Solar rebound: the unintended consequences of subsidies

Nicolas Boccard () and Axel Gautier ()

No 2020002, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Many jurisdictions use net metering to record the power exchange between solar photovoltaic panels and the grid, thus valuing home production at the electricity retail rate. However, if over the billing period, production exceeds consumption, the surplus remains freely available for consumption. In Wallonia (Belgium), this system was combined with generous subsidies for solar panels that encouraged households to set-up large installations, possibly exceeding their consumption needs. In this context, we test for a possible rebound effect. Based on a large sample of residential PV installations, we observe that a large proportion of households oversized their installation to benefit from the subsidies and, later ended-up consuming most of their excess production. The effect is econometrically highly significant. There are thus evidence of a strong increase in energy consumption by residential PV owners, that runs counter the original policy design.

Keywords: rebound effect; solar PV; net metering (search for similar items in EconPapers)
JEL-codes: C51 Q41 Q42 Q48 Q58 (search for similar items in EconPapers)
Date: 2020-01-01
New Economics Papers: this item is included in nep-ene and nep-reg
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Related works:
Journal Article: Solar rebound: The unintended consequences of subsidies (2021)
Working Paper: Solar Rebound - The Unintended Consequences of Subsidies (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2020002

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