Understanding your performance ratio
What performance ratio actually captures
Performance ratio compares your system's actual energy output against the theoretical output it should produce given the sunlight your specific site actually received. An 8 kW system at a location with 4.5 peak sun hours per day producing 10,500 kWh a year has a performance ratio of about 80%. This is one of the most widely used metrics in the solar industry for judging system efficiency. NLR's PVWatts calculator, the industry-standard modeling tool behind most professional solar estimates, builds its default output projections around this same concept of comparing expected losses against available sunlight.
What a good performance ratio looks like
Well-designed residential and commercial systems typically run a performance ratio between 75% and 85%. Ratios below 70% often point to a design or maintenance issue worth investigating, while ratios above 85% suggest an especially well-tuned system with minimal losses from shading, wiring, or heat. A DOE assessment of 75 federal PV systems found a median performance ratio of 79%, in line with this range.
How this differs from capacity factor
Capacity factor compares actual output against a theoretical maximum if the system ran at full rated power 24 hours a day, which heavily depends on location. Performance ratio instead compares actual output against what the site's actual sunlight should have produced, making it a better measure of system efficiency independent of location. Check the capacity factor calculator to see both metrics side by side for the same system.
What causes a lower than expected result
Common causes include inverter inefficiency, wiring loss, shading, soiling, panel degradation, and temperature-related derating. Since performance ratio already accounts for available sunlight, a low number points to losses inside the system rather than a weak solar resource, which makes it a useful diagnostic starting point. If degradation is a suspected factor, especially on an older system, the panel degradation calculator can help estimate how much of the shortfall age alone might explain.
What to do with this number next
If your performance ratio comes back low, work through the shading loss estimator, soiling loss estimator, and temperature derate calculator to narrow down which factor is dragging your number down.