According to research by the rating firm Crisil, solar power farms in India have seen their efficiency grow from 59% to 75% due to more prolonged and sunnier days. The percentage of projects that reached the P90 generation level increased, with 75% stating that they achieved P90 in the current financial year, compared to 59% in the previous year’s equivalent period. Investors can evaluate cash flow and consider variations in the generation when using the P90 generation estimate, which forecasts the amount of energy that will be generated with a confidence level of 90% throughout the lifetime of the solar project.
For instance, if the annual output has a P90 value of 10,000 kWh, it will produce more than 10,000 kWh of power 90 percent of the time. Suppose power generation is one percentage point lower than the P90 threshold. In that case, the debt servicing cushion is decreased by fifteen percent, and the return on equity is reduced by one and a half to two percentage points, according to the report. According to the investigation findings, an increase in irradiation can be attributed to weather and continues to play an essential role. A longer time of irradiation that is decreasing can lead to a reduction in confidence in cash flows, which can then lead to a decrease in interest from both loan and equity investors.
