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Solar panel efficiency: What is it and why is it important?

Efficiency is one of the key metrics of a solar cell's performance. How should you think about it?

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Efficiency is a key metric in comparing solar panel systems.
Andriy Onufriyenko/Getty Images

If you're in the market for rooftop solar panels, you want to make sure you're acquiring the best equipment for your needs. While there are a lot of quality panels, inverters and batteries available, you can ensure you get a fair deal and the best system for your needs by knowing what sets them apart.

One useful point of comparison is efficiency. It's a metric that shows up a couple of places in a residential solar system and one you need to know. The good news is that it's not terribly complicated and most manufacturers readily provide their panels' efficiency ratings.

Not every system needs the most efficient panels or inverter to be the best fit for your energy needs. But if you need to squeeze the most solar energy out of a limited space, high efficiency panels can do the trick.

What does solar panel efficiency measure?

In solar panels, efficiency measures how much of the sun's available energy actually gets turned into usable energy. Right now, the high end of solar panels available for residential customers sits around 22%. If that strikes you as low, just know the first useful solar panels clocked in around 1%.

According to the National Renewable Energy Laboratory, in 2020 (the most recent data available) residential solar installations used panels with efficiencies between 16% and 22% [PDF]. The majority of arrays installed in 2020 used panels with efficiency ratings of 19%, right in the middle of that range. 

Exciting things are happening outside the mainstream, too. Panels developed by researchers at the National Renewable Energy Laboratory can operate at 47.1% efficiency. That's the top mark for the highest-efficiency panels in development, which the laboratory tracks.

Efficiency also crops up in comparing inverters. In inverters, efficiency tells you how much energy is lost during the conversion from direct current electricity to alternate current. Solar inverters typically have efficiencies in the high 90s. 


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Does efficiency matter?

You may not need to squeeze the most electricity possible out of your rooftop. In this case getting the most efficient panels might not be worth it.

High-efficiency panels are often the most expensive. If lower-efficiency panels can cover their electricity use, homeowners might opt for less efficient panels and save money.

On the other hand, if a house has a small roof or one that makes it less optimal for solar (e.g., shading, a poor angle to the sun), higher-efficiency panels might still produce enough electricity to cover a household's needs. In this case, it might be worth it to spend a bit more money. The difference between solar panel manufacturers can be several thousand dollars for an entire solar system.

Solar prices have dropped steadily as they've grown in popularity, so high-efficiency panels may be more financially feasible moving forward. But there are multiple ways to meet your energy needs using solar panels, so while efficiency is a useful comparison for similar panels, maximizing for efficiency may not be necessary. Whatever your needs, knowing the importance of efficiency can help you design a system that best fits them.