Oil sector ‘regulator’ needs a pipeline for talent

The DGH is looking to end the ‘revolving door’ culture

It may be time for the Directorate-General of Hydrocarbons to create its own cadre to avoid conflicts in its role

The clichéd stereotypes about government offices – as stuffy, overstaffed bureaucratic mazes – seem to slip-slide away at the Directorate General of Hydrocarbons, the nodal body tasked with overseeing many important aspects of the oil and petroleum sector.

That’s because although the DGH, which was set up in 1993, has an approved strength of 220, it has only about 150 people, many of whom are on deputation from public sector undertakings. It additionally has eight consultants with expertise in different fields. Given the expanding ambit of the DGH over these two decades and more, it is actually understaffed.

Set up at a time when private players were entering the oil exploration business in India and there was a need for a supervisory body, the DGH has no cadre of its own. It depends on staff on deputation from the National Oil Companies (NOCs), primarily ONGC and Oil India. But since these companies are themselves into oil and gas exploration, this raises questions of the DGH’s independence.

Over time, the DGH’s responsibilities have expanded. Besides monitoring the production in discovered fields, it is tasked with implementing the New Exploration Licensing Policy and opening up new unexplored areas and looking at futuristic hydrocarbon energy resources.

There have been repeated demands for the creation of a permanent cadre for the DGH or to allow it to recruit independently. But nothing has changed.

Conflict of interestOf all the concerns, it is the potential conflict of interest that worries industry players the most. Since the DGH oversees business across the public and private sectors, the fact that its staff is drawn from ONGC and OIL raises uncomfortable questions. “Remember, the DGH has access to all our data,” says an oil explorer from a large private sector company.

A former Petroleum & Natural Gas Ministry official says, “The system of rotation is unhealthy and ill-serves the independence of the DGH.”

Till recently, even the DGH chief was drawn from NOCs. Rajiv Nayan Choubey became the first bureaucrat without a background in the energy sector to head this upstream technical arm of the Ministry. Now, another career bureaucrat, Atanu Chakraborty, heads the organisation, but the Gujarat cadre IAS officer has served as Managing Director at Gujarat State Petroleum Corp.

So, is creating a cadre a solution or should the DGH get geological experts, petroleum engineers and others as consultants on market-based remuneration, as opposed to the PSU-style perks and incentives they are offered currently?

Niche, technical workThose in the DGH say that a cadre can be built only when the organisational strength is large and the work is of a generic nature. DGH work, on the other hand, is highly technical, and it has tough regulatory duties of monitoring exploration and production contracts. Considering this, the DGH can perform better if it has the flexibility to attract talent from diverse sources, admits a senior DGH official.

Deputations from PSUs typically last three years, extendable to five. How can people who come in for just a few years take complex decisions with long-lasting impact?

Senior DGH officials, speaking on condition of anonymity, acknowledge that short stints don’t engender a learning attitude. “Organisational memory is critical,” they say. Currently, officers expend the initial years of deputation in learning, but invariably, by the time they are trained, their deputation period has wound down.

There have been suggestions to appoint officers for long tenures with DGH and facilitate an assembly line for grooming talent.

DGH officials, however, dismiss concerns about potential conflict in their roles, noting that the responsibilities of officers on deputation are vastly different from their work in the PSUs.

So, why can’t the DGH hire people from the private sector? Earlier, expertise in exploration and production was only available with NOCs, but today the private sector too is talent-rich.

They don’t come cheap, but as a bureaucrat points out, the DGH has hired private sector experts in the past. “What draws experts to the DGH is a high level of motivation to serve with utmost integrity,” he says.

“If an individual is able to combine his knowledge and capability with organisational goals, the DGH will go the extra mile to hire and retain him,” he asserts.

Going forward, the fight for talent will only get more challenging if the DGH does not resolve its staffing issues one way or another.


View original post on Hindu Business line: http://www.thehindubusinessline.com/specials/the-babu-seat-middle-piece/article9459550.ece

Stop and Acknowledge How Much Luck Has to Do With Your Success

By Carl Richards 

View original post on New York Times: 

I have a lucky friend. Chances are you know him. He has written several New York Times best sellers. By any outward appearance, he has officially made it.

I wanted to know what role he thought luck played in his career. Without batting an eye, he said, “Oh, luck has been everything. I can point to at least 10 occasions where pure, dumb luck landed me a huge break in my career.”

I was skeptical. “O.K., maybe you’ve had some luck,” I said. “But you’ve been working hard and ‘playing in traffic,’ right?”

“No,” he told me. “I’m talking about flat-out luck. A guy I met on a plane, a random stranger, an introduction to a friend of a friend who happened to know great book agent — that kind of luck.”

He is not alone. From Warren E. Buffett, who says he won the “Ovarian Lottery,” to the venture capitalist Fred Wilson, a lot of smart, industrious and hard-working people admit that luck played a role. Mr. Wilson writes that he wouldn’t suggest anyone take his career path: “It won’t work unless you get incredibly lucky.”

And yet, it feels as if for every person who credits luck for his or her success, 10 others dismiss luck. They don’t acknowledge the kind of luck that you can’t take credit for when it happens to you — if you are being honest.

Many of us, in fact, seem to be scared to give this kind of luck any credit because we feel doing so devalues our talent or hard work. But here is the conundrum: If bad luck exists and it is not your fault, so does good luck that has nothing to do with your efforts or actions either. And that is O.K. too.

We shouldn’t rely on luck, but let’s stop kicking it in the teeth when it does show up. Go ahead. Practice saying out loud, “I am very, very lucky.” And guess what? You can say those words and still have working hard, learning more and daring to play in traffic be really important.

By recognizing the role luck has played in our lives, we can go forward with just a little more humility and a little less ego. That is a great investment for long-term success.

“We are not against competitive bidding”

The wind energy industry in India is facing major headwinds. Manufacturing costs for turbine producers have gone up amid phasing out of incentives and talks of introduction of reverse auction regime for award of projects. The coming year will be a challenging time for the industry, Damerla Venkata Giri, Secretary General of the Indian Wind Turbine Manufacturers Association tells Yaruqhullah Khan and Sudheer Pal Singh in an exclusive interview. Edited excerpts..

The government is understood to be working on a reverse auction regime for the wind industry on similar lines as solar. Do you think it would work? Already, the margins for the wind industry are claimed to be under pressure.
It is not an issue of margins. We have gone on record to say that we are not against competitive bidding, both the manufacturers and the IPPs. It is the process of bidding which needs to be looked into. The government has already floated a policy paper for 1 GW of wind capacity under reverse bidding which will be sold by a wind state to a non-wind state. The government’s gazette notification of the tariff policy had earlier said the Central Transmission Utility (CTU) charges are to be waived for solar and wind. It has been notified for solar but not for wind. The charges are between Rs 1.17 to Rs 2.50 per unit. The projects will not be viable with this level of CTU charges. Also, a company opting for bidding would require a license for open access. So, the companies would bid without knowing which state the power will be supplied to.

Solar power tariffs have come down over years. Why are wind power producers holding on their prices, even as raw materials costs have declined?
Solar cannot be compared with Wind. There are no hard and fast standards in solar – any panel or structure can be set up. In wind, developers need to have a manufacturing facility for turbines. Companies have pumped Rs 25,000 crore in setting up such facilities so far. We can manufacture 9,500 Mw per annum which can be ramped up to 15,000 Mw per annum. However, we are chasing a market of only 3,500 Mw capacity per annum. The rest of the capacity is going waste. On the top of that, we cannot import old turbines. And they should have a certified power curve and an accreditation certificate. Our localization is upto 75 per cent. This means we are contributing to Make in India.

So, how have the components of the cost moved for wind players?
Our costs are dictated by the size of the turbine and the sales volumes and the height of the turbine and the length of the blade. The government has imposed a minimum import price on steel. So, either we pay duty on imports or buy from the local market where the price is Rs 10,000 per tonne more. Also, the best of the wind sites are gone, leaving us with low wind regime sites. This means additional cost to be incurred on hardware. The same logic applies to blade length. It has gone up to 55 meter today as compared to 40 meter earlier. In addition, we have costs related to design of turbines. Add to this different costs related to safety. All these issues are not there with solar plants. So, the capex of wind and solar can never be compared.

What is the average tariff for wind projects at present?
The lowest tariff at present is Rs 4.16 per unit in Tamil Nadu and the highest is in Rajasthan at Rs 5.60 per unit.

What are the issues in tapping into the high wind potential sites, even within the low wind regime?
The main issue is of forest clearance. This is true for sites like those in the Western Ghats. The Madhav Gadgil committee report had recommended ban on industrial activity including mining in this area but it had said that wind projects can be put up at selective locations. We even have had to fight for a long time with the Central Pollution Control Board authorities to get the wind industry removed from the Red category list. The other major problem is of movement and logistics.

Despite the problems, India added 3,400 Mw wind capacity last year and seems to be on track to add 4,000 Mw this year.
Every year, at least one state does better than others. It was Madhya Pradesh last year, adding 1,126 Mw. This was possible because the tariff was good. But it has been slashed from Rs 5.19 to Rs 4.78 per unit. This year, Andhra Pradesh would add around 1,500 Mw. Also, the Accelerated Depreciation (AD) benefit has been cut down from 80 per cent to 40 per cent by the finance minister beginning 2017. At the same time, the GBI benefit is coming to a stop from April 2017. There is a question mark over whether the GBI would be revived or not. In addition, wind energy development is facing major issues in Maharashtra. There, more than 900 Mw capacity projects are stuck in different categories — where the machines have been commissioned and the PPA is signed but the company is not getting paid or the turbines are set up but there is no PPA. Also, there are cases where the turbines are erected but not commissioned. This is around Rs 6,000 crore worth of projects stuck. In Tamilnadu, there had been delays of around 15 months in payment. That delay has now come down. Payments are stuck for 8-10 months in Rajasthan also.
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India adds 3.6 GW to solar capacity

KOLKATA: India’s total installed solar capacity has grown by over 80% in the last 12 months to reach 8.1 GW. Out of the 3.6 GW capacity added in this period, 2.7 GW has come from four southern states with Tamil Nadu alone adding over 1.2 GW. These six states account for 80% of the capacity added in India.

Data compiled by Bridge to India indicates that Tamil Nadu now ranks number 1 for commissioned capacity in both wind and solar. Feed in tariff for solar has been about Rs 7.01 unit.  

Including the current pipeline of 14 GW, 55% of total current and planned capacity will be located in four southern states; fresh demand from these states is expected to be muted.  

Market growth beyond 2018 will depend on fresh demand coming from states such as Maharashtra, Gujarat and Uttar Pradesh  

As of date, three western and central states of Rajasthan (1,307 MW), Gujarat (1,112 MW) and Madhya Pradesh (756 MW) and three southern states of Tamil Nadu (1,368 MW), Andhra Pradesh (961 MW) and Telangana (923 MW) account for around 80% of India’s total installed solar capacity as against only 38% of India’s overall power consumption.  

The remaining 23 states including some of the largest power consuming states like Maharashtra, Karnataka and Uttar Pradesh account for just 20% of the installed capacity.  

In the initial phase of solar sector development in India, until 2014, bulk of solar capacity addition came up in Rajasthan, Gujarat and Madhya Pradesh (57% of total). But the southern states have taken decisive lead in the last year driven primarily by their growing power needs.  

An analysis of recently completed tenders totalling over 14 GW shows that this trend is likely to continue over the next 2 years with the southern states accounting for 60% of this pipeline (8.7 GW). Karnataka has the largest pipeline of projects, 3.3 GW in total, under various stages of development.  

“Such heavy regional concentration of solar capacity addition raises two key issues. First, where is future demand going to come from? This is a growing concern for the sector as India faces a unique problem of excess power supply and most of the big power consuming states seem understandably reluctant to set up new solar capacities,” said Jasmeet Khurana, associate director – consulting, from Bridge to India  

“Second, grid balancing and management would become increasingly critical for sustainable growth of the sector. The government is planning upgrades of transmission infrastructure through its green energy corridor program, but such projects take much longer than the 12-18 months it takes to commission a solar project. States with high renewable penetration including Tamil Nadu and Rajasthan are already facing significant grid curtailment upsetting project cash flows and return expectations of investors,” he said.
View original post: http://economictimes.indiatimes.com/industry/energy/power/india-adds-3-6-gw-to-solar-capacity/articleshow/53823001.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst


India and Bhutan: Cross-Country Power Connectivity

On July 30 and 31, 2012, India witnessed its worst power failure in a decade. Eight states including Uttar Pradesh, Uttarakhand, Rajasthan, Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Union Territory of Chandigarh as well as New Delhi were in complete darkness as the northern grid collapsed. The second day, July 31, saw another acute power failure that affected more than 600 million people in 20 states across the country. Essential services such as hospitals, metros, schools and water supplies were interrupted for almost 72 hours.

Power failure is not new to India. On the contrary, power failures are now considered almost as “normal” events. A 2015 report states that Delhi witnessed 1000 long power failures within the first two weeks of June last year affecting more than 14 districts.

Besides localized occurrences of power cuts owing partly to regulatory and governance problems, the central reason for India’s infrastructure inadequacy in the power sector is more systemic and has wider implications for the country. In January 2001, the national grid failed, affecting 230 million people in the northern Indian states of Punjab, Haryana, Uttar Pradesh, Kashmir, Rajasthan and Himachal Pradesh. There was a similar five-state power failure in 2002 due to the excess withdrawal of power by Madhya Pradesh, a leading agricultural state.

Frequent power failures are routine, especially during peak summers when the temperatures rise to 48 degree Celsius, particularly in the north and northwest India. Delayed or insufficient monsoons cause significant problems, especially to the farming community that relies heavily on groundwater withdrawal for irrigation.

Lack of discipline on the part of states in drawing more electricity than the one they have been allocated by the regional load dispatch center further aggravates the situation leading to disastrous power failures. Additionally, state utilities often choose to induce intentional power cuts to reduce losses, or as a result of technical or administrative failures. All these factors contribute to recurring power cuts all over the country.

Despite several similarities in the causes behind such events, the 2012 power failure was different for two reasons. First, if one were to consider the sheer scale and magnitude of the July 2012 event, the numbers add up to almost half of the Indian population affected, in addition to economic losses estimated at $2 billion. Second, the incident thrust India’s struggling power sector into the limelight.

India’s electricity is generated by the integrated working of a pan-national electric grid, comprising the Northern grid, also called NEW (Northern, Eastern, North Eastern and Western) and the Southern grid. Each of these five regional grids operate in synchronous mode, which means that power in these regions can flow seamlessly as per relative load generation balance.

The Northern grid, which supplies power to the heavily irrigated farmlands of Punjab, Haryana and Uttar Pradesh, is in energy deficit and draws its power from the surplus regions. In 2012, a late monsoon followed by soaring demand for electricity incentivized excessive withdrawals by the Northern grid. Before 2013, the Southern grid was connected to the NEW grid through asynchronous mode, remaining isolated from any adverse impact, unlike the Northeastern and Eastern grids. Inevitably, the NEW grid collapsed due to overload and mismanagement of an overstretched generation system, affecting states across northern, eastern and northeastern region comprising almost half of the country’s population.

Soon after the crisis, a three-member expert committee was created by the Ministry of Power. Aging infrastructure, power withdrawals in excess of established limits, and poor inter-state coordination were identified as key bottlenecks. However, behind these technical and institutional anomalies is a perpetual demand and supply mismatch. Despite India’s ambitious growth targets for the economy, there is simply not enough reliable energy supply to meet the country’s current or future growth projections.

The demand for energy in India has seen a 6.9 percent average growth since 1990s, rising to 897 terawatt-hours (TWh) from 376 TWh in 2000 without a parallel rise in production capacity. Fuel supply risks, severe transmission and distribution losses estimated to be as high as 50 percent in some states combined with the slow pace of adding power generation capacity have resulted in a crisis situation. According to latest official estimates, peak electricity deficit in the country remains at 2.4 percent, a vast improvement from 13 percent a decade ago, nonetheless a significant gap that needs to be reduced.

Coal-based energy and hydropower are the two primary contributors to India’s power sector, with coal occupying almost 60 percent of the energy mix. While there has always been a low supply of high-grade coal in India, the summer of 2012 witnessed a double jeopardy: hydropower, which supplies 21 percent, or 38,106 MW, to India’s power sector, decreased by almost 20 percent of its normal generation capacity due to a delayed monsoon. Drought spells disaster for India, which relies heavily on rainfall for its agricultural production. More frequent occurrences of El Niño have increased the incidence of droughts in the country. As expected, demand for electricity increased as more groundwater had to be pumped out to meet irrigation needs.

Four years after the 2012 event, there are two significant observations to be made regarding India’s energy sector. One, the present national government upon assuming power in 2014 shifted the trajectory of the power sector towards renewable and clean energy. This is in line with India’s domestic and international commitments to combat climate change, as reflected in its ambitious intended nationally determined contribution. India has committed to reduce emission intensity of its GDP by 33-35 percent (compared to 2005 levels) and achieve 40 percent cumulative electric power installed capacity from non-fossil fuel-based energy resources, both by 2030. Given India’s history of chronic power shortages due to the unavailability of coal and natural gas supplies, these initiatives will help the country accomplish a step change in the long term. Two, India is now proactively diversifying its energy sources by increasing regional power imports. With domestic energy supply unable to match demand growth, India’s dependence on imported energy is inevitable. In this respect, a successful power-trading relation with the neighboring country, Bhutan, demonstrates the huge energy gains from such integration.

Ever since the 1960s, when India began investing in Bhutan’s largely untapped hydropower sector (accounting for almost one-third of India’s total hydropower potential), both countries have enjoyed a mutually beneficial arrangement. Despite its own immense endowments of water resources, India has not been able to exploit its hydropower potential. Over 93 percent of the total potential in the north eastern region remains untapped, primarily in parts of the Brahmaputra river basin due to regulation and implementation issues. In this scenario, India’s relationship with Bhutan serves as a major boost to India’s power sector.

Reliability and trust form a key pillar in the India-Bhutan bilateral relations. During the 2012 blackout the Indian government approached Bhutan for assistance to meet its power deficit. The emergency power brought in on a priority basis was used to electrify the Delhi Metro, the prime minister’s residence as well as a leading hospital in the national capital and restore the Eastern grid.

It is true that India’s power sector, largely handled by loss-making public sector companies, is in dire need of a long-term strategy. However, the solution to the electricity dilemma is not limited to solving bottlenecks in the domestic power sector. Diversification of energy sources to increase power generation capacity is just as significant, especially in view of the rising demand for energy on account of an expanding manufacturing sector, rising domestic power consumption due to urbanization and increasing integration of previously unconnected households into the power grid through various government schemes.

Reliable power supply is an important aspect of access to electricity. This can only be resolved by investing in technical infrastructure that increases availability of power. Regional interconnectivity could help countries manage power shortages, improve efficiency and also prevent colossal failures such as breakdown of a national power grid as witnessed in 2012.  India’s bid to import 10,000 MW surplus power from Bhutan by the year 2020 and support for the Bangladesh, Bhutan, India, Nepal (BBIN) agreement of the SAARC nations is a promising strategy with high future dividends in energy security.

Dr. Cecilia Tortajada is a Senior Research Fellow at the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore. Ms Udisha Saklani is a former research assistant at the same Institute.

View Original Post on The Diplomat: http://thediplomat.com/2016/06/india-and-bhutan-cross-country-power-connectivity/


Solar on track to break growth records, but analysts say market challenges loom

Solar on track to break growth records, but analysts say market challenges loom


The solar market is on track to break growth records this year, but analysts say the numbers may paper over some emerging market challenges for installers.

A joint report from GTM Research and the Solar Energy Industries Association (SEIA) said the solar industry is projected to add 14.5 GW of capacity this year, a 94% increase over the 7.5 GW installed in 2015. In the first quarter alone, solar developers installed 1,665 MW of solar PV nationwide, adding more new capacity than coal, natural gas and nuclear combined.

Typically, first quarter growth is the weakest of the year, but it appears the growth is building off momentum from 2015, largely due to declining system prices and an 11th-hour extension of the investment tax credit for solar installations.

Price declines for solar systems were about as impressive as installation growth last year, according to another GTM report: The price of non-residential solar installations dropped 8.3% to $1.88/watt in the first half of 2016. Residential installations dropped 8.8%, to $3.00/watt.

If continued, these drops in prices could help the solar sector hit the U.S. Department of Energy’s “impossible dream” price target of $1.00/watt by 2020, GTM noted.

Even so, the recent bankruptcy of SunEdison and declining stock prices for other leading installers raise questions among investors about the sector’s long-term health, according according to a recent research note from Deutsche Bank Securities.

The sector “has still not completely emerged from the shadows of the SunEdison bankruptcy and balance sheet quality remains the biggest source of investor concern,” the bank’s Vishal Shah wrote. “Complicating the investment process is the complexity of solar business models and difficulty in modeling a path for sustainable cash flow generation.”

The extension of the ITC, while a boon to the solar industry, could also lead to oversupply in the module market, the Deutsche report noted. Investors are also warily watching the heated net metering battles taking place in key states like Nevada and Arizona, casting doubt over the sustainability of the lease financing model of many solar developers.



Price declines for solar systems were about as impressive as installation growth last year.

Credit: GTM Research


Building on 2016 growth: the challenges ahead

“Without question, the extension of the federal investment tax credit [ITC] ranks as the most important policy development for U.S. solar in almost a decade,” the GTM installation report noted. “The wheels are already in motion for U.S. solar to benefit in 2016 from a double-digit-gigawatt pipeline of late-stage utility PV projects that rushed through development last year.”

Benjamin Gallagher, the author of the GTM report on pricing, said utility-scale solar systems are expected to compose nearly 75% of the new capacity.

“With the extension of the ITC, the utility-scale developer is back in the driver’s seat,” Gallagher said.

But the Deutsche Bank note doesn’t paint an entirely happy picture for the solar market in the second half of 2016. Shah wrote the fundamentals of the solar market will be “challenging in 2H16,” though it may not alter pricing forecasts.

Two important factors could combine to produce slower demand in the upcoming six months, Shah suggested. The first is the absence of a rush to meet the year-end ITC reversion. The second is a drop in demand from China’s market when it lowers its feed-in tariff at the end of June.

As a result, “investors are rightly concerned about the risk of oversupply from 2H16,” Shah noted. “Moreover, a significant amount of new supply is expected to come online in 2017, raising concerns over potential pricing/margin pressure for module manufacturers.”

Before the U.S. investment tax credit extension occurred at the end of 2015, developers were racing to get their projects online by the end of 2016 to qualify for it. Module suppliers knew developers needed their product and “looked to get as much margin as possible,” Gallagher said.

Now developers are asking their suppliers to rebid projects or come back with better pricing or they will wait until next year to build,” he said. “That shifts the pressure to suppliers to drive down costs.”

Impact on markets, module manufacturers

Falling demand for modules built by companies like SunPower and First Solar could compromise their bottom lines. But it could also lead to a drop in price for modules as suppliers look to clear the market. Since both companies are vertically integrated, such a situation could lead to a “pickup in business momentum,” Shah noted.

“It is also possible this price reduction forecast is high,” GTM’s Gallagher added. “If the global solar market is flatter than we expect due to reduced demand in China, we may see the price of modules decline more and more rapidly.”

It’s uncertain whether Shah’s concerns about a decrease in global demand due to China’s FIT reforms will pan out, said Mohit Anand, senior analyst at GTM. That big demand drop, he said, “is only for the second half of this year … Our estimate for next year for China is 19 GW to 20 GW installed despite the reduction in the FIT this year.”

Back in the U.S., solar prices have already dropped so low in some regions that it can both “compete with and complement new natural gas plants,” the GTM report noted. If this trend continues to spread, it could spark a “wave of geographic demand diffusion.” Already, grid operators in markets like SPP are noting many utilities adding utility-scale solar investments when they had bet on wind and natural gas before.

Even so, the residential solar market segment could struggle since “investors are generally concerned about the net metering policy changes in a few states such as Arizona and Nevada, and implications for policy decisions in other states,” Shah wrote.

In January, Nevada regulators scaled back the retail rate remuneration for net metering and increased fixed charges. And Arizona, which has been in the national spotlight for its rancorous debates over the net metering policy, is now experiencing another resurgence as major utility Arizona Public Service is now asking its regulators to approve a $0.0299/kWh credit for 2017.

If these net metering debates over how to compensate rooftop solar proliferate in other states, it could severely challenge the value proposition of residential solar, and it’s unclear if

most residential solar installers have the fundamentals and financing to weather such challenges, Shah argued.

Companies like SolarCity and Vivint must demonstrate “improving bookings momentum and execution on the financing front,” Shah says. And resolving the “net metering policy overhang” will also be necessary for installation company values to stabilize, he added.

Beyond 2020, the future is hazy

Despite the potential financial risks, especially in the residential solar market, the ITC extension will “will serve as a long-term policy bridge to help transform solar PV into an increasingly mainstream source of power generation in the U.S. electricity market,” the GTM installation report asserted

But the future for rooftop solar beyond 2019 is hazy.

A tax credit will remain available past 2019 but steps down to 26% in 2020, 22% in 2021, and 10% for third-party-owned residential, non-residential, and utility PV projects in 2022. A “commence construction” provision will also allow projects that go online through the end of 2023 to qualify for the credit.

This is a major achievement for the industry, Gallagher stressed. “Solar at below $1/wattdc is a strong message to people who are skeptical about solar power,” he said. “A lot of market dynamics affect solar’s competitiveness with fossil fuel-generated electricity, but reduced capital costs are a major element.”

Even so, there are too many variables to make a reliable forecast for beyond 2020, Gallagher said. “Once the industry gets past 2016 and 2017 and the shakeup that followed the ITC extension, it will begin shifting its attention to 2021. But this is what solar looks like when it is at scale and being installed with lean and efficient business models.”

View Original Post on Utility Drive: http://www.utilitydive.com/news/solar-on-track-to-break-growth-records-but-analysts-say-market-challenges/421163/