What Happens to Solar Panels After 25 Years?

Solar Panel Degradation Rate: How Panels Age Over 25 Years

Short answer: most crystalline silicon panels lose about 0.5% of their output per year, with a larger share of that loss often occurring early in life.

NREL’s widely cited review of nearly 2,000 field-measured degradation rates found a median of 0.5% per year and an average of about 0.8% per year. A later NREL compendium covering more than 11,000 rates from nearly 200 studies reached the same conclusion for crystalline silicon: median of roughly 0.5–0.6% per year, mean of roughly 0.8–0.9%. The average is higher than the median because a minority of systems degrade much faster.

Panels lose output for a few well-understood reasons:

• Initial light-induced loss. Many warranties allow roughly 1–3% loss in the first year, which is why warranty curves usually start at 97–98% rather than 100%.
• Thermal cycling. A panel heats and cools every day, which adds up to roughly 9,000 expansion-and-contraction cycles over 25 years and can stress solder bonds and cell connections.
• UV exposure and moisture. These can discolor or weaken the encapsulant and, over time, let moisture reach the cells.
• Potential-induced degradation (PID). Voltage differences between the cells and the grounded frame can drive losses in affected panels. A qualified technician can test for PID, and in some cases the loss is partly reversible.

At 25 years, a physical inspection is worth doing. Warning signs include delamination (layers separating), browning or yellowing, cracked glass, burn marks, and hot spots visible on an infrared scan. A technician can also compare measured output against your system’s monitoring history.

Chart takeaway: the typical panel (blue line) lands near 87.5% at year 25, between a premium warranty floor of 92% and a common warranty floor of 86%. The red line shows why averages can mislead: panels that degrade at the 0.8% mean rate end near 80%. The lines are straight-line illustrations of published rates, so your own system may sit above or below them.

Is Solar Still Worth It? Long-Term ROI After the 2025 Tax Credit Expiry

Short answer: often yes, but the math changed in 2026: homeowners who buy a system outright or with a loan no longer receive the 30% federal credit.

The Residential Clean Energy Credit (Section 25D) ended for expenditures after December 31, 2025, under the One Big Beautiful Bill Act signed July 4, 2025. Homeowners whose systems were completed by that date keep their credit. Leases and power purchase agreements, where a company owns the system, may still be able to use the business-claimed 48E credit under its own deadlines (construction begun by July 4, 2026, or placed in service by December 31, 2027). Rules are changing, so confirm eligibility with your installer or a tax professional.

Costs and payback in 2026:

• Price: about $2.60 per watt on the EnergySage marketplace (about $20,800 for 8 kW), versus a higher $3.50 per watt median for 2024 cash purchases in Lawrence Berkeley National Laboratory’s data.
• Payback: EnergySage reports that its average shopper breaks even in about 10 years. Your number depends on your rate, system size, financing and net-metering terms.

To make the long-term picture concrete, we built a simple model. It assumes an 8 kW system producing about 10,500 kWh in year one (4.5 peak sun hours, 80% system efficiency), degrading 0.5% per year, valued at the flat 2024 U.S. average rate of 16.48¢ per kWh with no future rate increases. It leaves out inverter replacement, maintenance and financing costs.

• 25-year bill savings: about $40,800.
• System cost at $2.60/W: $20,800.
• Net after 25 years: about $20,000, or roughly $67 per month.
• Simple payback in this model: about 12 years. That’s longer than EnergySage’s 10-year average because we deliberately used a conservative flat rate; higher local rates or rate increases shorten it.

For early adopters the picture was different. Systems installed around 2000 cost on the order of $10 per watt before incentives (per Lawrence Berkeley National Laboratory’s long-run price data), so a 5 kW system could cost around $50,000. At roughly 7,000 kWh per year and an average rate of about 10–12¢, bill savings over 25 years come to roughly $18,000–$21,000. Those owners generally relied on state or utility incentives to come out ahead, which is exactly why today’s much lower installed prices matter.

Run your own numbers with the solar ROI calculator, and check state incentives for programs that still apply. If you live in a high-rate state such as California, Massachusetts or Hawaii, solar often pays back faster than the national average.