This study examines how photovoltaic (PV) installation parameters—such as tilt angle, azimuth angle, row pitch, height above ground, and albedo impact PV module operating conditions in harsh climates, focusing on irradiance levels and module temperature. It evaluates how these parameters influence degradation rates and the overall lifetime of PV modules. The study correlates variations in module lifetime to lifetime energy generation, economic factors, and environmental impacts. A novel PV optimization strategy is proposed, incorporating lifetime energy yield, levelized cost of electricity, and greenhouse gas emissions, rather than focusing solely on economic metrics. Findings show that installation parameters significantly affect climate stressors and PV module lifetime, making their consideration crucial. For instance, higher tilt angles are recommended to reduce stressor levels and extend the module's lifetime, optimizing energy yield while mitigating losses due to soiling. Height and albedo are identified as particularly sensitive, especially for bifacial modules, where small changes lead to significant differences in lifetime and energy yield. The study highlights an optimal albedo of ≈0.5, aligned with desert sand, suggesting that albedo boosters may not be necessary in desert climates. This approach offers valuable insights for balancing long‐term performance, environmental impact, and economic factors in PV system design.