Solar-cell efficiency refers to the portion of energy in the form of sunlight that can be converted via photovoltaics into electricity by the solar cell.
The efficiency of the solar cells used in a photovoltaic system, in combination with latitude and climate, determines the annual energy output of the system. For example, a solar panel with 20% efficiency and an area of 1 m2 will produce 200 kWh/yr at Standard Test Conditions if exposed to the Standard Test Condition solar irradiance value of 1000 W/m2 for 2.74 hours a day. Usually solar panels are exposed to sunlight for longer than this in a given day, but the solar irradiance is less than 1000 W/m2 for most of the day. A solar panel can produce more when the sun is high in the sky and will produce less in cloudy conditions or when the sun is low in the sky, usually the sun is lower in the sky in the winter.
Two location dependant factors that affect solar PV efficiency are the dispersion and intensity of solar radiation. These two variables can vary greatly between each country. The global regions that have high radiation levels throughout the year are the middle east, Northern Chile, Australia, China, and Southwestern USA. In a high-yield solar area like central Colorado, which receives annual insolation of 2000 kWh/m2/year, a panel can be expected to produce 400 kWh of energy per year. However, in Michigan, which receives only 1400 kWh/m2/year, annual energy yield will drop to 280 kWh for the same panel. At more northerly European latitudes, yields are significantly lower: 175 kWh annual energy yield in southern England under the same conditions.
Several factors affect a cell's conversion efficiency, including its reflectance, thermodynamic efficiency, charge carrier separation efficiency, charge carrier collection efficiency and conduction efficiency values. Because these parameters can be difficult to measure directly, other parameters are measured instead, including quantum efficiency, open-circuit voltage (VOC) ratio, and .