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For homeowners and businesses looking to switch to solar energy, understanding solar panel efficiency is key to making the right decision. It’s the most important factor in deciding system size, energy output, and ultimately, the return on your investment. But what exactly does efficiency mean in the context of solar panels, and can you navigate the numbers to choose the best system for your needs?
In this 10-minute read, we’ll explore a range of factors related to solar panel efficiency to help you make an informed decision. Our guide covers the common solar panel types available in 2025, the technologies they use, and the highest-performing models, as well as wider system design factors, including panel placement, inverters, voltage optimisation and battery storage.
What is solar panel efficiency?
Solar panel efficiency, also known as conversion efficiency, is measured as a percentage value that represents the proportion of sunlight that a solar panel converts into usable electrical energy.
Simply put, if a solar panel is rated as 20% efficient, then it will convert 20% of the solar energy hitting its surface into electricity. The other 80% is either converted into heat or reflected back into the environment.
It’s important to remember that the efficiency rating of a solar panel refers to its performance under Standard Test Conditions (STC), measured in a laboratory setting. STC mandates:
- A consistent solar cell temperature of 25°C (77°F)
- Solar irradiance of 1000 W/m² (simulates peak sunshine on a clear day)
- Air Mass (AM) of 1.5 (representing the spectrum of sunlight that passes through the atmosphere at a specific angle)
STC ratings provide a standardised benchmark, allowing manufacturers to advertise the ideal performance of their products accurately and allowing consumers to compare the efficiency of different panels against the same baseline. Real-world conditions (like higher/lower temperatures or changes in light levels due to cloud cover or shading) will differ from STC, sometimes significantly, impacting actual performance.
A common mistake we see is confusing a panel’s efficiency (measured as a percentage) and its total power output (measured in watts).
A higher efficiency panel will output more power for the same surface area, not overall. So, a larger, less efficient panel might have the same power output as a smaller, more efficient panel.
What factors affect solar panel efficiency?
Outside the laboratory, there are multiple technological and environmental factors that determine how efficiently your solar panels operate in real-world conditions. It’s important to take these into account when designing your system and calculating the total energy output you can expect.
Type of solar panel
The material and design of solar cells are a primary factor in their efficiency. For example, monocrystalline panels are more efficient than polycrystalline or thin-film versions due to the higher purity of silicon used. We’ll look at the key types in detail in the next section of the guide.
Local temperature and weather conditions
Solar panels perform best in sunny but cool conditions – excessive heat can reduce efficiency. Most panels have a temperature coefficient, which indicates how much their output will decrease for every degree the panel temperature rises above 25°C (the STC value). A coefficient of -0.35% / °C means the panel’s output will decrease by 0.35% for each degree above 25°C.
Moderate wind can help cool panel surfaces, improving efficiency (although strong winds have the potential to damage or displace panels). Cloudy conditions reduce the amount of sunlight reaching the panels, and therefore lower their output, although today’s high-efficiency solar panels maintain reasonable performance in diffuse light.
Panel orientation and shading
In the northern hemisphere, solar panels should ideally face south to capture the maximum amount of sunlight throughout the day (in the southern hemisphere, the reverse applies). East or west-facing panels may still be viable if no other orientation is possible, but will generally produce less energy overall, with the difference being as substantial as 15-20%.
The ideal tilt angle is related to the geographical latitude and, as a result, changes slightly throughout the year. Adjusting the angles of your panels seasonally can therefore increase solar energy capture. Shading – even partial shading – can significantly reduce efficiency. And unless microinverters or power optimisers are used, a single shaded panel can act like a bottleneck, restricting the current flow through the entire series of panels (even those in direct sunlight).
Panel age and degradation rate
Like many technologies, solar panels experience a gradual decline in performance over time, known as the degradation rate. Most manufacturers offer a performance warranty guaranteeing a certain level of output (e.g., 80-90%) after 25-30 years. The typical annual degradation rate is around 0.3% to 0.8% after an initial, slightly higher degradation in the first year. Higher quality panels generally have lower degradation rates thanks to improved build quality and QA.
Cleaning and maintenance
Accumulated dust, dirt, pollen, leaves, or snow can block sunlight and reduce panel efficiency. While rain often helps clean panels, periodic manual cleaning might be necessary, especially in dry, dusty areas or locations with significant bird activity. Regular maintenance is important to ensure your solar panels continue to operate at peak efficiency.
Solar panel types compared by efficiency
The technology behind solar panels has evolved significantly, leading to various types with different efficiency levels, costs, and applications.
Panel types explained
Monocrystalline
Monocrystalline solar panels are made from a single, high-purity silicon crystal. They are uniform in appearance with a black surface. These panels currently offer the highest efficiency on the market, particularly when combined with PERC or bifacial technologies.
- Pros: Highest efficiency, excellent performance in high temperatures and low-light conditions, longer lifespan, more compact.
- Cons: Generally the most expensive option on the market.
Polycystalline
Polycrystalline solar panels are made from multiple silicon fragments melted together, giving them their distinctive blue, speckled appearance. They are less efficient than monocrystalline panels, but offer a more affordable entry point.
- Pros: Less expensive than monocrystalline, good performance, manufacturing process is less wasteful.
- Cons: Lower efficiency and space efficiency compared to monocrystalline, can be more sensitive to very high temperatures.
Thin-film
Thin-film solar panels are made by depositing one or more thin layers of photovoltaic material (like amorphous silicon (a-Si), cadmium telluride (CdTe), or copper indium gallium selenide (CIGS)) onto a substrate. They are generally lower efficiency, but this is balanced by offering a wider range of installation options.
- Pros: Lightweight, flexible (some types), can perform better in high temperatures and indirect sunlight, lower manufacturing costs for some types.
- Cons: Lower efficiency means they require more space for the same power output, and can have shorter lifespans (depending on photovoltaic materials used).
PERC (Passivated Emitter and Rear Cell)
This is a layer added to monocrystalline or polycrystalline cells which reflects light that passes through the silicon back into the cell for a second absorption attempt, boosting standard panel efficiency by around 1%.
Bifacial solar panels
Often built using monocrystalline PERC cells, these panels can capture sunlight from both their front and rear surfaces. The rear side absorbs light reflected from the ground or mounting surface, increasing total energy generation by between 5% to 30%.
Did you know?
Making an informed decision
For an in-depth look at the different solar panel technologies on the market and their advantages and disadvantages, check out our comprehensive guide: Types of Solar Panels Explained
What is the most efficient solar panel in 2025?
As of early 2025, the solar panels boasting the highest commercial efficiencies are predominantly monocrystalline PERC and advanced N-type technologies like Interdigitated Back Contact (IBC) or Heterojunction Technology (HJT). Brands like SunPower/Maxeon, REC, Panasonic, LG, Q CELLS, Canadian Solar, and Jinko Solar are frequently among the efficiency leaders, but with incremental improvements announced regularly, the “most efficient” panel title is a moving target.
As of April 2025, CNET reports that the Maxeon 7 445-watt panel is leading the market, boasting 24.1% efficiency in ideal test conditions, but there are a range of alternatives achieving between 22.5% and 23%.
And while the highest efficiency panels are technologically impressive, they also come with a premium price tag. The best overall value for money depends on your specific circumstances, which leads us on to an important question…
What level of solar panel efficiency do you really need?
As a rule of thumb, higher efficiency comes with a higher price tag, so you need to be able to justify your investment if you’re going to opt for more efficient models of solar panels. Depending on your requirements and constraints, it may not always be worth the extra expenditure.
If your usable roof area is limited or if you have significant shading that restricts placement options, higher efficiency panels are especially recommended. They allow you to generate more power per square meter, maximising the potential of your limited space. This can be crucial for meeting a larger portion of your household’s energy consumption.
For commercial installations or residential properties with very high energy demands (electric vehicle charging, electric heating), maximising output is often a priority. Higher efficiency panels can contribute to a more compact system footprint for a given power output, potentially reducing installation complexity and balance-of-system costs (like racking).
However, for large ground-mounted commercial systems with abundant land, a cost-per-watt analysis might favour slightly less efficient but more economical panels.
- If available space is the primary limiting factor
- If you want to future-proof your system against increased energy needs
- If aesthetic considerations require a smaller array
- If you need to minimise installation cost and complexity
How can you maximise solar panel system efficiency?
Beyond choosing the most efficient panels, there are several system design and maintenance factors that can help you achieve the best operational efficiency.
Placement and angling
We’d recommend conducting a thorough shade analysis of your property at different times of day and year, as even small amounts of consistent shading can have a disproportionate impact on the efficiency of your solar panels. Ideally, you’ll be able to site your panels in a south-facing location, free of shade, and angled appropriately for your latitude. For the UK (latitudes ~50-59°N), tilt angles of 30-40° are common. And as discussed above, seasonal adjustments to the tilt angle can optimise efficiency further.
Did you know?
JLM offers a free remote energy audit, as part of which we can advise on panel types, technologies, placement and system design.
Maintenance
Regular maintenance is crucial to keeping the efficiency of your panels (and broader system) as high as possible. You’ll need to ensure that panels are free of dust, grime, leaves, and bird droppings. Depending on your local environment, the necessary frequency may vary, but an annual check and clean is a good starting point. You’ll also need to periodically inspect wiring, connections, and mounting hardware for any signs of wear, corrosion, or damage. We would advise a professional inspection every 2-3 years at a minimum.
BESS (Battery Energy Storage Systems)
Combining a solar array with a BESS can boost efficiency significantly. While battery energy storage systems don’t directly increase the conversion efficiency of the solar panels themselves, they dramatically improve your overall system efficiency and self-consumption. By storing surplus solar energy generated during the day for use during the evening or cloudy periods, you reduce reliance on expensive grid electricity. This means you use more of your own clean energy, maximising the value of every kilowatt-hour your panels produce.
Inverter performance
The inverter, which converts the DC electricity from your panels into AC electricity for your home or business, directly affects system efficiency. Modern inverters are highly efficient (typically 95-98%), but some energy is always lost during the conversion process, so look for a high-quality inverter with good efficiency ratings. You also need to ensure your inverter is correctly sized for your solar array to prevent “clipping” (where the inverter can’t handle total power output at peak generation times).
Voltage optimisation
Voltage optimisation, using MPPT (Maximum Power Point Tracking), adjusts the electrical operating point of the panels to ensure they are producing the maximum possible power under varying conditions. It also helps to prolong the life of your equipment, reducing stress and wear by smoothing out the fluctuations naturally associated with solar generation.
Key takeaways at a glance
Building the most efficient solar panel system for your needs
At JLM, we have extensive experience designing solar energy generation systems for businesses of any shape and size, from high-output arrays for heavy commercial and industrial use to smaller systems designed to optimise output within a limited space.
If you’re looking to make the switch to solar energy, you can take advantage of our free remote audit – a chance to look at your current usage patterns in detail and calculate the highest ROI solution possible based on your available space and budget.
We can also advise on zero-upfront-cost models, which allow you to implement solar energy without capital expenditure. After the audit, you’ll receive a personalised PDF report with equipment recommendations, cost breakdowns, annual savings projections, and a predicted return on investment.
Contact one of our expert consultants to book your free audit today or to discuss any other questions about commercial solar PV.
