CT: If a part of the solar cell is shaded the cell can heat up to such extreme temperatures that the cell material as well as the encapsulation (EVA) and backsheet will be permanently damaged. A so called hot spot develops.
Under normal operation condition the cell generate current. In contrast, a shaded cell not produce any electricity any more but uses the current from the other cell. The current from the other cells of the strings is driven through the darkened cell. The current flow is then converted into heat.
To prevent the cells from hot spots bypass diodes are used in all standard modules nowadays. If a cell is shaded, the bypass diodes get into operation and redirect the current for the full cell string via a bypass and prevent the cells from the hot spot effect.
Hotspots may still occur. For example, if the bypass diodes are faulty, or if only a very small part of the cell is shaded and thus the bypass diode is not enabled.
Other reasons for hotspots can be high contact resistance at the busbars of the cells (bus bars are the silver coloured lines connecting the cells). Reasons for high contact resistance can be cracked solder joints on the busbars.
The power loss of a module with a hotspot is often very low. Unless there are already big areas with hotspots. Nevertheless, these modules should be replaced, especially when not the cell only but also the surrounding encapsulation material burned.
S: http://www.europe-solar.de/catalog/index.php?main_page=page&id=44 (last access: 25 February 2015)
N: The location on a focusing collector at which the concentrated sunlight is focused and the highest temperatures are produced.