Optimizing photovoltaic systems: Best practices for economic, technical key performance indicators

KPIs are vital metrics to evaluate the technical performance, economic sustainability, and environmental impact of PV systems. From investors and asset managers to operation 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 a given time. This KPI is critical for financial modeling, as it aligns performance expectations with realistic variability in weather and operational conditions.
2. Performance Ratio (PR) measures the system’s energy efficiency by comparing actual output to the potential output under ideal conditions. It's simple to use and can be adjusted to different temperatures or bifacial modules, but it can be influenced by environmental factors like high DC-to-AC ratios or curtailment.
3. Availability tracks the operational uptime of a PV system (whether it’s time-based availability or energy-based availability), ensuring it generates electricity during periods of suitable irradiance. It is a staple in O&M contracts and directly influences system reliability assessments.
4. The Soiling Ratio (SR) quantifies performance losses due to dirt or debris on PV panels, comparing actual output to what would be expected if panels were clean. It supports data-driven cleaning schedules to optimize efficiency, and it’s particularly important when it comes to desert and polluted regions.
5. The Degradation Rate (Rd) evaluates the irreversible loss of performance due to material aging and wear, and is often fed into financial models to predict future maintenance needs. It is a critical parameter for long-term reliability, but it requires several years of high-resolution data for accurate assessments.
6. The Performance Loss Rate (PLR) includes all reversible and irreversible performance losses in a PV system, such as soiling or degradation. It offers a broader view of system health compared to Rd, and is a key parameter for O&M planning and lifecycle cost assessments.
7. The Energy Performance Index (EPI) measures the ratio of actual to 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 Tests verify system performance by comparing measured output against expected output under standardized reference conditions. They are used primarily during system commissioning and periodic audits, and help ensure compliance with contractual obligations and validate system performance under real-world operating conditions.

Economic KPIs

1. The Levelized Cost of Electricity (LCOE) measures the cost of generating one unit of electricity, accounting for all expenditures over the system’s lifetime. It balances CAPEX, OPEX and performance metrics, and is used to compare the cost-effectiveness of different PV projects. As innovations like bifacial modules and tracking systems improve efficiency, LCOE continues to drop, making solar 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, thus providing insights into long-term financial feasibility. It is a highly valuable metric for attracting investors, especially in projects with high upfront costs but long-term gains.
3. The Net Present Value (NPV) calculates the present value of cash flows against the initial investment, providing insights into project profitability. The NPV enables stakeholders to assess competing project proposals, prioritizing those with the best financial returns.
4. Capital Expenditure (CAPEX) represents the upfront costs associated with deploying a PV system, including equipment, installation, and infrastructure. Minimizing CAPEX without compromising quality is crucial for project feasibility, and innovations in manufacturing and localizing supply chains are helping to reduce it significantly.
5. Operational Expenditure (OPEX) covers ongoing costs such as maintenance, repairs, and monitoring systems. OPEX can be optimized by 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 data cleaning and validation, from initial collection to processing. Factors like missing values, inconsistent measurements, and inadequate data storage practices can compromise KPI reliability.

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 critical guideline for ensuring data consistency. Following this standard enhances transparency and comparability of KPIs, fostering better collaboration across stakeholders.

Challenges and best practices

Despite their usefulness, the implementation of KPIs is not without challenges.

1. Standardization gaps: While KPIs are widely accepted, variations in calculation methods can lead to inconsistencies. For instance, 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 harder to understand and adopt. The development of user-friendly tools and clear guidelines is essential for broader acceptance.
3. Uncertainty in long-term metrics: KPIs like Rd and PLR depend on extended data periods, introducing uncertainty. The report suggests best practices for minimizing 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 paths include:

• Machine learning for performance prediction: AI-driven models can enhance the accuracy of KPI forecasts, enabling more precise planning and optimization.
• Geospatial mapping: Using satellite data and drones to map KPIs like PR and Rd across regions offers new opportunities for performance benchmarking and site selection.
• Sustainability metrics expansion: As the industry prioritizes environmental goals, KPIs related to lifecycle impacts, such as carbon footprint and material recycling rates, will gain prominence.

Conclusion

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

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

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

The Task 13 report, “Best practices guidelines for the use of economic and technical KPIs,” outlines calculations and applications of the main technical and contractual KPIs for PV system operations.

Authors: Ignacio Landivar and Sascha Lindig

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