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Q-complementarity in household adoption of photovoltaics and electricity-intensive goods: The case of electric vehicles

Jed Cohen, Valeriya Azarova, Andrea Kollmann and Johannes Reichl

Energy Economics, 2019, vol. 83, issue C, 567-577

Abstract: Photovoltaic (PV) units and electric vehicles (EVs) are two household goods that are the focus of much research, and many policy initiatives attempting to promote a more sustainable, low-carbon energy system. Despite both academic and practical interest in household adoption of PV units and EVs, potential linkages in these household decisions have only just begun to be explored. This paper presents q-complementarity between the goods as one possible form of a linkage between PV and EV purchases that is based on economic utility theory. We posit the goods could be q-complements due to a PV-owning household's ability to offset and shift their electricity load from EV charging to increase the self-consumption of ‘home-made’ electricity, thereby increasing the positive feelings of environmental efficacy and monetary returns from the PV unit. We use data from 2541 internet surveys of Austrian residential electricity customers collected in 2018 to explore these hypotheses. Probit models of household EV and PV adoption choice are estimated, including a recursive bivariate probit model of households who plan to purchase an EV in the future, with PV ownership endogenously determined. Controlling for household income, characteristics, environmental attitudes, and neighborhood characteristics, we find that EV and PV adoption are positively correlated, and that current PV unit owners are 21% more likely to plan an EV purchase in the next 5 years compared to non-PV owners. We interpret these results as evidence in support of our hypothesis of q-complementarity between PV units and EVs, and note the potential for added benefits from incentive policies promoting adoption of one good or the other that this linkage suggests.

Keywords: PV adoption; Photovoltaic; Solar adoption; Electric vehicle adoption; q-complements; Household choice; Recursive bivariate probit model (search for similar items in EconPapers)
JEL-codes: Q42 Q40 Q20 D10 D11 D12 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:83:y:2019:i:c:p:567-577

DOI: 10.1016/j.eneco.2019.08.004

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