The present work focuses on two strategies contributing to the development of high efficiency, cost-effective photovoltaic (PV) technology for renewable energy generation: the design of new materials offering enhanced opto-electronic performance and the investigation of material degradation processes and their role in predicting the long-term reliability of PV modules in the field. The first portion of the present work investigates the integration of a novel CdTe-ZnO nanocomposite material as a spectral sensitizer component within a thin-film, hybrid heterojunction (HJ) PV device structure. Quantum-scale semiconductors have the potential to improve PV device performance through enhanced spectral absorption and photocarrier transport. This is realized via appropriate design of the semiconductor nanophase (providing tunable spectral absorption) and its spatial distribution within an electrically active matrix (providing long-range charge transport). Here, CdTe nanocrystals, embedded in an electrically active ZnO matrix, form a nanocomposite (NC) offering control of both spectral absorption and photocarrier transport behavior through the manipulation of nanophase assembly (ensemble effects). A sequential radio- frequency (RF) magnetron sputter deposition technique affords the control of semiconductor nanophase spatial distribution relative to the HJ plane in a hybrid, ZnO-P3HT test structure. Energy conversion performance (current density-voltage (J-V) and external quantum efficiency (EQE) response) was examined as a function of the location of the CdTe nanophase absorber region using both one dimensional solar cell capacitance simulator (SCAPS) and the experimental examination of analogous P3HT-ZnO based hybrid thin films. Enhancement in simulated EQE over a spectral range consistent with the absorption region of the CdTe nanophase (i.e. 400–475 nm) is confirmed in the experimental studies. Moreover, a trend of decreasing quantum efficiency in this spectral range with increasing separation between the CdTe nanophase region and the heterojunction plane is observed. The results are interpreted in terms of carrier scattering/recombination length mitigating the successful transport of carriers across the junction. The second portion of the research addresses the need for robust PV performance in commercial module as a primary contributor to cost-effective operation in both distributed systems and utility scale generation systems. The understanding of physical and chemical mechanisms resulting in the degradation of materials of construction used in PV modules is needed to understand the contribution of these processes to module integrity and performance loss with time under varied application environments. In this context, the second part of present study addresses microcracking in Si–an established degradation process contributing to PV module power loss. The study isolates microcrack propagation in single-crystal Si, and investigates the effect of local environment (temperature, humidity) on microcrack elongation under applied strains. An investigation of microindenter-induced crack evolution with independent variation of both temperature and vapor density was pursued in PV-grade Si wafers. Under static tensile strain conditions, an increase in sub-critical crack elongation with increasing atmospheric water content was observed. To provide further insight into the potential physical and chemical conditions at the microcrack tip, micro-Raman measurements were performed. Preliminary results confirm a spatial variation in the frequency of the primary Si vibrational resonance within the crack-tip region, associated with local stress state, whose magnitude is influenced by environmental conditions during the period of applied static strain. The experimental effort was paired with molecular dynamics (MD) investigations of microcrack evolution in single-crystal Si to furnish additional insight into mechanical contributions to crack elongation. The MD results demonstrate that crack-tip energetics and associated cracking crystal planes and morphology are intimately related to the crack and applied strain orientations with respect to the principal crystallographic axes. The resulting fracture surface energy and the stress-strain response of the Si under these conditions form the basis for preliminary micro-scale peridynamics (PD) simulations of microcrack development under constant applied strain. These efforts were integrated with the experimental results to further inform the mechanisms contributing to this important degradation mode in Si-based photovoltaics.