Measuring the Effects of Policies on the Adoption and Prices of Solar Energy Systems
(Natural Resource Security, Energy and Environmental Policy)
*Names in bold indicate Presenter
Governments play a central role in solar energy because the technology interacts with multiple potential market failures: it avoids the negative pollution externalities of its fossil fuel-based competitors; its deployment generates positive learning externalities; adoption involves asymmetric information between consumers and installers; and natural monopolies exist in the electricity distribution system to which it is connected. Although many of the social costs and benefits of PV remain non-priced, governments are subsidizing PV adoption at the level of tens of US$ billions per year. Those amounts are small compared to the possible future levels of combined public and private investment in PV over the next 15 years, which are on the order of a trillion dollars. Though government policy clearly plays a large role in solar deployment, understanding the details of that influence is central to enabling further PV price reductions, which will be necessary to sustain PV capacity growth and enable PV to contribute meaningfully to addressing climate change and other energy-related problems, such as air pollution and energy security.
Our panel includes multiple perspectives on the general topic of how policies affect markets for solar energy. In her paper, Bixuan Sun, a PhD student in Applied Economics at University of Minnesota, looks at the role of state level policy, where most of the policy innovation and most of the variation has taken place. Her paper is notable in that it uses machine learning tool to look at the interactions between policy components and non-policy variables in affecting the adoption of solar. Gilbert Michaud, Adjunct Assistant Professor at Ohio University, uses a punctuated equilibrium framework and interviews with actors in the solar industry to assess the drivers of and barriers to an emerging business model, known as community solar, in which dozens of customers subscribe to a larger solar facility. Prof. Varun Rai and his co-author D. Cale Reeves directly estimate the effect of the California Solar Initiative (CSI) rebate program to accelerate the adoption of residential solar PV while accounting for contextual differences across the program’s implementation. Finally, Greg Nemet, from the La Follette School of Public Affairs at University of Wisconsin-Madison, and colleagues, assess the reasons for the existence of price dispersion in solar installations in the U.S. using data on the prices of 234,000 systems in 34 U.S. states.
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