more specific like a low converting system because you don’t want to waste energy on export limits

So, to summarise: If your solar panel has a rating of 21% efficiency, then 21% of the sunlight that hits the solar panel will be converted into electricity. 

It’s as simple as that, right?

So, What Determines Solar Panel Efficiency?

There are 3 main factors that can change or make up the efficiency of a solar panel. Now these are super important to consider because they also affect the price of the solar panel as well. This is because the technology is more advanced. 

Any technology that has a large investment and research will require a bigger investment from the homeowner, usually because its higher quality and will provide you more value. 

Ok, so let’s take a look at the 3 main factors that make up solar cell efficiency.

The material the solar panel is made from

Solar panels can be made from several different materials. The most popular ones are: 

Thin-film (silicon solar panels)

Out of these the best material is monocrystalline with an average efficiency rating of 20%. These different materials all affect how well the solar panel can convert sunlight into electricity.

The same applies for panels which are made from p-type and n-type silicon cells. They p stands for positive and n stands for negative. N Type solar cells are much more efficient and last a lot longer than p type cells. 

If you’re interested to learn more about the types of solar panels, I’ve written a full article here.

How reflective the solar panel is

When sunlight hits the solar panel, some light may be reflected back. When the light is reflected back, it’s not being absorbed or converted into electricity.

This causes a loss of energy conversion and makes the cells less efficient. The less the solar panel can reflect, the better.

This is why most solar panels are made from glass, as it does not reflect much light back. Again, this is also why all black solar panels usually have a higher conversion efficiency.

Interestingly enough, technology in the past few years has allowed us to develop what’s called bifacial solar panels. This actually converts electricity from the underside of the panel facing the roof. 

It captures light that reflects from tin roofs and converts it into energy, making this very efficient solar panel technology. However, these panels are usually big and mostly used for commercial purposes.

The wiring and busbar of the solar panel

Lastly, the number of bus bars and types of wiring will all affect the solar panel efficiency rating. The more bus bars the better, meaning it can convert more energy with less tension.

So to explain it in more simple terms, when sunlight hits the solar panel it requires a small amount of energy to convert that sunlight into energy and then move that energy from the panel down into the inverter. 

Therefore, the better wiring and less tension the more energy will be saved. The higher the tension, the more energy will want to jump out and be released and essentially, escape or get wasted.

there are different factors that affect the solar panel efficiency which include the type of solar panel, how reflective the panel is and the wiring of solar panel

There Are Also Factors That Affect Solar Panel Efficiency

There are many different factors that may increase or decrease your solar system’s overall efficiency. Some of these factors are an easy fix. Others you will need to consider before you buy your solar panels. By doing this, you will ensure you are getting the most from your budget.

Here are the main factors to consider:

Shading of solar panels

This is a pretty obvious one. Any shading that may naturally occur from trees, time of day, clouds etc will all directly affect your solar panel efficiency.

Also, this applies to dirt and soil that may collect on your solar panels from time to time. The dirt will obstruct the light from reaching the solar cells and lower the conversion efficiency. To prevent this from happening you can give your solar panels a clean from time to time.

To be honest, the best way to overcome this issue is to look at getting a design consultation with a SolarEdge or Enphase expert. You can speak to my team as we are official design partners for both. 

Enphase products use micro inverter technology which allows each panel to perform independently. This means if one panel is shaded, the rest will still continue to perform. 

The same applies for the technology that SolarEdge uses, which are called panel optimisers. These do pretty much the same thing, and can easily overcome small shading issues. 

Temperature derating & degradation

There is a certain point where sunlight will actually turn into thermal energy (heat) and begin to negatively impact the solar cells. 

Over time, the hotter the solar panel gets the less efficient it will be. Some solar panels can actually get to temperatures of 65°C degrees or more. This could impact the solar panels output by as much as 26%

This is why solar panels are installed using racks; to allow for airflow to happen through the panels. It helps cool them down and maintain a good level of efficiency.

With saying this, it’s important to remember how hot our Australian sun can get. Choosing a solar panel that is designed to withstand this heat is a must. 

Of course, I can recommend a few for you but each homeowner is going to be different so it’s hard to say which solar panel is best for your home. Either way, here’s a blog on the most efficient solar panels in 2022.

Which way your solar panels face

Another pretty obvious one. If your solar panels are facing towards the sun they will get a higher sunlight coverage. The more sunlight, the more energy can be converted. 

Fortunately, due to today’s technology in solar panels we can design a system around the time of day you use the most energy. Therefore, we can place panels in the areas that the sunlight will hit during the time you are consuming the most energy. 

Now, it’s best to try and maximise your self consumption because that is where the most savings will be. Unless of course you have a solar battery (we strongly recommend looking into the Sonnen battery or Tesla powerwall 2) then your energy is going to get wasted on export limits. 

PS. Not sure what an export limit is, find out here.

So let’s summarise, your panels and system are going to be made more efficient by facing them towards sunlight during the time of day that you use the most energy.

Solar Inverter efficiency

The job of the inverter is to convert the DC current in AC current so that it can be used to power your house. Now, this might not directly impact the solar panel efficiency but it will impact the efficiency of your system. 

Although technology is improving, inverters are still not 100% effective. You may even see a loss of up to 8% in energy conversion. The best inverters for energy conversion are Sungrow and Fronius. I’ve done a full comparison of Fronius vs Sungrow here

SolarEdge is the most efficient inverter in the industry with a whopping 98% conversion efficiency. I’ve written a full review on SolarEdge here

Don’t forget, you can find out the best solar inverters here.

Long cable runs

Alright, let’s quickly run through this one. Small amounts of energy are always lost through cables. This is why short cable runs will give you more energy as there is less time and length that the energy can be lost. The longer the cable runs, the more energy will be lost

It’s also important to use good, strong cables to prevent further energy loss. Luckily, we do have a lot of requirements to meet so most installers will be using industry standard equipment and cables.

So just remember, shorter cables mean more energy.

Solar system design

Of course one factor to consider is the design of your system. If you get a basic sales rep who has no knowledge of how electrical solar installation works you’re going to end up with a crap system design that will result in poor solar panel efficiency. 

If you get your system designed by a solar engineer they will be able to maximise your energy output through shorter cable runs, optimum panel placement and minimal strings if you are using PV. For micro inverters you can be flexible with your design to maximise your energy output as well. 

Quality of solar panel installation

This is something that often gets overlooked. The quality of your solar panel installation will play a big part in how efficient your solar panels are. If you get cheap, crap installation then it’s most likely your panels will quickly lose efficiency. 

Not only that, but it’s likely they will actually just stop working altogether. So, we cannot stress enough. Make sure you are going with a reputable company that isn’t charging low prices because they’re cutting costs on equipment and installation. 

Here’s some differences between good and bad installations.

solar panel efficiency can get affected by bad solar installers doing a crap job

How Do You Calculate Solar Panel Efficiency?

We usually leave this up to the scientist in their labs to determine the efficiency of a solar panel. They can perform a series of accurate tests to work out how efficient the solar cell is converting energy at. 

All tests are done based on a 25 degrees clear, sunny day. They will test the panel under common conditions of light exposure, panel orientation and panel temperature. 

However, there are ways to find out the output and efficiency of your solar panels. It’s a bit long winded, but it will get you a fairly accurate rating. 

You will need to multiply the amount of sunlight that hits the earth’s surface in your area by the area of your solar panel (measured in square metres). Once you have your answer you will need to divide it by the maximum wattage of your solar panel and times by 100. Here you should have your solar panel efficiency. 

These days solar panels are starting to come with a performance test conditions (PTC) rating which is a fairly accurate rating for what efficiency you can expect from your solar panel.

Does Solar Panel Efficiency Matter, Or Is It Nonsense?

There are arguments for both sides of this. I’m going to run through both of the arguments and explain why they are important. 

To be honest, sometimes it’s important and other times it’s not really. I guess it completely depends on what you want to achieve with solar and what your goals are. 

This is the message I’m trying to promote and push across the solar industry. Every homeowner is different and has a different reason for moving to solar. Therefore, for one homeowner the small 2% increase in panel efficiency could make a huge difference in savings. 

On the other hand, another homeowner won’t consider this 2% because they’re looking for the fastest ROI and not the longest. They might even consider moving home at a later date so the most efficient panel wouldn’t be on the top of their list.

Here’s why people think it shouldn’t really matter

The argument is that all solar panels will produce the same quality of electricity. Having a more efficient solar panel system won’t give you better energy, brighter lights or higher quality energy. 

Homeowners don’t really need to make solar panel efficiency the biggest selling point on the market. Usually, solar panels with only 19-20% efficiency can be enough to significantly reduce your energy bill.

Here’s why people think it should matter

On the other hand, a lot of people will tell you that solar panel efficiency is one of the most important factors you should consider when buying solar panels. 

The argument is that with a higher efficiency solar panel you can generate more energy for less. It means that you will be able to see a longer return on investment and more overall electricity.

Here’s a good argument about why solar panel efficiency is important. He shows how a more expensive but higher efficiency system can give you more energy and faster ROIs. 

It’s also good to point out that high solar panel efficiency will allow you to fit more in a smaller space. This means you can utilise your roof and get more energy output.

there are arguments for and against if solar panel efficiency should actually matter

Why Is Solar Panel Efficiency So Low?

Well, there are a few reasons why.

Thermal heat

Firstly, solar panels actually do have a maximum efficiency before they start to generate thermal energy, which is heat.

It’s around 60-85%, after this the solar panel will start to release heat and burn. This actually means we are limited in the amount of sunshine we can actually convert into energy.

Solar panels are fixed

Another reason is because most solar panels are fixed and do not follow the sun. As mentioned above, solar panel efficiency is determined by the amount of sunshine on the solar panel that is converted into energy. 

Sometimes the position of the solar panel is not directly facing the sun, therefore the sunlight is ‘weaker’ and will ultimately convert less. Panels that follow the sun will have a much higher efficiency rating.


Solar panel efficiency is a tough one really. There are arguments for and against. But I’m always going to stick by what I say, it always comes down to the homeowner. 

If you require a high efficiency system because you have a smaller roof and need to generate more energy, then it’s best suited to go for the high panel efficiency. 

There are many different factors to consider and put into play. Overall, don’t over stress about solar efficiency. Speak to a design engineer and they will be able to help you understand what will be the best solution for your home. 

I hope that this clears things up about solar panel efficiency a little more, and now it makes a bit more sense. 

Share with us below what your thoughts or comments are with the future of solar cell efficiency. Also, if you believe it does or doesn’t make a difference, let us know below.

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Written By:

Luke Cove
Managing Director
Lightning Solar & Electrical

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