This study assesses a 10 kW grid-connected solar PV system in Algeria's harsh steppe climate in M'Sila, characterised by intense solar radiation and considerable temperature variations. High temperatures reduce photovoltaic conversion efficiency and increase thermal stresses, prompting a detailed investigation into PV systems' challenges in such environments. The research reveals that M'Sila's system generates 7,794.8 kWh annually, with an efficiency range of 16%–19.2%, peaking slightly. Unique thermal management techniques are necessary to sustain efficiency, as extreme heat causes efficiency losses of up to 20%. The levelized cost of energy (LCOE) of $0.0138 per kWh makes the system economically viable in these conditions. The investment proves worthwhile, yielding annual savings of $304. The M'Sila solar system also reduces CO₂ emissions by 4.07 tonnes per year. Algeria’s shift toward renewable energy and carbon reduction gains an additional $59.11 annually in “carbon credit” from these emissions reductions. This research supports Algeria’s renewable energy goals by guiding energy companies and decision-makers to improve efficiency and minimise environmental impact in steppe regions like M'Sila.