The accurate prediction of the performance output of photovoltaic (PV) installations is becoming ever more prominent. Its success can provide a considerable economic benefit, which can be adopted in maintenance, installation, and when calculating levelized cost. However, modelling the long-term performance output of PV modules is quite complex, particularly because multiple factors are involved. This article investigates the available literature relevant to the modelling of PV module performance drop and failure. A particular focus is placed on cracks and hotspots, as these are deemed to be the most influential. Thus, the key aspects affecting the accuracy of performance simulations were identified and the perceived relevant gaps in the literature were outlined. One of the findings demonstrates that microcrack position, orientation, and the severity of a microcrack determines its impact on the PV cell’s performance. Therefore, this aspect needs to be categorized and considered accordingly, for achieving accurate predictions. Additionally, it has been identified that physical modelling of microcracks is currently a considerable challenge that can provide beneficial results if executed appropriately. As a result, suggestions have been made towards achieving this, through the use of methods and software such as XFEM and Griddler.