Photovoltaic cells are prone to thermal degradation as surface temperature exceeds critical value. Temperature reduction is one of the options for efficiency improvement. An attempt is made to analyze the cooling effect on temperature drop. At different depths and for various flow rates of water in underwater environment, the best performance is observed with a maximum efficiency of 21.6% at a depth of 4 cm and 17.4% for a flow rate of 30 ml/ sec at an optimized depth. An average reduction in temperature of 43.1% for no flow conditions and 47.6% for flow conditions has been observed in comparison with dry panel conditions.