Shoulders have been observed in the measured semilogarithmic current‐voltage (I–V) characteristics of high‐efficiency passivated emitter and rear locally diffused silicon (Si) solar cells. An improved understanding is given of the mechanism proposed to cause these nonidealI–Vcurves. It is shown that this mechanism is due to the electrostatic behavior of free carriers at the Si/SiO2interface of oxidized Si devices in which the Si adjacent to the oxide is depleted (or in some cases, inverted) at equilibrium, and results in saturation of the surface recombination rate. Two‐dimensional numerical computer simulations are used to investigate this mechanism and its effect on cell performance. In addition, the simulations provide a means of estimating the extent to which lateral conduction in the rear surface channel also contributes to the observed recombination saturation in these cells. It is shown that ohmic limitation of lateral conduction occurs, however, the lateral current flows are negligible in comparison to the recombination currents due to the former mechanism. ©1995 American Institute of Physics.