Solar Principles
The immutable truths. Markets shift. Technology evolves. These don't.
The Six Principles
| # | Principle | Why Immutable | Implication |
|---|---|---|---|
| 1 | Sun angle determines yield | Physics — latitude sets the ceiling | Best locations win, everything else optimizes |
| 2 | Degradation is inevitable | Panel chemistry — ~0.5%/year | Factor it in or lie to customers |
| 3 | Inverter efficiency caps output | Electronics — 97-99% max | Diminishing returns beyond best hardware |
| 4 | Grid connection is the bottleneck | Infrastructure — queues years long | Interconnection delays kill more than economics |
| 5 | LCOE is the only honest metric | Finance — lifetime cost ÷ lifetime kWh | Everything else is marketing |
| 6 | Verification creates value | Trust — unverified credits are zero | Proof of generation is the moat |
1. Sun Angle Determines Yield
Solar irradiance is physics. No amount of technology changes the sun's position.
The math: POA (Plane of Array) irradiance depends on latitude, tilt, azimuth. Optimal tilt ≈ latitude ± 15°.
The implication: Geographic arbitrage is real. India gets 1,800+ kWh/m²/year. Northern Europe gets 900. Capital should flow to sunlight.
DePIN advantage: Protocols coordinate global capital to optimal locations. Glow farms in India cost 1/5 of US deployments for similar yields.
2. Degradation is Inevitable
Every panel loses efficiency over time. No exceptions.
The constraint: ~0.5%/year degradation for quality panels. After 25 years: ~88% of original output.
Traditional approach: Assume 25-year lifespan, hope warranty covers failures.
DePIN approach: On-chain generation data reveals actual degradation. Transparency creates accountability.
The shift: From "trust the manufacturer" to "verify on-chain."
3. Inverter Efficiency Caps Output
The inverter is the bottleneck between DC generation and AC delivery.
The constraint: Best inverters achieve 97-99% efficiency. Physics limits this ceiling.
DC/AC Ratio tradeoff: Oversizing DC (1.1-1.4x) captures morning/evening production but clips peak output.
The implication: Hardware improvements face diminishing returns. The gains are in software, optimization, and coordination.
4. Grid Connection is the Bottleneck
More projects die from interconnection delays than from bad economics.
Traditional queues: 3-5 years in many US markets. Applications outnumber approvals 10:1.
The constraint: Utility approval process. Transformer upgrades. Transmission capacity.
DePIN opportunity: Protocol-coordinated applications. Standardized documentation. Queue position transparency.
The shift: From "wait for utility approval" to "coordinate permissionless deployment."
5. LCOE is the Only Honest Metric
Levelized Cost of Energy reveals truth. Everything else is marketing.
The formula:
LCOE = (Capital + PV of O&M) ÷ PV of Energy
Why it matters: Compares projects across geographies, technologies, scales. Cuts through sales pitches.
Current benchmarks:
- Utility-scale: $0.02-0.04/kWh
- Commercial rooftop: $0.04-0.08/kWh
- Residential: $0.08-0.15/kWh
DePIN implication: Protocol efficiency should improve LCOE. If it doesn't, the model doesn't work.
6. Verification Creates Value
Unverified generation is worthless. Proof of additionality is the moat.
Traditional verification: Manual audits, quarterly inspections, trust-based registries. 30%+ fees.
DePIN verification: IoT meters + satellite imagery + on-chain proofs. Near-zero marginal cost.
The opportunity: Tokenized carbon credits (GCC) with cryptographic proof of generation.
The moat: Networks that solve verification own the additionality premium.
The Test
Before any solar investment or build:
| Question | Yes = Proceed | No = Reconsider |
|---|---|---|
| Is the location optimal for irradiance? | High POA | Below regional average |
| Have you factored degradation? | Realistic projections | Overstated yields |
| Is LCOE competitive? | Below grid parity | Above alternatives |
| Is interconnection clear? | Queue position secured | Unknown timeline |
| Is verification built in? | On-chain proofs | Trust-based claims |
Minimum: Yes to 4 of 5.
Principles → Performance
These principles determine what to measure:
| Principle | Performance Metric |
|---|---|
| Sun angle determines yield | Specific yield (kWh/kWp), capacity factor |
| Degradation is inevitable | Year-over-year output decline |
| Inverter efficiency caps output | Performance ratio, clipping losses |
| Grid connection is bottleneck | Interconnection timeline, curtailment |
| LCOE is the honest metric | $/kWh across lifecycle |
| Verification creates value | Claim legitimacy rate, GCC issuance |
See Performance for the full metrics framework.
Data Model
How solar systems work at a fundamental level. Understanding this is prerequisite to measuring performance.
Key Terms
| Term | Meaning | Context |
|---|---|---|
| ICP | Installation Control Point (NZ) | Unique customer connection identifier |
| POI | Point of Interconnection | Where solar connects to grid |
| PCC | Point of Common Coupling | Shared grid point for multiple users |
| POA | Plane of Array Irradiance | Solar resource at panel orientation |
| LCOE | Levelized Cost of Energy | Lifetime cost ÷ lifetime production |
| GHI/DNI/DHI | Global/Direct/Diffuse Irradiance | Solar resource components |
System Inputs
Site Inputs
| Data | Source | Why It Matters |
|---|---|---|
| Latitude/Longitude | GPS, address | Determines solar resource, angle calculations |
| Azimuth | Site survey, LIDAR | Panel orientation — 180° optimal (Northern Hemisphere) |
| Tilt Angle | Design software | Latitude ± 15° for seasonal optimization |
| Available Area | Roof plans, survey | Constrains system size |
| Shading Analysis | 3D modeling, drones | Critical for accuracy |
| Grid Connection | Utility records | Interconnection requirements |
Equipment Inputs
| Data | Options | Impact |
|---|---|---|
| Panel Type | Mono, Poly, Thin-film, Bifacial | Efficiency, degradation, cost |
| Panel Wattage | 400W-700W (utility), 350W-450W (residential) | System sizing |
| Inverter Type | String, Microinverter, Central | Efficiency, monitoring, shade tolerance |
| DC/AC Ratio | Typically 1.1-1.4 | Clipping vs utilization trade-off |
| Mounting System | Ground, Rooftop, Tracker | Installation cost, yield optimization |
Resource Inputs
| Data | Source | Precision |
|---|---|---|
| GHI | TMY data, satellite | kWh/m²/day |
| DNI | Weather databases | Critical for trackers |
| Temperature | Historical weather | Panel efficiency derating |
| Wind | Local records | Structural design, cooling |
Data Sources: NREL NSRDB, SolarAnywhere API, Solargis
The Physics (Calculations)
Annual Yield (kWh) = System Size (kWp) × PSH × PR × (1 - Degradation)^n
Where:
- PSH = Peak Sun Hours (location-specific)
- PR = Performance Ratio (0.75-0.85)
- n = Year number
| Metric | Formula | What It Reveals |
|---|---|---|
| Specific Yield | kWh/kWp/year | Location quality |
| Performance Ratio | Actual ÷ Theoretical | System health |
| Capacity Factor | Actual ÷ (Nameplate × 8,760) | Utilization efficiency |
| LCOE | (Capital + PV of O&M) ÷ PV of Energy | True cost per kWh |
Standards: UL 1703 (modules), UL 1741 & IEEE 1547 (inverters), AS/NZS 4777.1:2024
Context
- Solar Overview — The transformation thesis
- Knowledge Stack — How principles become platforms
- DePIN — Physical infrastructure patterns
- First Principles — Broader principles framework