Degradation · Glossary

Degradation refers to the gradual ageing of a technical asset or component, as a result of which usable properties are lost. In the power system, this mainly affects assets whose performance must be reliably available over many years. These include batteries, electrolysers, fuel cells, photovoltaic modules, power electronics, transformers and cables. The term does not describe a single defect but an ongoing change that is usually irreversible. The asset continues to function. However, it may store less energy, provide less power, achieve poorer efficiency or reach its operating limits more quickly.

In batteries, degradation is particularly visible because it directly affects the usable capacity and the available power. An example: a new battery stores 100 kilowatt-hours. After several years, it may only provide 85 or 80 kilowatt-hours of usable capacity. At the same time, internal resistance often rises. More energy is then converted into heat during charging and discharging, and high charging or discharging power is harder to achieve. For a battery storage system, therefore, the initially installed capacity is not the only thing that counts. What matters is the capacity that actually remains available over the planned period of use.

Technical significance in batteries

Batteries age through chemical and mechanical changes in the cells. The electrodes change their structure, and side reactions consume active material. In addition, the boundary layer between electrode and electrolyte grows. Under unfavourable conditions, lithium can also deposit as metal (lithium plating) and is then permanently lost for storage. Some of these processes also occur when the battery is hardly used. A distinction is therefore made between calendar ageing and cycle ageing.

Calendar ageing depends mainly on time, temperature and state of charge. A battery therefore also ages when idle. This applies especially if it is operated or stored for long periods at a high state of charge and high temperature. Cycle ageing results from charging and discharging. It depends on depth of discharge, charging and discharging power, cell chemistry, temperature window and operating strategy. A battery that switches daily between almost empty and almost full ages differently from a battery operated within a narrower charge range.

The C-rate indicates how quickly a battery is charged or discharged relative to its capacity. At a C-rate of 1, the battery is theoretically fully charged or discharged in one hour. At 0.5 C, this takes two hours. High C-rates put more stress on the cells, especially at unfavourable temperatures or states of charge. High power is technically possible, but it costs service life if it accelerates ageing. Operational management and economic viability are therefore closely linked.

The ageing state is usually expressed as State of Health (SoH). It describes how much capacity or performance remains compared with the new condition. The EU Battery Regulation (EU) 2023/1542 defines state of health as a measure of the general condition of a rechargeable battery. It describes its ability to deliver the specified performance compared with its original condition. Under Article 14, since 18 August 2024 the battery management systems of stationary battery energy storage systems, LV batteries and electric vehicle batteries must contain up-to-date data on the parameters set out in Annex VII. These parameters serve to determine the state of health and the expected lifetime. For stationary storage systems, they include, among others, remaining capacity, remaining power capability, round-trip efficiency, the evolution of self-discharge and internal resistance. Certain actors such as purchasers or independent aggregators receive read access to this data. This makes it possible, for example, to assess a battery's residual value or its further usability. The battery management system thus also becomes, legally, the central data source for degradation.

Degradation in electrolysers and photovoltaics

In an electrolyser, degradation shows up mainly as rising cell voltage at the same current density. More electricity is therefore needed for the same quantity of hydrogen. At the same electrical power, correspondingly less hydrogen is produced. In European funding programmes, stack degradation is expressed as a percentage efficiency loss per 1,000 operating hours. The Clean Hydrogen Partnership gives the following example: 0.125 percent per 1,000 hours corresponds, after ten years with 8,000 operating hours each, to an energy consumption about 10 percent higher. The US Department of Energy sets the end of life for PEM electrolysers at a 10 percent voltage increase compared with the new condition, measured at the same current density. It also stresses that dynamic operation and on-off cycles must be taken into account in the assessment. Precisely the flexible operation that is desirable for the power system can therefore influence ageing.

In photovoltaic modules, degradation usually shows up as slowly declining output under comparable irradiance. A widely cited analysis by the US National Renewable Energy Laboratory (NREL) compiled almost 2,000 degradation rates from field measurements. The median was 0.5 percent per year, the mean about 0.8 percent per year. Most values were below 1 percent per year. These long-term rates generally do not include the short-term light-induced initial degradation in the first hours of operation. Depending on technology and climate, values can deviate considerably.

Distinction from defect, efficiency and availability

Degradation is not the same as a failure. A failed component no longer performs its function or only does so outside permissible operating conditions. A degraded component still performs its function, but with lower quality or in a smaller usable range. This distinction is important for planning and regulation. An asset can be available and still deliver less than originally assumed.

Degradation is also not the same as efficiency. Efficiency describes the ratio of benefit to input, that is, of output to input power or energy, under certain operating conditions. Degradation, by contrast, is the change of such parameters over time. It can worsen efficiency, but this does not have to be where it first appears. In batteries, capacity loss is often noticed first. In electrolysers, on the other hand, the rising electricity demand per kilogram of hydrogen, that is, falling efficiency, is the actual hallmark of degradation.

Availability is also a different concept. It describes whether an asset is technically ready for use. Degradation describes the properties with which it is ready for use. A battery with 80 percent remaining capacity can be fully available. However, it no longer fulfils the same storage task as when new. Anyone who does not take this difference into account plans with overly optimistic assumptions about storage duration, revenues or ancillary services.

Why degradation matters in the power system

Technical assets in the power system increasingly do more than generate electricity. They also serve balancing, time-shifting and stabilisation. Storage systems shift electricity from times of high generation to times of higher demand. Electrolysers are meant to operate as flexible loads and produce hydrogen when electricity is cheap or abundantly available from renewable sources. Photovoltaic plants and wind farms are meant to deliver predictable energy quantities over decades. In all cases, degradation helps determine which power and which energy quantities can be reliably planned for over the service life.

For investment decisions, degradation is a key variable. The initial investment alone says little about the actual costs per usable kilowatt-hour. Metrics such as the Levelized Cost of Storage therefore take into account how much energy a storage system can actually deliver over its lifetime. If a storage system is used very frequently in the market, it ages faster. The resulting ageing costs must be set against revenues. An operating model can bring high income in the short term while consuming capacity in the long term. In calculations, degradation therefore often appears as cost per cycle or per kilowatt-hour throughput. Alternatively, a remaining capacity after a certain operating period is assumed.

In the case of flexibility, this point is often overlooked. A battery storage system can respond quickly and thereby provide valuable services, for example in intraday trading, in balancing energy or for grid relief. However, every use stresses the asset. The operator must weigh whether an additional use justifies the ageing costs. Markets generally remunerate the energy or power dispatched, not the wear incurred in the process. The operator must factor this into their bids themselves.

Typical misconceptions

A common misconception is to treat degradation as a fixed percentage per year. For some technologies there are typical empirical values, such as the roughly 0.5 percent per year mentioned for photovoltaic modules. But even these values are averages with wide scatter. In batteries and electrolysers, ageing depends strongly on operation. Two identical assets can be in very different condition after five years. This is the case, for example, if one was operated in a gentle temperature and charge window and the other often had to work at high power and unfavourable states of charge.

It is equally imprecise to equate cycle count and service life. The statement that a battery lasts a certain number of cycles only holds under the conditions under which those cycles were defined. A cycle with low depth of discharge stresses the battery differently from a full cycle. Partial cycles are therefore often converted into equivalent full cycles. Temperature, charging power and state-of-charge window also change the result. Cycle life is therefore not an absolute property but a metric that only applies under certain assumptions.

Another misconception concerns remaining capacity. The end of life of a cell is often considered to be the point at which capacity has fallen to 80 percent of its initial value. Alternatively, end of life is considered reached when internal resistance has doubled. However, these limits are conventions, not laws of nature. Warranties for stationary storage systems may also specify other thresholds, such as 70 percent. A battery below the threshold is not worthless. It may remain suitable for applications with lower requirements, for example as a second-life battery in a stationary storage system. Its economic value depends on which task it can still fulfil and on the costs of testing, integration and safety.

Institutional and economic consequences

Whether degradation becomes visible also depends on rules. Warranties specify which remaining capacity is guaranteed after what time or energy throughput. Metering concepts determine how charging and discharging processes are documented. In the EU, the Battery Regulation now requires battery management systems to hold data on the state of health. For purchasers, second-life providers and aggregators, degradation thus becomes easier to verify. Grid connection conditions can favour operating modes that either spare an asset or stress it more. Market rules decide whether short and frequent power dispatches are rewarded.

Technical ageing does not always cause costs where the use is triggered. If a storage system is used to avoid grid congestion, its operator bears the ageing costs while the benefit arises in grid operation. A very flexibly operated electrolyser can improve the integration of renewable generation but affects maintenance needs, efficiency and service life. Such costs must therefore be explicitly taken into account in contracts, remuneration or bids; otherwise the operator bears them unplanned.

An asset is therefore not described solely by its installed power, its nominal capacity or its efficiency when new. For practical use, ageing behaviour, operating windows, warranties, replacement strategies and the costs of lost usability also count. The concept of degradation makes one thing visible: flexibility, storage and conversion in the power system are physical processes. Their economic value depends on how long the technology deployed retains its properties.

Sources

Verordnung (EU) 2023/1542 über Batterien und Altbatterien — Europäisches Parlament und Rat der EU (EUR-Lex); 2023-07-12. Art. 3 Nr. 25 und 28 (Begriffsbestimmungen), Art. 14, Anhang VII
Photovoltaic Degradation Rates — An Analytical Review (Preprint) — National Renewable Energy Laboratory (D. C. Jordan, S. R. Kurtz); 2012 (Preprint; Zeitschriftenfassung 2013). Abstract und Histogramm der Degradationsraten
FCH 2 JU – MAWP Key Performance Indicators (KPIs) — Clean Hydrogen Partnership (Clean Hydrogen JU); unbekannt. Abschnitt Hydrogen production, Fußnote 4
Technical Targets for Proton Exchange Membrane Electrolysis — U.S. Department of Energy; unbekannt. Zieltabelle, Fußnoten f und g
Untersuchung: Kreislaufstrategien für Batteriesysteme (Endbericht) — Fraunhofer IPA; unbekannt. Abschnitte zu Lebensdauer, Restkapazität und C-Rate

Related glossary entries

Edited by eCMS on 11.11.2026 18:44