About the Degradation Sensitivity

Degradation sensitivity analysis tests how sensitive a solar project's IRR and lifetime yield are to different panel degradation rate assumptions — since the degradation rate is one of the key uncertainties in long-term financial models and small differences compound significantly over 25 years.

How to calculate it

1. 1Build a base-case yield model: Year-1 generation × (1 − d₁) × (1 − dₙ)ᵗ for each year.
2. 2Vary dₙ across the plausible range: low (0.3%/year — top-tier HJT/bifacial), base (0.5%/year — standard monocrystalline), high (0.7%/year — older PERC, harsh climate).
3. 3Calculate cumulative generation and revenue for each scenario over 25 years.
4. 4Calculate the delta: a 0.2%/year change in degradation rate over 25 years changes cumulative yield by approximately 3–4% — significant at the scale of a large plant.
5. 5Convert yield change to revenue impact and IRR sensitivity.

Worked example

A 1 MWp plant generating 15 L kWh in Year 1. Over 25 years: at 0.3%/year degradation, cumulative generation = 3.26 Cr kWh; at 0.5%/year = 3.18 Cr kWh; at 0.7%/year = 3.09 Cr kWh. Revenue difference between 0.3% and 0.7%/year at ₹3.5/kWh PPA = ₹59 L over 25 years — meaningful for an ₹3.5 Cr project. IRR impact: approximately 0.5–0.8 percentage points.

What you can calculate

• Sensitivity table
• LCOS impact
• Revenue delta
• Scenario compare

Frequently asked questions