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Abstract Copper indium gallium diselenide (CIGS) based technology is actively competing in the global photovoltaic market with high conversion efficiency. Commercial CIGS modules are anticipated to perform on rated output in the field condition for 20 years. Potential induced degradation (PID) is considered as one of the critical concerns among all the current reliability assessment issues. PID accelerated tests have been performed on pre‐commercial CIGS modules to investigate reduction in electrical performance. We report the severe reduction in electrical performance after PID is correlated to the microstructural and chemical properties of the constituent materials. Under extreme PID stress, the cell surface reveals various defects including crater formation. The aim of this article is to explore the consequences of PID induced craters on the efficiency of CIGS solar cells by investigating material degradation kinetics. In this perspective, we present the root cause of PID in CIGS thin‐film modules in relation to microstructural defects by detailed investigation using J‐V analysis, field emission scanning electron microscope (FESEM), Raman spectroscopy, X‐Ray diffraction (XRD), X‐ray photoelectron spectroscopy (XPS) and photoluminescence spectroscopy (PL). This analysis can provide more effective and sustainable research strategies to cultivate more efficient and reliable CIGS technologies in the long run.