After comparing fresh and degraded performances of Polymer Electrolyte Membrane (PEM) based components of a hydrogen cycle with the help of computational fluid dynamics simulations, recently established stand-alone solar energy system producing hydrogen for energy storage is investigated focusing on the effects of degradation of fuel cells on the overall performance of the system. A complete model of the system has been developed using TRNSYS, and a degraded PEM Fuel Cell Subsystem has been incorporated into the model. Then, the effects of the PEM fuel cell degradation on the overall performance of the energy system are estimated. After reviewing the simulation results, the model shows that the PEM Fuel Cell degradation has a substantial impact on the overall system performance causing a system down time of approximately one month in a typical simulation year. Consequently, the stand-alone system is not capable of operating continuously for a complete year when the PEM fuel cells are degraded. Furthermore, an economic analysis is performed for a project lifetime of 25 years and the Levelized Cost of Electricity (LCE) value of the degraded system is found to be 0.08 $/kWh higher than the newly established system. Nevertheless, LCE calculations that are repeated for declining PV panel costs show that the considered hybrid system may be an economically competitive alternative to conventional diesel generators, even when the degradation of PEM based components and their regular maintenance are considered. (C) 2017 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.