Abstract: This paper introduces a new concept within shadow segmentation for usage in shadow removal and augmentation through construction of an alpha overlay shadow model. Previously, an image was considered to consist of shadow and non-shadow regions. We construct a model that accounts for sunlit, umbra and penumbra regions. The model is based on theories about color constancy, daylight, and the geometry that causes penumbra. The behavior of the model is analyzed and a graph cut energy minimization is applied to estimate the alpha parameter. The approach is demonstrated on natural complex image situations. The results are convincing, but the alpha gradient in penumbra must be improved.