Solar Panels on the Sun

Commercial Solar Panel Efficiency: What You Need to Know

• Updated on February 20, 2023 • [rt_reading_time postfix=”minute”] read

Solar energy systems are growing in popularity for businesses of all sizes. And is it any wonder why? A solar array can provide your company with the resilience it needs to keep working during an unexpected power outage and it can even lower your energy bills.

If you’re considering investing in solar power for your business, you’re no doubt wondering how important solar panel efficiency is when designing your system. What does solar panel efficiency mean in the first place? Should you always opt for the most efficient solar panels? What are the best solar panels for your situation? How can you be sure you’ll have enough solar power to run your business?

This post will answer some of your most pressing questions about solar panel efficiency.

Table of Contents

Solar Panel Basics: From Solar Cells to Solar Panels

Before we get into efficiency, let’s set the stage with a few solar panel basics. Solar panels are made up of individual solar photovoltaic (PV) cells, which are thin slices of silicon that typically measure 6 inches long by 6 inches wide. Each solar cell converts sunlight into electricity in what’s called the photovoltaic effect. Multiple solar cells are assembled together to form a single rectangular shaped panel. Multiple panels are then assembled into an array to provide the solar power your business needs.

Solar panels typically contain 60 or 72 cells, though there are some on the market with as few as 32 and as many as 96 solar cells. These are typically used for specific applications like recreational vehicles and very large commercial installations, respectively.

Commercial solar panels usually have 72 solar cells and measure around 6 feet by 3.25 feet, typically about the size of a sheet of plywood.

solar panels on the sun

Solar Panel Efficiency Defined

A solar panel’s efficiency is the amount of sunlight (solar irradiance) that falls on the solar panel that can be converted into usable electricity. In 1954, when solar panel technology was first introduced, solar efficiency was just 6%. Today, solar panel efficiencies range between 16 and 22%, with an average of just over 20%.

What that means is that for a panel with a 20% efficiency rating, 20% of the sun’s energy absorbed by the panel will be converted into electricity. This is also known as the power output or power rating of the panel, which is measured in watts. The highest efficiency solar panel will generate more electricity (more watts of power) than a less efficient panel under the same circumstances. Most 72-cell panels on the market today produce between 350 and 600 watts of power each.

Not Quite The Sum Of The Parts

The efficiency of a panel’s individual PV cells is the primary driver of the panel’s overall efficiency. PV solar cell efficiency is largely determined by the cell’s design and the type of silicon used to make the cell (more on that in a minute). Some of the most efficient solar cells can achieve efficiencies in the 40% range, but are often still in testing labs and not yet available to consumers.

The way in which solar cells are assembled into a panel impacts the unit’s overall efficiency – and the efficiency of the individual cells does not necessarily equate to the efficiency of the entire panel or the solar power system overall. The number of cells used, how they’re laid out, how they’re wired together, and the type of material used on the back of the panel (called the back sheet) all contribute to a solar panel’s overall efficiency rating.

It’s important to note that there are some variations in efficiency by manufacturer. You may see one manufacturer that offers a 72-cell commercial solar panel that’s 20% efficient while another’s panels are rated 22%. This likely is due to the materials used during the construction and assembly of the panel, though keep in mind that higher efficiency in this case doesn’t necessarily mean you’re getting a higher quality solar panel.

What Are The Most Efficient Solar Panels?

There are three primary ways to manufacture a solar PV cell. Each has its pros and cons and a trusted solar advisor can help you understand which is best for your specific needs.

Let’s take a quick look at how efficiency varies based on the type of solar cell technology used to make a panel.

Monocrystalline Solar Panels

Monocrystalline solar panels are the top of the line, and with 20 to 23% efficiency ratings (generating 300 to 550 watts of power), they are the most efficient solar panels available. They are generally considered to have the best look to them, and they’re typically the most expensive option because of the way they’re made – a single pure crystal of silicon is inserted into molten silicon and slowly extracted. This results in a solar cell with very few imperfections that could interfere with sunlight absorption.

Bifacial solar panels are a type of monocrystalline panel that collect sunlight from both the front and the back of the panel. The back or underside has a transparent back sheet that allows the panel to capture sunlight that’s reflected off the ground. This allows bifacial panels to generate more electricity than conventional monocrystalline solar panels.

Passivated Emitter and Rear Cell (PERC) panels are the next generation of conventional monocrystalline panels. This new technology adds another layer near the rear of the panel that enhances solar panel efficiency by as much as 5%, allowing the system to generate more electricity in a smaller footprint than traditional monocrystalline panels.

As the name implies, half-cut or split cell panels use monocrystalline solar cells that have been cut in half. This reduces heat and resistance within the solar panel, which in turn improves the overall efficiency.

Polycrystalline Solar Panels

Polycrystalline solar panels are less expensive because their cells are made with silicon crystal fragments rather a single crystal. The downside is that this type of solar cell isn’t as efficient or as powerful as monocrystalline cells. Polycrystalline panels are only 15 to 17% efficient and produce 300 to 400 watts of power.

Thin Film Solar Panels

Thin film solar panels are lightweight and flexible, but they are the least efficient solar panels on the market, offering just 6 to 15% efficiency. Despite the low efficiency rating, thin film solar panels are great for installations where there’s limited roof space or the roof may not be able to support the weight of heavier panels.

Unlike the other two types of panels, thin film panels are typically made with cadmium telluride (CdTe), not silicon wafers. Thin film panels can also be made with copper indium gallium selenide (CIGS) or amorphous silicon (a-Si) in place of the cadmium telluride. CIGS panels are the most efficient thin film panels with a range of 13 to 15%. Those made with CdTe range between 9 to 11% efficiency and amorphous silicon panels deliver around 6 to 8%.

Check out this article to learn more about the different types of solar panels on the market.

Are There Solar Panels That Are 100% Efficient?

You may be wondering why 100% efficient solar panels aren’t available on the market. The industry is working hard to make significant advancements in solar panel efficiency. In fact, a solar panel developed by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL) recently garnered 47% efficiency ratings in the lab and 40% in a real world setting. But, photovoltaic technology will likely never achieve 100% efficiency because there are some wavelengths of light, such as UV and infrared, that simply cannot be absorbed by today’s solar panels. This light energy is either reflected off the panels or simply lost.

As technologies improve, it’s possible that one day panels will be able to absorb a broader spectrum of light, but even so 100% solar panel efficiency won’t be achieved. Some of the light energy that’s absorbed will always be lost in the photovoltaic conversion process within the solar cells. This is just the nature of converting one form of energy (sunlight) into another (electricity). Remember that from high school physics class?

solar panels with chimneys nearby

Real World Factors That Impact Solar Panel Efficiency

Another important consideration is that solar panel efficiency ratings are based on standard lab testing, which is great because then you can compare apples to apples when you’re shopping for solar panels. That said, you’ll want to make sure you understand how your panels will actually perform in the real world – not just in a controlled environment.

There are many factors that can affect efficiency, whether you install solar panels on the roof, ground, or on a solar carport. All of these factors should be accounted for when your renewable energy partner designs your system.


High volumes of pollution and smog can reduce the amount and quality of sunlight hitting your panels, limiting the production of even the most efficient solar panels. Solving for this may require adding panels to your solar energy system that might not be needed in areas with less air pollution.


The latitude of your location may also impact solar energy absorption because of where the sun is positioned in the sky relative to the location of your panels. The closer you live to the equator, the more direct sunlight your panels will be able to absorb.

Time Of Year

The time of year may also impact solar panel efficiency not only because of where the sun is positioned in the sky but because of the shorter days. Longer summer days also provide more opportunity to generate solar electricity, though systems in northern climates can be designed to generate as much electricity as needed regardless of the time of year.

Solar Panel Orientation

The amount of energy your solar panels are able to collect depends, in part, on the angle at which the light passes through them. Solar panels in the US face South allowing them to capture the most direct sunlight (conversely, solar panels in the southern hemisphere face North).

The angle at which a solar panel is mounted on the racking system is also important. Identifying the optimal angle for the panel, which is usually somewhere between 30º and 45º in the northern hemisphere, is key to maximizing the amount of light captured, which in turn maximizes the efficiency of the panel. Velo’s engineering team will analyze the optimal orientation for your system.


If some or all of your panels are shaded by trees, buildings, or other obstructions during certain times of day, less sunlight will reach the panels. Shading isn’t necessarily a factor considered by solar panel manufacturers, but it’s a primary concern for your solar installer because even a small area of shading on just one panel can impact the efficiency of the entire solar energy system.

Your provider will work with you to select a site for your array that maximizes the amount of sunlight captured by your solar panel system. They may also recommend things like optimizers or micro-inverters that can reduce the impact of shading.


Perhaps counterintuitively, panels in hotter climates can be less efficient than those in more moderate temperatures. This is because as the surface temperature of the panel rises the resistance of the solar cell also increases, which reduces the power output and negatively impacts the unit’s efficiency.

If your business is located in the southern part of the US, your solar partner may recommend installing solar panels designed to handle warmer climates.

solar panels with snow


Weather is perhaps the most obvious factor that can influence the production of your solar panels. Clearly, solar panels work their best on sunny days when they can absorb the most energy from the sun. But since we don’t see 75º and sunny blue skies every day, your solar provider will need to account for the impact of your region’s weather when designing your system.


Just a two-inch accumulation of snow on your solar panels can significantly impact the efficiency and power output of your system. Most solar panels are installed at such an angle that snow will slide off. If it doesn’t, as can happen during periods of quick accumulations, the snow may need to be manually removed. Several companies are also developing technology that is designed to melt any snow that accumulates on the panels.

It’s important to note that solar panels can still generate electricity in snowy conditions. If you have bifacial solar panels, you may even see improved efficiency as the sun reflects off the snow on the ground and onto the back of your panels.


Ice can also reduce solar panel efficiency, so most manufacturers coat their panels with silicon to reduce ice buildup. Like snow, ice will either need to melt or be removed to restore proper function.

Wind, Rain and Hail

Obviously, rain and clouds will negatively impact your energy production because they cut down on the amount of sun hitting the panels. If you live in cloudier regions, your provider will design your solar system to generate the power output required to meet your energy goals. This may include adding additional panels, solar batteries and an energy storage system for added resilience.

High winds and hail can physically damage the panels and if not repaired, potentially lower your system’s efficiency. That said, manufacturers conduct extensive testing and design their solar panels to withstand both high winds and hail, so damage may only occur in the most severe storms.

On the flip side, wind can also positively impact the efficiency of photovoltaic panels by cooling them off, which reduces resistance and improves power output.

Dust, Grime and Debris Build Up

Dirt, pollution, leaves, and anything else that sits on the surface of your solar panels and blocks the sun will negatively impact their efficiency. Even bird droppings can have an effect. If you’re in areas prone to wildfires, soot and ash can be particularly problematic.

While rainstorms can wash off a lot of the grime that naturally accumulates, you may need to clean your panels periodically to ensure maximum efficiency. Don’t underestimate the impact dirty solar panels can have on the efficiency of your system.

O&M Agreements – and Why You Want One

Routine maintenance is key to keeping your solar energy system in good repair and functioning at maximum efficiency. Your solar provider likely offers an operations and maintenance (O&M) agreement to do just that.

These contracts typically include an annual system checkup for your solar panel components, including the PV modules, the racking and mounting infrastructure, the electrical system and wiring components, and the inverter. They’ll check and repair damage to your solar system’s components from wind, hail, or normal wear and tear.

Most O&M agreements also include a quick survey of your solar installation, which can alert you to new or increased shading by overgrown vegetation. You might be surprised by how much trees can grow in a year.

Annual maintenance is important not only to maintaining panel efficiency but because it allows you to catch potential issues with your solar system before they become a crisis.

person checking solar panels

Why Does Efficiency Matter?

Typically, what you’ll find is that the most efficient solar panels have the biggest price tag. But that shouldn’t scare you off. In fact, while the per panel cost of high efficiency solar panels is higher than standard solar panels, using them could reduce your total upfront investment. Why? Because your energy costs will be lower and you’ll be able to pay for your system more quickly.

Lower Energy Costs

As mentioned earlier, the most efficient solar panels generate more electricity per square foot than standard panels, and they can do it in a smaller footprint. So, if you’re looking to reduce your energy costs by minimizing the amount of grid energy your business uses, and you have limited space for a solar array, higher efficiency panels may be the right choice for your situation because you’ll likely need fewer panels to generate the required energy output.

A trusted solar provider like Velo Solar can run the numbers around efficiency and power output to provide you options custom designed to meet your energy goals.

Faster Payback

Because higher efficiency solar panels generate more energy, you’ll have to pull less power from the grid, reducing your energy bills even further. With the extra savings you’ll be able to pay off your initial investment that much faster.

Managing The Costs Of Solar

Solar system price tags can be intimidating, so it’s important to look at the financials holistically. You should consider not only the savings on your energy bill and how quickly you’ll be able to pay for your system with those savings, but also what your energy costs would be without solar.

You have to have electricity to run your business. Unless you’re generating your own electricity, you have to buy it from the utility and pay the prices they set – including the higher prices they demand during peak hours – or you don’t get the energy. Plus, energy prices are expected to continue their steady climb upwards in years to come, which means your operating budget will need to also grow.

When it comes to investing in solar, it’s important to understand that what you’re really purchasing is a hedge against future energy costs (this is your levelized cost of energy). If you have a solar system powering your business, even partially, you own all the energy it makes and that provides you some protection from the rising cost of energy and more control over this cost center.

Power Rating

While it’s great to understand solar panel efficiency, this rating should not be considered in isolation. A panel’s power rating, which we’ve mentioned earlier, is another factor you should consider when selecting the right solar panel for your business. And here’s why:

You may see one manufacturer that offers a 72-cell commercial solar panel that has a 20% efficiency rating and produces 350 watts of power. Another manufacturer’s panel may be 18% efficient but also produces 350 watts. Since both are providing you with the same amount of electricity, efficiency is only a factor if it impacts the size of the array and your initial investment costs. In this case, you can consider both your available roof space and the total cost difference between the two to determine if the more efficient panels will provide you with additional value.

solar panels with VeloSolar logo

Don’t Go It Alone

Knowing which solar panels are the best for your business can be challenging. But the good news is there are reputable commercial solar providers like Velo Solar that can partner with you to design, install, and maintain a system. Utilizing Velo’s unique design-build approach, you can have a system that will power your business with renewable energy for years to come.

Don’t go it alone. Partner with Velo to make sure you’re meeting your energy goals in a cost effective manner by creating a solar system that maximizes solar panel efficiency and power output.