Optimization of photovoltaic systems: best practices for economic, technical key performance indicators

January 15, 2025
IEA-PVPS

KPIs are essential metrics for evaluating the technical performance, economic sustainability and environmental impact of PV systems. From investors and asset managers to operations and maintenance (O&M) providers, stakeholders rely on KPIs to assess system reliability, guide decision-making, and analyze long-term profitability.

By aligning technical and economic metrics, KPIs ensure that PV systems remain competitive and resilient in an increasingly demanding energy market.

Technical KPIs

1. Pxx energy yield estimates the probability of achieving specific energy outputs over time. This KPI is critical to financial modeling because it aligns performance expectations with realistic variability in weather and operational conditions.
2. Performance Ratio (PR) measures the energy efficiency of the system by comparing actual output to potential output under ideal conditions. It is easy to use and can be adjusted to different temperatures or bifacial modules, but can be affected by environmental factors such as high DC-to-AC ratios or containment.
3. Availability tracks the operational uptime of a PV system (whether time-based availability or energy-based availability) so that it generates electricity during periods of appropriate irradiation. It is an important part of O&M contracts and has a direct impact on the assessment of system reliability.
4. The Pollution Ratio (SR) quantifies performance losses due to dirt or debris on PV panels, comparing actual yield to what would be expected if the panels were clean. It supports data-driven cleaning schedules to optimize efficiency, and is especially important when dealing with desert and polluted areas.
5. The Degradation rate (Rd) evaluates the irreversible loss of performance due to material aging and wear, and is often used in financial models to predict future maintenance needs. It is a critical parameter for long-term reliability, but several years of high-resolution data are needed for accurate assessments.
6. The Performance Loss Rate (PLR) includes all reversible and irreversible performance losses in a PV system, such as contamination or degradation. It provides a broader view of system health compared to Rd, and is an important parameter for O&M planning and life cycle cost assessments.
7. The Energy Performance Index (EPI) measures the ratio between actual and expected energy yield based on modeled performance. It also has higher seasonal stability compared to PR, and its use has shown particular growth in regions where high-efficiency modules with non-standard configurations are becoming the norm.
8. The Capacity testing verify system performance by comparing measured output to expected output under standardized reference conditions. They are mainly used during system commissioning and periodic audits, and help ensure compliance with contractual obligations and validate system performance under real operating conditions.

Economic KPIs

1. The Level electricity costs (LCOE) measures the cost of generating one unit of electricity, accounting for all expenses over the life of the system. It balances CAPEX, OPEX and performance metrics and is used to compare the cost-effectiveness of different PV projects. While innovations such as bifacial modules and tracking systems improve efficiency, LCOE continues to decline, making solar energy more competitive against other energy sources.
2. The Internal rate of return (IRR) reflects the profitability of a PV project by identifying the discount rate at which the project breaks even, providing insight into its long-term financial viability. It is a very valuable metric for attracting investors, especially for projects with high initial costs but long-term returns.
3. The Net Present Value (NPV) calculates the present value of cash flows compared to the initial investment, providing insight into project profitability. The NPV allows stakeholders to evaluate competing project proposals and prioritize those with the best financial returns.
4. Capital expenditure (CAPEX) represents the initial costs associated with implementing a PV system, including equipment, installation and infrastructure. Minimizing CAPEX without compromising quality is crucial to project feasibility, and innovations in manufacturing and localizing supply chains are helping to significantly reduce this.
5. Operating expenses (OPEX) covers ongoing costs such as maintenance, repairs and monitoring systems. OPEX can be optimized through strategies such as real-time monitoring systems and condition-based maintenance approaches.

Data quality: a crucial need for reliable KPIs

High-quality data is indispensable for accurate KPI calculations. The report emphasizes the importance of rigorous cleansing and validation of data, from initial collection to processing. Factors such as missing values, inconsistent measurements, and inadequate data storage practices can compromise the reliability of KPIs.

Advanced Supervisory Control and Data Acquisition (SCADA) systems and robust data imputation techniques are recommended to address these challenges.

The report also highlights the IEC 61724 standard as a crucial guideline for ensuring data consistency. Adhering to this standard improves the transparency and comparability of KPIs, promoting better collaboration among stakeholders.

Challenges and best practices

Despite their usefulness, implementing KPIs is not without challenges.

1. Standardization gaps: Although KPIs are widely accepted, variations in calculation methods can lead to inconsistencies. For example, the report notes differences in how temperature-corrected PR and bifacial adjustments are applied, underscoring the need for standardized definitions and methodologies.
2. Complexity of advanced KPIs: Emerging metrics such as the Energy Performance Index (EPI) require sophisticated calculations, making them more difficult to understand and apply. For wider acceptance, the development of user-friendly tools and clear guidelines is essential.
3. Uncertainty in long-term statistics: KPIs such as Rd and OUR depend on longer data periods, creating uncertainty. The report proposes best practices to minimize these uncertainties, including the use of advanced statistical methods and cross-validation techniques.

Future directions

The evolution of KPIs will likely focus on greater integration with advanced technologies and improved standardization. Some trails include:

• Machine learning for performance prediction: AI-driven models can improve the accuracy of KPI forecasts, enabling more accurate planning and optimization.
• Geospatial mapping: Using satellite data and drones to map KPIs such as PR and Rd across regions offers new opportunities for performance benchmarking and location selection.
• Expansion of sustainability metricsAs the industry prioritizes environmental goals, KPIs related to life cycle impact, such as carbon footprint and material recycling rates, will gain importance.

Conclusion

The IEA PVPS Task 13 report provides a detailed framework for implementing these KPIs to optimize performance, reduce costs and promote sustainability of PV systems. By integrating all technical and economic KPIs, stakeholders can better assess the health and financial viability of the system.

As we move forward into 2025, the adoption of advanced tools and standardized methodologies will ensure that KPIs remain a cornerstone of the solar industry, driving innovation and good practice in a rapidly changing energy landscape.

This article is part of a monthly column from the IEA PVPS programme.

The Task 13 report: “Best practice guidelines for using economic and technical KPIs”, outlines calculations and applications of the most important technical and contractual KPIs for the operation of PV systems.

Authors: Ignacio Landivar and Sascha Lindig