Solar panel efficiency, explained
Efficiency is the percentage of sunlight a panel converts to electricity — typically 19–23% for residential panels in 2026. It only matters when your roof space is limited. If you have room, a cheaper lower-efficiency panel produces the same power for less money.
What efficiency does and does not tell you
A 22% efficient panel produces more watts per square metre than an 19% one. That is the whole claim. It says nothing about durability, degradation rate, warranty or how it performs in heat — and it does not mean a kWh from it is worth more.
Worked comparison
| Standard panel | Premium panel | |
|---|---|---|
| Efficiency | 19.5% | 22.5% |
| Output per panel | 400 W | 450 W |
| Panels for 8 kW | 20 | 18 |
| Roof area used | ~39 m² | ~35 m² |
| Typical price premium | — | +15–30% |
Both make 8 kW. The premium panel saves about 4 m² of roof. If you have 4 m² spare, that saving is worth nothing — and you paid 15–30% more for it.
The spec that matters more: temperature coefficient
Panels are rated at 25°C and lose roughly 0.3–0.4% of output per degree above that. A roof in Phoenix easily hits 65°C, which is a 12–16% real-world loss. A panel with a better temperature coefficient (closer to −0.29%/°C than −0.40%/°C) can outproduce a nominally more efficient one in a hot climate. Almost nobody markets this, and it is the more useful number in the sunbelt.
What actually drives your output
- Shading — dwarfs everything else. A tree can cost a third of your output.
- Orientation and pitch — 10–25% swing.
- Local sunlight hours — the difference between Tucson and Seattle is roughly 60%.
- System losses — inverter, wiring, heat, dust: ~15%.
- Panel efficiency — a few percent, and only if space is tight.
It is last on the list, and it is the thing salespeople talk about most.
What this looks like in real cities
Measured rooftop data, spanning the range from fastest to slowest payback we have found:
| City | Sun hrs/yr | Rate | Payback |
|---|---|---|---|
| Boston, MA | 1,446 | 30.1¢ | 5.4 yrs |
| Plano, TX | 1,765 | 15.1¢ | 8.8 yrs |
| Toledo, OH | 1,474 | 15.2¢ | 10.6 yrs |
| Bismarck, ND | 1,597 | 11.1¢ | 13.3 yrs |
| Montreal, QC | 1,384 | 7.9¢ | 30.7 yrs |
Frequently asked
What is a good solar panel efficiency in 2026?
Anything from 19% up is mainstream and fine. Premium panels reach 22-23%. Efficiency below about 18% is dated technology and worth questioning.
Do more efficient panels produce more electricity?
Per square metre, yes. Per dollar, usually not. If you have the roof space, more standard panels produce the same total output for less money.
Why do panels underperform their rated wattage?
Ratings are measured at 25C in laboratory conditions. Real roofs run hotter, and inverter, wiring and soiling losses take roughly another 15%.
Related guides
General information, updated 2026-08-22. Not financial, tax or engineering advice.