Carbon credit trading in photovoltaic systems: A case study on break-even and passive income

The global expansion of photovoltaics (PV) systems and the operationalization of carbon markets necessitate high-precision financial and environmental forecasting. However, conventional economic models often rely on manufacturer-specified panel degradation (ERSD) while neglecting the progressive efficiency decay of power electronics, leading to potential systematic overestimations of carbon revenue. This study addresses this gap by presenting a novel energy reduction including PV panel degradation and inverter efficiency loss (DIEL) method. Utilizing a 5.99 MWp hybrid PV infrastructure at Suranaree University of Technology (SUT), Thailand, as a "living lab" case study, we evaluate the system’s performance over a 25-year lifecycle across four scenarios (with and without carbon credit trading). The results demonstrate that while the integration of carbon credits (at 5.52 USD/tCO₂eq) accelerates the Break-Even Point (BEP) by approximately 0.5% (to 4.04 years) and enhances the Internal Rate of Return (IRR) by up to 2.86%, technical realism is paramount for valuation accuracy. Comparative analysis reveals that traditional ERSD models overestimate cumulative passive income and carbon reduction by 17.40% and 21.07% (14,992 tCO₂eq), respectively, compared to the technically grounded DIEL method. These findings suggest that failing to account for inverter-level losses results in a significant "integrity gap" in carbon credit issuance and financial bankability. This study provides a refined framework for institutional prosumers and regulators within the Thai carbon market (TGO/FTIX), ensuring that environmental commodities and financial returns are aligned with the physical reality of hardware decay.