Unless the PV array is mounted on a two-axis tracker, the incident angle for the direct component of the solar radiation will not be normal except for a few rare instances, depending on the orientation.  When the angle of incidence is greater than zero, there are optical losses due to increased reflections from the module materials that need to be quantified.

To define the loss factor due to angle of incidence we define an “angle of incidence modifier”, IAM, which in the case of the beam component of incident irradiance is defined as:

where  is the weighted transmittance, R is the weighted reflectance, and A is the weighted absorptance as a function of angle.  The weighting is done using the product of the spectral response of the PV module and the spectral distribution of the radiation.