Solar photovoltaic (SPV) systems installed on water bodies, i.e., floating solar PV (FSPV) and canal top solar PV (CTSPV), have gained significant propulsion in recent years, not only because of their enormous potential but also because of other additional co-benefits. This review article discusses the scope and potential of FSPV and CTSPV, an ambitious plan, and various upcoming FSPV projects in India. The review focuses on different degradation modes, failure mechanisms, characterization techniques and distinct factors influencing the degradation of SPVs operating in tropical climates. It was explored that potential induced degradation (PID) and materialistic degradation have a significant impact on the performance of SPV. The paper provides an overview of the test procedures outlined in IEC-61215 and IEC-62804 that pertain to SPV performance under hot and humid conditions. Additionally, it presents a comprehensive review of the various methodologies adopted for accelerated damp heat testing to predict the life of PV systems in such conditions, and their significant analytical and visual outcomes is elucidated. Also, till date, no simulation tool has been available to assess the long-term performance of SPV in a humid environment. As this energy generation technique is still in its infancy, this study will help many researchers and solar power developers recognize the impact of elevated and prolonged exposure to temperature and humidity on generation, degradation, and mode of failure for different SPV technologies.