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Many Photovoltaic cells' electrical output is extremely sensitive to shading. There are some non-traditional solar cell manufacturers, thin-film a:Si, that have installed bypass diodes between each cell that minimize the effects of shading and only lose the power of the shaded portion of the array. When even a small portion of a cell, module, or array is shaded, while the remainder is in sunlight, the output falls dramatically due to internal 'short-circuiting' (the electrons reversing course through the shaded portion of the p-n junction).
Diodes are included to avoid overheating of cells in case of partial shading. Since cell heating reduces the operating efficiency it is desirable to minimize the heating.
I've got to admit that when we get down to specifics it's not entirely clear to me either.Perhaps the wording is just a bit ambiguous, but a bypass diode between cells doesn't make sense; if it's between cells then it'll be a link diode and not a bypass diode. A bypass diode would be one that routed around the cell (and what good would it do there?).Also too, if diodes are placed between each cell in a string of series linked cells, and one of the cells becomes shaded, then the diodes either side of the shaded cell can prevent reverse flow through that cell. However, in doing so, the diodes will have broken the series string, so you'd get no output at all from that string unless there is some sort of switching circuitry to bypass the shaded cell when its output drops relative to the others. That sort of electronics would be a bit more complex than just a few simple diodes though.