Household demand for community- and rooftop-solar electricity: conceptual and numerical assessments

Arthur Caplan

Journal of Environmental Economics and Policy, 2025, vol. 14, issue 1, 105-124

Abstract: This paper characterizes the trade-offs faced by households in deciding how much solar power to produce privately on their rooftops or to subscribe to in a community solar project (or, ‘green electricity plan’), and how these trade-offs are influenced by a regulator's pricing scheme. We characterize a model where representative households choose their rooftop and community-solar consumption levels and respond to the regulator's scheme. Within the model's conceptual and numerical frameworks, we derive a suite of household comparative static effects and explore four key implications pertinent to the growth of rooftop and community solar within a given community: (1) the extent to which the regulator must adjust its pricing scheme to achieve a community-wide solar electricity standard, (2) the potential of a ‘death spiral’ experienced by the regulator, (3) the effect of a ‘solar tax’ levied by the regulator on the production of solar electricity by rooftop-solar households, and (4) adoption of ‘behind-the-meter’ battery storage by rooftop-solar households. We obtain both analytical and numerical results for each of these implications, enabling us to better understand the underlying conditions governing a representative household's responses to incentives provided by a regulator, and the social implications of these responses.

Date: 2025
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DOI: 10.1080/21606544.2024.2410702

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