Every solar energy system may experience cell degradation, wire resistance, mechanical deformation due to weather cycling, and electrical component failure. System degradation results in the decrease of energy production (kWh) over time. The amount of degradation depends on the PV technology, local climate, and other application-dependent properties.
How is system degradation calculated in Sighten?
Sighten accounts for system degradation on an annual basis by applying a degradation percentage, or rate, for each year of the solar energy system's lifetime, beginning in Year 2. No degradation is applied to year 1 production estimates in Sighten.
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% per year and functions as follows:
Example:
Year 1 Estimated Production = 10,000 kWh
Year 2 Estimated Production = Year 1 Estimated Production x (100% - 0.7%/Year) = 10,000 x (100% - 0.7%) = 9,993 kWh
Year 3 Estimated Production = Year 2 Estimated Production x (100% - 0.7%/Year) = 9,993 x (100% - 0.7%) = 9,986 kWh
and so on...
In this example, the cumulative system degradation over a 20-year lifetime would be 19 x 0.7% = 13.3% meaning that in Year 20, the production would be degraded by this amount on a year-to-year basis.
How is system degradation configured in Sighten?
There are four ways system degradation is configured on the platform. The degradation can be set by: the financier, module, organization, or Sighten default. We'll discuss them according to their level of hierarchy and how they are configured:
1 Financier degradation configurability
This is a specific degradation rate required for select integrated financing programs within our portal. This will not actually modify the system production, but will be a factor in TPO products / cash flows when applicable. There is currently only one financier in our portal utilizing this functionality.
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% 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.
Note that production degradation rates are static for all years of the financial product's lifetime. That is, Year 2 degradation rate is the same as all subsequent years. Also this is only applicable to financier production calculations.
Please contact your Sighten Account Manager and/or submit a request to Sighten support to revise this value.
2 Module-specific degradation configurability
This is a fixed value provided by a spec sheet or a manufacturer that we have added for specific models. Thus, when this model is used for a job, Sighten will use the module-specific degradation value instead of the organization level. This is somewhat new functionality, so we are still building out the database and your input here is very helpful.
To revise this value, please submit a request to Sighten 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 Sighten's default 0.7%, with the exception of financing products with a set degradation value.
3 Contractor degradation configurability
Production degradation rates can also be configured per organization. This degradation will be used automatically whenever a module does not have a specific degradation. Again, it is importan to note that an organization's set degradation rate will only be applied to jobs without module or financing product-specific degradation rates.
To configure the production degradation for your company, please contact Sighten support at support@sighten.io and submit a request. To configure the production degradation rate for integrated solar financing products, please contact the financier's representative and submit a request.
4 Sighten-default degradation rate
If an organization does not set a degradation rate, it will be 0.7% (Sighten default) for all jobs provided that no financier-specific or module-specific degradation % applies to the job.
System degradation impacts
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 Sighten 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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