The Role of Reliability and Durability 

in Photovoltaic System Economics

February 11, 2019

Michael Woodhouse(1), Andy Walker (2), Ran Fu(1), 

Dirk Jordan (3), and Sarah Kurtz (4)

(1) Strategic Energy Analysis Center

(2) Integrated Applications Center

(3) PV Engineering and Reliability Group within the 

National Center for Photovoltaics (NCPV)

(4) UC Merced
NREL | 2

Presentation Outline

1 Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes
NREL | 3

Technoeconomic Analysis Activities Within DuraMat

Capability Summary & Impact

Capability Area & Teaming

Capability Area(s): Data, Predictive Simulation, Materials Forensics, 

Accelerated Test, Field Deployment

Team: Mike Woodhouse, Andy Walker, Ran Fu, David Feldman, and 

Robert Margolis, NREL

FY19 Analysis Projects: Three smaller topics for this 

fiscal year. One multi-year topic.

Bottom-Up Module O&M and Repowering Economics

• Identified a priority by SETO and the IAB

• Focus on cracked cells and hot spots this fiscal year

• Coordination and support to several DuraMAT projects

Coatings for improved energy yield

• Identified a priority by SETO

• IRR analysis of breakeven coating costs versus improvement 

in energy yield for sites within the U.S.

• Work with SETO awardees at SLAC, NREL, the University of 

Minnesota, and WattGlass. Outdoor RTC data collection.

Bottom-Up Cost Modeling of Module Testing

• Lends analysis support to core DuraMAT capabilities

Longer-term multi-year topic:

• Handbook of module cross-technology reliability and 

durability testing results and considerations for energy yield 

assessments. LCOE and IRR relevant evaluation.

Use technoeconomic analysis to inform 

research prioritization and identify 

opportunities for impact.

Expected Results

• Provide feedback to researchers about the performance 

metrics necessary to achieve SETO’s goals and to provide 

value to industry (e.g., energy yield improvements 

needed to offset any increases in module cost or the 

value of addressing field failures)

• Connecting researchers to industry 

• Facilitate teaming and research prioritization 

• Feasibility analysis of materials, designs, and tests

• Identify data needs for application to industry

• Identify opportunities and barriers for new technology 

commercialization
NREL | 4

Presentation Outline

1

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes

Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT
NREL | 5

Starting Questions

The consistent question from 

projects within DuraMAT: 

What is the value of solving a 

particular problem?

Degradation rates and failure modes vary across technologies

Figure sources. Top: D Jordan, S R Kurtz, K VanSant, and J Newmiller “Compendium of Photovoltaic Degradation Rates”, PIP, 2016

Bottom left: D Jordan, T J Silverman, J H Wohlgemuth, S R Kurtz, and K T vanSant “Photovoltaic failure and degradation modes”, PIP, 2017. Bottom right: IEA “Review of Failures of Photovoltaic Modules, 2014

Major failure modes for c-Si (Mono and Multi)

Median for c-Si: -0.5%/yr

Mean for c-Si: -0.75%/yr
NREL | 6

Starting Questions Central question for understanding the value of 

reliability R&D projects: What is the value of solving a 

particular problem?

Relevant to PV system economics at a high level:

(1) Solving field failures before they occur can reduce 

O&M expenses and increase total power production 

over the performance period. This lowers project 

LCOE and improves project IRR.

(2) Building more robust systems increases residual 

value. This lowers project LCOE and improves IRR.

(3) Lower degradation rates means more PPA revenues 

over the life of the project. This improves IRR.

By addressing particular problems, reliability R&D may 

provide solutions that improve PV project economics

Degradation rates and failure modes vary across technologies

Figure sources. Top: D Jordan, S R Kurtz, K VanSant, and J Newmiller “Compendium of Photovoltaic Degradation Rates”, PIP, 2016

Bottom left: D Jordan, T J Silverman, J H Wohlgemuth, S R Kurtz, and K T vanSant “Photovoltaic failure and degradation modes”, PIP, 2017. Bottom right: IEA “Review of Failures of Photovoltaic Modules, 2014

Major failure modes for c-Si (Mono and Multi)

Median for c-Si: -0.5%/yr

Mean for c-Si: -0.75%/yr
NREL | 7

Introduction to Pro Forma Analysis of PV Projects

Years

Upfront Capital Cost for 

System Installation ($/W)

Any Applicable 

Incentives

Total Lifecycle Costs ($)

Benefits Provided by the Sun: Total Lifetime Energy Production (kWh) 

kilowatt hours (kWh)

Any corrective component

replacements or unplanned 

Any preventative and routine O&M, events ($/kW-yr)

including cleaning ($/kW-yr)

For an overview of the NREL System Advisor Model (SAM) approach to calculating LCOE, please see: Short, W., D.J. Packey, and T. Holt. 1995. A Manual for the Economic 

Evaluation of Energy Efficiency and Renewable Energy Technologies. NREL/TP-462-5173. Available online: http://www.nrel.gov/docs/legosti/old/5173.pdf. 

Residual

Value (+/-)
NREL | 8

Introduction to Pro Forma Analysis of PV Projects

Module,

Inverter,

BOS

Costs

Reliability and Durability

Financing and Incentives

(MACRS and Monetizing the ITC)

‘Capacity Factor’ Term:

(System Location, Orientation, Tracking, Bifaciality,

Temperature Coefficient, Low light level efficiencies, etc.)

The underlying discount rate may also be 

influenced by the PV module and system reliability.

Nameplate

Efficiency System

Architecture

Recycling

Or Repowering?

Lower degradation rate 

equals more lifetime kWh
NREL | 9

For most recent published bottom-up costs analysis, please see: 

(1) M Woodhouse, B Smith, A Ramdas, and R Margolis “Crystalline Si Module Manufacturing Costs and 

Sustainable Pricing: 1H 2018 Benchmark and Cost Reduction Roadmap”, NREL technical report, In Press, 

2019

(2) R Fu, D Feldman, and R Margolis “U.S. Solar Photovoltaic Cost Benchmark: Q1 2018”, NREL technical 

report available online: https://www.nrel.gov/docs/fy19osti/72399.pdf

Poly Ingot Wafer Cell Module Module 

Total

Inverter Field 1X 

Tracking* Total

U.S. pricing $0.05/W $0.03/W $0.05/W $0.09/W $0.13/W $0.35 $0.05 $0.60 $1.0/W

CapEx

($/kg or $/W, 

including 

facilitation)

Siemens

$30-40/kg

FBR

$35-45/kg

Czochralski

$0.08/W

Multi

$0.04/W

$0.03/W $0.10/W $0.07/W

Minimum 

Scale (Annual Production Volume)

20,000 MT 5 GW 5 GW 2 GW 500 MW

*Includes categories 

shown but excludes: 

Construction financing, 

O&M, monitoring, 

site security, and sub 

station transformers (if 

needed).

Bottom-up system costs 

analysis with battery 

storage is also available.

Bottom-Up Capital Costs Accounting of PV System Installations 
NREL | 10

Bottom-Up O&M Costs Accounting for PV Systems 

Time (Years)

Preventative Maintenance: Relatively constant cash flow structure

o Module cleaning, system inspection, and planned parts replacement 

Dollars

Time (Years)

Corrective Maintenance: A Weibull distribution cash flow structure

o Unplanned module and inverter replacements

Dollars
NREL | 11

Bottom-Up O&M Costs Accounting for PV Systems 

Preventative Maintenance (Mostly Planned) 

• Vegetation management

• Wildlife countermeasures 

(variable and planned)

• Site maintenance (variable and planned)

• System monitoring, inspection, and 

security

• Module cleaning

• Tracker lubrication

Corrective Maintenance (Mostly Unplanned) 

• Reset electrical disconnects and replace electrical 

components (variable) 

• Replace parts or entire units of modules, trackers, and 

inverters (variable and planned)

Operations Administration (Planned)

• Payment of O&M

• Administration of project cash

flows to bondholders and 

equity owners

• Accounting and taxes

• Warranty enforcement

Condition-Based Maintenance 

• Active monitoring

• Equipment replacement (variable and planned)
NREL | 12

Bottom-Up O&M Costs Accounting for PV Systems 

NREL and Sandia Cost Model for Average Annual Levelized O&M Expenses by Sector ($/kW-yr)

Residential Commercial Fixed-Tilt Utility One-Axis Tracking

Operations administration 

(planned) $2.6 $3.6 $2.8 $2.8

Inverter-related actions and 

component replacement 

(corrective)

$18.3 $5.5 $3.8 $3.8

Module replacement 

(corrective) $0.8 $0.8 $0.9 $0.9

Component parts replacement 

(planned) $3.2 $0.5 $0.6 $0.6

System inspection and 

monitoring (planned) $5.5 $2.5 $1.7 $2.3

Module cleaning and vegetation 

management (planned) $0.8 $2.7 $3.3 $3.3

Average O&M expense 

without escalator ($/kW-yr) $31.2 $15.6 $13.1 $13.7
NREL | 13

100 MW(DC) Single Owner Undiscounted Cash Flows and EBITDA

The mean net capacity factor (CF) for 

PV projects installed in 2016 and 

measured in 2017 was 26.8% 

– Corresponds to 2,348 kWh(AC)/kW(DC)

– The range in annual mean CF since 

2013 has been 26.5—27.1%

– 78% market share for 1-axis tracking 

in 2017

PPA revenues are the product of PPA 

price times energy yield 

– The average levelized price of 

PPA’s signed in 2017 was 

$41/MWh (Compiled data by 

Bolinger and Seel (LBNL) of FERC 

Electric Quarterly Reports)

– Revenues decline over time according 

to the system degradation rate

Earnings Before Interest, Taxes, 

Depreciation, and Amortization 

(EBITDA):

– Declines over time according to the 

system degradation rate and O&M 

expenses
NREL | 14

100 MW(DC) Single Owner Unlevered After-Tax Project Returns and IRR

The SunShot reliability goals call upon reducing degradation rates to 0.20%/yr

and cutting O&M expenses by two-thirds:

• Improves IRR by 195 bps and takes a full 

year off the discounted payback period.

• Provides greater system lifetime value:

Achieving a higher IRR at a given energy 

yield and PPA price also supports the 

movement for PV stakeholders to take on 

even lower PPA prices and lower energy 

yields! 

Total Net Present Value (2019 USD) 

7.4% nominal rate of return, $1.0/W(DC) capital cost, 

$35/MWh(AC) flat PPA price, and 

2,350 kWh(AC)/kW(DC) solar resource. 

PV system with 0.75%/yr

degradation rate and 

$12/kW(DC) O&M expense

$0

PV systems with 

SunShot 2030 

performance: 

0.2%/yr degradation rate 

$4/kW(DC) O&M expense

$10.6 M

(100 MW(DC))

$636 M 

(2017 U.S. utility-scale 

PV market: 6 GW(DC))
NREL | 15

The Impact of Energy Yield on PV Project Financial Metrics

Both PV project LCOE and IRR entail pro forma 

discounted cash flow analysis:

– At 1,170 kWh(AC)/kW(DC) , only the $40 and 

$45/MWh projects are profitable (although the 

rate of return is quite small, at less than 2%)

– At 1,860 kWh(AC)/kW(DC), the $25 - $45/MWh 

projects are profitable

– At 2,200 kWh(AC)/kW(DC), all projects greater 

than $20/MWh are profitable

– For > 3,000 kWh(AC)/kW(DC), all projects are 

profitable at the given PPA prices

With a 6% nominal discount rate assumption:

Solar resource Nominal LCOE

(Minimum Sustainable PPA price)

1,170 kWh(AC)/kW(DC) $64/MWh

1,860 kWh(AC)/kW(DC) $40/MWh

2,200 kWh(AC)/kW(DC) $34/MWh

2,350 kWh(AC)/kW(DC) $32/MWh

2,540 kWh(AC)/kW(DC) $30/MWh

2,900 kWh(AC)/kW(DC) $26/MWh
NREL | 16

Top Down Impact of O&M on Utility-Scale PV Project IRR

Opportunity Impact

Reduce O&M expenses 

from $12/kW-yr to 

$6/kW-yr at 0.75% 

degradation

Improve IRR 

by 113 bps

Reduce O&M expenses 

from $12/kW-yr to 

$6/kW-yr at 0.20% 

degradation

Improve IRR 

by 105 bps

Reduce degradation 

rate from 0.75% to 

0.20% at $12/kW-yr

Improve IRR 

by 63 bps

Reduce degradation 

rate from 0.75% to 

0.20% at $6/kW-yr

Improve IRR 

by 55 bps

Achieve SunShot

2030 reliability 

goals

Improve 

Project 

IRR by 

195 bps
NREL | 17

Major Failure Modes for PV Module Technologies

Figure source: D Jordan, T J Silverman, J H Wohlgemuth, S R Kurtz, 

and K T vanSant “Photovoltaic failure and degradation modes”, 

PIP, 2017. 

Opportunity

Impact Upon 2019 

Baseline Utility Scale 

PV Projects

Reduce O&M expenses from 

$12/kW-yr to $11.5/kW-yr at 

0.75%/yr degradation

Improve IRR by 10 bps

Lower LCOE by 

$0.30/MWh(AC) 

(7.4% discount rate) 

Reduce O&M expenses from 

$12/kW-yr to $11.5/kW-yr at 

0.20%/yr degradation

Improve IRR by 9 bps

Lower LCOE by 

$0.29/MWh(AC) 

(7.4% discount rate) 
NREL | 18

Presentation Outline

1

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes

Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT
NREL | 19

Indoor and Outdoor PV Testing Centers in the United States

Outdoor DOE PV Lifetime and 

Proving Ground Sites:

• NREL

• Sandia

• Las Vegas, NV

• Orlando, FL

• Williston, VT

Private Independent Testing Labs 

(Indoor and Outdoor):

• DNV GL

• RETC

• Fraunhofer CSE

• TUV Rheinland

Indoor University Testing Labs:

• Arizona State
NREL | 20

Improving energy yield with new coatings technologies

Data from ~3kW of panels installed in 

Albuquerque, NM

Experimental modules packaged with 

WattGlass’ AR coating

Control modules packaged with a competing 

AR coating

From 12/12/18 – 1/21/19, ~1.4% increase in 

cumulative energy production

Site maintenance work from 1/8/18 –

1/15/19, so no data in that timeframe
NREL | 21

Improving energy yield with new coatings technologies

Data from ~3kW of panels installed in Las Vegas, NV

Experimental modules packaged with WattGlass’ 

AR coating

Control modules packaged with bare glass

From 1/8/19 – 2/4/19, ~4.1% increase in 

cumulative energy production
NREL | 22

The Impact of Energy Yield on Breakeven Module Price

Improvements in energy yield might 

justify a module price premium. 

Linear relationship:

Approximately $0.0144/W(DC) 

change in breakeven module 

price for each +/- 1% change in 

kWh(AC)/kW(DC) energy yield 

Improvement 

in Energy 

Yield

Breakeven 

Price Premium for 

Self-Consistent IRR 

($/W(DC))

1%

$0.0144/W

$2.6/m2

18% 

efficiency

$3.6/m2

25% 

efficiency

5%

$0.0720/W

$13/m2

18% 

efficiency

$18/m2

25% 

efficiency

Reducing O&M expenses 

(e.g., reducing module cleaning) 

might also support a module price 

premium.
NREL | 23

Presentation Outline

1

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes

Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT
NREL | 24

Methodology and Approach for Bottom-Up Cost Modeling
NREL | 25

Process Flow and Costs by Step for Traditional Module Assembly

Source of Figures: M Woodhouse, B Smith, A Ramdas, and R Margolis “Economic Factors of Production Affecting 

Current and Future Crystalline Silicon Photovoltaic Module Manufacturing Costs and Sustainable Pricing”
NREL | 26

Presentation Outline

1

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes

Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT
NREL | 27

Top Down Impact of Residual Value on LCOE

Analysis Period 

(years) 10 25 30 50

Equivalent $/W Value in Initial System Cost

Residual 

value change 

from 0% to 

50% ($/W)

0.26 0.09 0.06 0.02

Residual 

value change 

from 0% to 

100% ($/W)

0.52 0.18 0.13 0.04
NREL | 28

The Scale of Responsibility for PV Module Waste Streams

Source of figure: G Heath, T Silverman, H Cui, T Remo, M Kempe, M Deceglie, D Ravikumar, P Sinha, T Barnes, and A Wade 

“Recycling R&D to Bring PV Modules into the Circular Economy”, In preparation for submission to Nature Energy
NREL | 29

PV Module Recycling

Source of figure: G Heath, T Silverman, H Cui, T Remo, M Kempe, M Deceglie, D Ravikumar, P Sinha, T Barnes, and A Wade 

“Recycling R&D to Bring PV Modules into the Circular Economy”, In preparation for submission to Nature Energy
NREL | 30

Developing PV Module Recycling Roadmap

Unloading Disassembly Glass 

Separation Cutting

Sieving, 

Leaching, & 

Filtration

Electrowinning

Neutralization 

& Filtration

Source of figure: G Heath, T Silverman, H Cui, T Remo, M Kempe, M Deceglie, D Ravikumar, P Sinha, T Barnes, and A Wade 

“Silicon for PV Recycling Roadmap”, In preparation
NREL | 31

Repowering Economics

• LCOE as a function of module replacement period and degradation rates

• Source of figure: “J Jean, M Woodhouse, and V Bulovic, “Lower the cost of solar 

energy with periodic module replacemnts”, submitted to Nature Energy
NREL | 32

Presentation Outline

1

2

Repowering Economics

Coatings for Improved Energy Yield

5

Bottom-Up Module O&M

6

Bottom-Up Cost Modeling of Module Testing

3

4

7 Conclusions and Next Steps

Cross Technology Reliability Assessments: IEC Testing Results and Failure Modes

Introduction of FY19 Technoeconomic Analysis Activities for DuraMAT
NREL | 33

Conclusions and Proposed Next Steps

• We have identified some critical gaps in understanding that would be helpful for PV project 

financial models. These include specific correlations between the causes of field failure and their 

overall impact upon system degradation and O&M expenses.

Next Steps: To work with DuraMAT awardees to gather state-of-the-art knowledge relevant to 

these questions. It is also hoped the DataHub might provide such data in the future. 

• We have identified further work that is needed in the areas of bottom-up O&M and module 

manufacturing and testing cost modeling. For O&M, we need to somehow correlate field failure 

data (or at least performance modeling) to project cash flow expectations during each year of the 

analysis period. In bottom-up module cost modeling, within the near-term we need to examine 

the cost premiums for depositing new coatings on glass and for better manufacturing process 

control procedures that reduce hot spots and cracked cells. 

Next Steps: To work with DuraMAT awardees to gather state-of-the-art knowledge relevant to 

these questions, and to provide any analysis that might be helpful to quantify the overall value 

proposition of specific research projects. 
www.nrel.gov

Thank You

NREL/PR-6A20-73751

This work was authored by the National Renewable Energy Laboratory, operated by Alliance for Sustainable 

Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Funding 

provided as part of the Durable Modules Consortium (DuraMAT), an Energy Materials Network Consortium 

funded by the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Solar Energy 

Technologies Office. The views expressed in the article do not necessarily represent the views of the DOE or the 

U.S. Government. The U.S. Government retains and the publisher, by accepting the article for publication, 

acknowledges that the U.S. Government retains a nonexclusive, paid-up, irrevocable, worldwide license to 

publish or reproduce the published form of this work, or allow others to do so, for U.S. Government purposes.