The price of risk in residential solar investments
Stefano Carattini and
Ecological Economics, 2021, vol. 180, issue C
Households are key actors in decarbonizing our economy, especially when it comes to investments in a decentralized energy system, such as solar photovoltaics (PV). The phasing-out of feed-in tariffs, and unexpected policy changes in the wake of an increasingly polarized climate debate, require residential PV investors to bear new risks. Conducting a discrete choice experiment coupled with a randomized informational treatment among potential residential solar investors in Switzerland, we test whether policy and market risks deter households from investing in solar. We find that salient policy risk reduces households' intention to invest in solar, especially for risk-averse individuals. Conversely, households seem less sensitive to market risk: residential solar investors accept volatile revenues, as long as a price floor for excess electricity sold to the grid is guaranteed. Our study suggests that keeping perceived policy uncertainty low is more important for residential solar investors than fully hedging against electricity market risk.
Keywords: Residential solar investors; Risk preferences; Policy risk; Market risk; Discrete choice experiment; Information asymmetries (search for similar items in EconPapers)
JEL-codes: D1 D81 O33 Q42 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:180:y:2021:i:c:s0921800919321780
Access Statistics for this article
Ecological Economics is currently edited by C. J. Cleveland
More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().