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Cloudy Skies and Reduced Solar Irradiation Pose Challenges for India’s Solar Farms

India's solar farms face a significant challenge as the country experiences a consistent drop in solar irradiation levels, according to the annual report by SolarGIS. The report highlights that the Global Horizontal Irradiance (GHI) has been below the Long-Term Average (LTA) for the past few years, with 2024 showing a 3%-10% drop in GHI across most regions of India.

This reduction in solar irradiation can significantly impact solar energy production, especially in key solar hubs like Gujarat and Maharashtra, which have experienced persistent cloud cover and prolonged rainy periods due to one of the wettest monsoons in recent memory. While beneficial for agriculture and water availability, the increased cloud cover and extreme weather events have reduced the availability of sunlight, leading to lower energy generation from solar farms.

A 10% drop in GHI could push lower solar plant generation, raising concerns about the financial viability of these projects. This drop could lead to issues such as difficulties in servicing debt, breaches of financial covenants, resizing of debt, and challenges related to minimum guaranteed generation metrics in Power Purchase Agreements (PPAs).

The report emphasizes that this pattern of reduced solar irradiation is indicative of the effects of climate change on solar energy production, which further underscores the need to diversify the energy mix by increasing clean energy sources to ensure energy security in the face of climate variability.