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System degradation rates are configured by organization. Some of our integrated PPA and lease programs have a specific degradation rate that will supersede an organization's rate. The default degradation rate is 0.7% 5% per year (prior to August 2024, the default degradation rate used to be 0.7%) and functions as follows:
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Year 2 Estimated Production = Year 1 Estimated Production x (100% - 0.7%5%/Year) = 10,000 x (100% - 0.7%5%) = 9,993 950 kWh
Year 3 Estimated Production = Year 2 Estimated Production x (100% - 0.7%5%/Year) = 9,993 950 x (100% - 0.7%5%) = 9,986 900 kWh
and so on...
In this example, the cumulative system degradation over a 20-year lifetime would be 19 x 0.7% 5% = 139.3% 5% meaning that in Year 20, the production would be degraded by this amount on a year-to-year basis.
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A financier can designate a fixed degradation rate for the lifetime of their financial product. If a financier has elected to configure a specific degradation rate for their product, that rate will supersede the degradation rate set by the organization. Financing product degradation rates may vary from one financial product to the next, depending on the financier's configuration. For example, the default degradation rate for cash purchase quotes is set to 0.7% 5% per year but a financier may have set it to a different value for their solar financing product. This only impacts our integrated financing products. All other products will use the organization's degradation rate unless a module-specific degradation rate is set for the modules used.
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To revise this value, please submit a request to EverBright support or your account Manager with the spec sheet where the said degradation value is indicated. Note that this configuration will override any set degradation for your organization and EverBright's default 0.7%5%, with the exception of financing products with a set degradation value.
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If an organization does not set a degradation rate, it will be 0.7% 5% (EverBright default) for all jobs provided that no financier-specific or module-specific degradation % applies to the job.
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Annual system production degradation affects quotes, proposals and contracts in the following ways:
Reduces the annual estimated energy production in future years, as displayed in EverBright proposals
Financial impacts in solver and quoting process - lower production in future years due to degradation will affect financial model accordingly, including:
Payments over time (e.g., future year's estimates)
Post-solar utility bill
Future year's cash flows
Solar savings, return on investment, and payback calculations
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