Photovoltaics and the Solar Rebound: Evidence for Germany

Manuel Frondel, Kathrin Kaestner, Stephan Sommer and Colin Vance

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: Recent research suggests that households would increase their electricity consumption in the aftermath of installing photovoltaics (PV) panels, a behavioral change commonly referred to as the solar rebound. Drawing on panel data originating from the German Residential Energy Consumption Survey (GRECS), we employ panel estimation methods and the dynamic system estimator developed by Blundell and Bond (1998) to investigate the solar rebound effect, thereby accounting for simultaneity and endogeneity issues relating to PV installation and the electricity price. Our empirical results suggest that PV panel adoption of households hardly reduces the amount of electricity taken from the grid. As we derive theoretically, this outcome implies that the rebound reaches a maximum that is bounded by about 30% for German households. Yet, we are skeptical of whether there is such a large solar rebound effect given the strong economic incentives to feed solar electricity into the public grid in the past

Keywords: Feed-in tariffs; GMM system estimator; German Residential Energy Consumption Survey (GRECS) (search for similar items in EconPapers)
JEL-codes: C23 H10 Q41 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242356

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