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).