Valuing Solar Subsidies

Bryan Bollinger, Kenneth Gillingham and Justin Kirkpatrick

No 33368, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Individuals trade present for future consumption across a range of economic behaviors, and this tradeoff may differ across socioeconomic groups. To assess these tradeoffs, we estimate a dynamic model of residential solar adoption and system sizing in California using household-level data on solar irradiance, electricity consumption, and electricity rates that offer plausibly exogenous variation in the future benefits from adopting relative to upfront costs. We find implicit discount rates of 15.3%, 13.8%, and 10.0% for low-, medium-, and high-wealth households. Counterfactual simulations demonstrate opportunities to reduce the regressivity of solar adoption, increase policy cost-effectiveness, and improve welfare for low-wealth households.

JEL-codes: L94 Q48 (search for similar items in EconPapers)
Date: 2025-01
New Economics Papers: this item is included in nep-ene and nep-env
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Working Paper: Valuing Solar Subsidies (2025)
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