Degradation Rate

A Degradation Rate refers to the decrease in energy production from a power plant due to decreases in its efficiency during the course of its life. It’s usually expressed in terms of % (of initial output) per year. Degradation needs to be factored in when preparing a project financial model or looking at the long-term economics or energy costs (e.g. LCOE) of a power project. It can result from a wide range of factors such as wear and fatigue of materials in thermal power stations, to structural changes to the photovoltaic materials in solar modules, to reduction in the aerodynamics of wind turbine blades (due to physical wear and damage).