Photovoltaic (PV) module reliability issues, due to silicon cell cracking, are gaining more and more attention due to increasing demand for solar power and reduction of cell thickness to reduce cost. Recent reports show significant effect of encapsulation polymer material on cell cracks leading to the idea of tailoring encapsulation materials for more reliable PV modules. This paper investigates the effect of encapsulation modulus on the cell residual stress using Synchrotron scanning X-ray microdiffraction (µSXRD), which has been proven to be an effective technique to probe the stress in silicon solar cells, especially once they are encapsulated. The post lamination residual stress in the encapsulated multi-crystalline silicon (mc-Si) solar cells was reported for the first time using µSXRD in this manuscript and provide quantitative evaluation of the effect of encapsulation modulus on the cell residual stress. Further, simple approximate finite element (FE) model was also developed to evaluate the effect of the encapsulation polymer on the cell stress. The FE simulations predict the trend of the stress variation with encapsulation polymer modulus very well. Dynamic mechanical analysis and rheological testing of the encapsulation polymers was also performed to correlate the polymer behaviour with the experimental and simulated stresses. Both experimental and simulation results show a similar trend of significant cell stress variation with encapsulation polymer modulus. In the case of external loading, the temperature of load application is observed to be very significant as it dictates the elastic state of the encapsulant, leading to critical conclusion that the encapsulant needs to be selected based on elastic behaviour over the temperature history of the encapsulant during module fabrication and operation. The results and discussion presented are expected to be very useful for development of more reliable PV modules.