From shine to decline: Degradation of over 1 million solar photovoltaic systems in Germany

Solar photovoltaic systems are central to the future of electricity production worldwide. However, their performance degrades with age. The rate of decline in real-world usage critically affects the financial viability and carbon mitigation potential of photovoltaic installations. Earlier studies are typically limited by small sample sizes or short observation periods, and limited treatment of a potential non-linear relationship to environmental factors. This study uses high-dimensional fixed-effects panel regression encompassing up to 16 years of data from over 1 million solar installations in Germany (34 GW of capacity). Key robustness checks, including separate regressions for a self-consumption subsample and sensitivity analysis for air pollution, confirm the reliability of the estimates. The Findings show that power production falls by an average of 0.59% per year. Degradation rates decrease with age, with system output declining between 7% and 13% slower at age 10 than when new, and are one-third higher for larger installations (> 30 kWp). Output is significantly affected by environmental variables. Each day of extreme heat or cold and each microgram of particulate matter reduce annual output by 0.038–0.101%. Heat-related degradation intensifies over time, while cold and pollution have stronger effects on newer installations. By providing robust evidence from a population several orders of magnitude larger than previous studies, this study supports improved economic and environmental forecasts and strategic planning for global solar energy expansion. Back of the envelope, the estimated cost of degradation would compared to average literature results decrease by about €638 million p.a. to maintain installed capacity in 2040.