Adoption, incidence and welfare impacts of interest-free loans: evidence from solar PV

Leanne Cass, Misato Sato and Aurélien Saussay

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Steep declines in solar PV costs raises questions about whether, and how, to continue support. We leverage administrative microdata on the near-universe of UK domestic PV and a matched difference-in-differences design exploiting devolved UK policy to evaluate the zero-interest Home Energy Scotland loan. The loan increased household adoption even in a low solar-potential setting and shifted take-up towards smaller systems. Distributionally, gains were broad and not concentrated among high-income areas, and were relatively strong in urban and accessible rural locations, yielding a less skewed wealth distribution and geography of installations. A loan-specific marginal value of public funds shows welfare gains at modest fiscal cost via a consumption-smoothing, financing channel. Zero-interest loans can cost-effectively expand household PV while promoting equitable access.

Keywords: Renewable Support Policies; Interest-free loans; Residential PV; Distributional impacts; MVPF (search for similar items in EconPapers)
Date: 2025-12-12
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp2139

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