So much of the conversation today is about whether solar rooftop systems are worth investing in (hint, they are). However, what I also find really exciting about the technology, especially if you’re looking to buy solar panels, is that the panels are only going to get better and therefore that business case can only get stronger.
So what do I mean by this? Essentially the ‘panel’ part of the system, the part that makes the electricity, isn’t actually that efficient. This is called solar panel efficiency, and all panels have an efficiency level. Solar panel efficiency is a measure of how much sunlight a panel can turn into usable electricity. Imagine the sun is pouring energy onto your roof. If a solar panel has 20% efficiency, that means it converts 20% of the sunlight it receives into electricity, and the rest is lost as heat or reflected away. So, higher efficiency equals more power. This can be great for many different reasons e.g. you could make smaller panels to take up less space on a roof or you could save more on your energy bills and increase your solar savings.
Smarter and More Efficient Solar Panels
Over the past decade, solar panel efficiency has risen from around 15–17% in 2014 to 20–22% today, with high-end models exceeding 23%. This marks a major leap in how much sunlight panels can convert into usable energy, especially important for anyone planning to buy solar panels or upgrade their home solar system. So how was this done?
PERC (Passivated Emitter Rear Cell)
PERC adds a special layer to the back of solar cells that reflects unused sunlight back in, giving the panel a second chance to capture it. This boosts how much energy is converted from sunlight. It’s a simple upgrade that made solar installation more efficient without adding much cost.
Half-Cut Cells & Multi-Busbar Designs
Half-cut cells are standard solar cells sliced in half to reduce energy loss. Multi-busbar designs use more thin wires to spread electricity more efficiently across the panel. Together, they improve power output and help panels perform better even if partially shaded — ideal for residential solar systems.
TOPCon and HJT (Advanced Cell Types)
TOPCon and HJT are newer solar panel technologies that reduce energy loss and improve efficiency. They work better in hot or low-light conditions and are more durable over time — a great choice if you’re looking for the best solar panels for your home.
Examining the Benefits
There are plenty of benefits from more efficiency, mainly that we can have more energy for less, which in turn means even more cost savings from solar. It’s basically the cheapest form of energy now (although this can be dependent on location). So as efficiency increases, there’s just no way anything else will be able to keep up. If you don’t believe me, just ask the IEA, which is the International Energy Agency. These guys are a reliable and balanced source, they even get criticized for being too conservative. However, it’s hard to blame them as no one can imagine the rate at which solar energy is currently changing the world. I’ve broken down a couple of key benefits below.
More energy!
Upgrading from 15% to 23% efficiency on an average sized system could generate over 2,200 extra kWh per year, saving an additional $668 annually — just by capturing more sunlight from the same amount of space. That’s real solar savings for your household. Let’s break that down for you.
- Roof size: On average there’s about 20 m² of usable space for panels
- Average sunlight: For most parts of NZ there are 4.5 peak sun hours per day
- Peak sun energy: This equates to 1000 watts hitting each square metre
- Electricity cost: Average cost in NZ is $0.30 per kWh
- System efficiency factor: Estimated at 85% due to inverter and wiring losses
So usings these assumptions we can do work out the increase in energy as per the below.
Panel Efficiency = 15%
20 m² × 1000 W/m² × 15% = 3,000 W = 3 kW system
3 kW × 4.5 sun hours × 85% = ~11.5 kWh/day
Panel Efficiency = 23%
20 m² × 1000 W/m² × 23% = 4,600 W = 4.6 kW system
4.6 kW × 4.5 sun hours × 85% = ~17.6 kWh/day
Difference in Daily & Annual Output
Daily gain: 17.6 – 11.5 = 6.1 kWh extra per day
Annual gain: 6.1 × 365 = ~2,227 kWh more per year
Potential Monetary Savings
2,227 kWh × $0.30 = ~$668 extra savings per year
Note: Actual savings will vary depending on how the electricity is used — whether stored, consumed, or exported to the grid.
Less space needed
High-efficiency solar panels are a game-changer for homes with limited roof space. Because they generate more electricity per square metre, you can get the same, or even more power output with fewer panels. That means even small or shaded roofs can support a residential solar installation big enough to make a real dent in your power bills. It also means shared buildings like apartment blocks might even be able to get enough solar to power flats individually. Technology such as SolShare by Allume would benefit from this hugely.
What’s the future?
The most common material in today’s solar panels is silicon, which has a theoretical efficiency limit of around 29% (due to the Shockley–Queisser limit. Its physics, I won’t bore you). We’re currently around 23% in commercial panels, and might see 27% through improvements like reduced internal energy loss and better light capture.
Tandem Cells
The really exciting area for solar though is not continuing upgrades of silicone, but the combination of new solar materials. There are a few different options, but currently the most excitement in the industry is about a material called perovskite. Perovskite by itself has a theoretical limit of about 33%, which is good but not hugely different to silicone. It has other benefits like it’s easier and potentially cheaper to manufacture and its ability to absorb different light rays across a wider spectrum means they work better in lower light. They’re not perfect though for example the longevity of the material is less than silicone, so there’s work to be done.
However, what’s really gaining traction at the moment is putting both silicone and perovskite together in one cell. These are called tandem cells. In 2024 the world record for photovoltaic conversion efficiency was broken by the company Longi, which achieved 34.6% efficiency. And if that doesn’t get you then understand the theoretical limit is a whopping 45%. Game changer. I don’t want to get carried away, but if you start to introduce additional layers on top of that then there’s been discussion of 50-60% efficiency. Unfortunately, that is unlikely to happen in my life time, but currently human races learning curve on well, everything suggests that we’ll probably get there. Future generations will scoff at our single cell 23% efficiency, not to mention our obsession with burning lumps of rock, which also tend to destroy our environment and impact our health.
45% efficiency would lead to an extra 2,500 kwh per year. A 5kw system at 45% in NZ would create 6,900kwh give or take per year. Context the average New Zealand house uses 7,000 kwh per year. Interesting. Obviously that’s very crude, there’s plenty of other things to consider like less sun in winter, average size of system increasing etc. etc., but I think you see what I’m getting at.
Artificial Intelligence
It would be remiss of me to mention AI as that’s basically only thing people talk about right now. AI and yes Internet of things can make solar more efficient, and better integrated. AI enables predictive maintenance, energy forecasting, and real-time panel optimization, improving performance and reducing downtime. IoT devices allow smart monitoring and control of energy use, boosting self-consumption and lowering costs. Together, they support smart grids by balancing solar variability, enabling virtual power plants, and optimizing battery storage and EV charging. At a broader level, they help utilities and governments plan solar deployment, enhance grid stability, and shape policy. The result is more reliable, cost-effective, and scalable solar energy.
To conclude..
So hopefully you understand now that solar panel efficiency is quite important. However, don’t read this blog and think well might as well wait to buy solar, the gains I’m talking about take time and the technology advancements cost more (at the moment). If you’re thinking about investing in free energy you should do it now to start saving money. A system pays itself off here around 7 years and then you’ll probably get 15+ years of free energy after that. If you wait you’ve missed the opportunity for the awesome return of investment.
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