Stacking penalties refer to an effectiveness reduction that is incurred when using two or more modules or rigs that affect the same attribute. Most, but not all, mods show in their description if they are subject to this. Modules affected by stacking penalty multiplier include, but are not limited to: Electronic Warfare (target painters, webbers), resistance bonuses (hardeners, etc), Ship speed modules (nanofiber structure, inertia stabilizers and overdrive injectors), and others.
Note that it is the stat bonus that is affected, not the module itself. For example, if you have a nanofiber internal structure (agility and velocity) and an overdrive injector system (velocity), the nano's velocity bonus would suffer a stacking penalty, but not its agility bonus. Similarly with armour or shield resistance modules: if you fit an EM hardener, an Explosive hardener and an omni-hardener (adaptive invulnerability field or adaptive nano plating); the EM/Exp resistances from the omni-hardener would be stacking-penalized but the Kin/Therm resistances would not.
Also of note is that module drawbacks (negative effects) can also be stacking penalized.
The stacking penalty for module number n is
S(n) = 0.5^(((n-1) / 2.22292081) ^2)
1st mod: 100.0% effectiveness
2nd mod: 86.9% effectiveness
3rd mod: 57.1% effectiveness
4th mod: 28.3% effectiveness
5th mod: 10.6% effectiveness
6th mod: 3.0% effectiveness
As is clear, stacking more than 3 or 4 modules or rigs - unless you really have nothing else at all that you could fit there - that affect the same stat is fairly pointless, as your benefit is so tiny.
What suffers stacking penalties?
The first thing to note is that absolute effects are never stacking-penalized, only percentage effects. That is to say, things like +1 warp core strength, +1000 structure HP, +15m signature radius, +400 GJ capacitor are not stacking-penalized because they are not percentage (%) effects.
The second thing is that only modules and rigs are stacking-penalized. Skills, ship bonuses from ship skills, implants, hardwirings and boosters are not. There is one exception to this, and that is the Snake pirate implant sets (the ones that affect velocity); the total velocity modification from this set is stacking-penalized.
The third thing is that negative and positive effects are stacking-penalized separately. So, one +% and one -% effect to an attribute suffers no penalties, whereas with two +% and two -% effects, one of each would only be 86.9% effective. This situation doesn't generally come up in practice though, since if you're fitting modules that both add to and detract from the same stat on your ship, you're probably doing it wrong.
It can be hard to tell exactly what suffers stacking penalties and what does not. For instance, the Overdrive Injector System II gives +12.5% velocity at a cost of -20% cargo capacity, and the description claims it suffers stacking penalties. The velocity bonus is stacking-penalized, but the cargo drawback is actually not. Similarly, the Warp Core Stabilizer II gives you one extra warp core strength at a cost of -40% targeting range and -40% scan resolution. It doesn't mention stacking penalty in the description, but the drawbacks are actually stacking-penalized.
We can learn from this that it is not the module itself which determines whether its effects are stacking-penalized, but rather the attribute affected.
Here's a handy table of what ship effects are stacking-penalized and which aren't. It has an important footnote and is not yet complete (and I'm still not 100% sure about some things). Remember, it is only percentage effects from modules/rigs that are penalized.
Is <insert attribute> stacking-penalized?
| Ship attribute
|| Is it stacking-penalized?|
| Powergrid (including reduced-PG-need effects)
| CPU (including reduced-CPU-need effects)
| Cargo capacity
| Capacitor capacity
| Capacitor recharge rate
| Shield recharge rate
| Shield / armor / hull HP
| Shield / armor / hull resistances
| Shield boost / armor repair bonus
| Sensor strength
| ECM jammer strength
|Scan probe sensor strength||no|
| Scan resolution
| Targeting range
| Signature radius
|Inertia modifier (agility)||yes|
| Duration (cycle time) bonuses (except weapons)
| Missile launcher rate of fire
| Missile damage
| Missile explosion velocity
| Missile explosion radius
| Missile flight time
| Missile velocity
| Turret rate of fire
| Turret damage modifier
| Turret tracking speed
| All optimal range (modules/turrets)
| All falloff (modules/turrets)
|Mining laser yield (including mining drone yield)||no|
| Drone damage
1 Damage Control modules and the Reactive Armor Hardener module work slightly differently, if you fit both modules.
If you only fit one or the other (one Damage Control or one Reactive Hardener), then they are never stacking penalized. They will always give their full damage resistance effect, along with your most effective module that also gives it's full effect as explained above, followed by any other modules that will be stacking penalized. This is one reason why the Damage Control module is so popular; because it is always 100% effective.
If, however, you fit both, then one of them (whichever is less effective) will count as a second module and be stacking penalized accordingly (so, 86.9% effective). This is in addition to your normal resistance modules, of which one will give its full effect and the rest stacking penalized as explained above.
As an example, consider the following five modules all fitted to your fit and their resulting effectiveness: one Damage Control (100% effective), and one Reactive Armor Hardener (86.9% effective); one Armor EM Hardener (100% effective), one Energized Adaptive Nano Membrane (EM resistance 86.9% effective, other resistances 100% effective), and one Adaptive Nano Plating (EM resistance 57.1% effective, other resistances 86.9% effective)
- Turret tracking speed modules are stacking penalized separately to turret tracking speed rigs.
- There's probably more weird exceptions that can be added here...
See also Module Stacking and Speed Modules.