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Incentive pass-through for residential solar systems in California

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  • Dong, Changgui
  • Wiser, Ryan
  • Rai, Varun

Abstract

This paper estimates the incentive pass-through rate for the two largest solar photovoltaic rebate programs in the U.S.: California Solar Initiative and its predecessor Emerging Renewables Program. We apply both a structural-modeling approach based on the conduct parameter and a reduced-form regression analysis using different fixed effects. Identification comes from rebate level stepwise changes within each of the three major electric utilities in California and different rebate levels across the utilities. The results from both approaches suggest an average pass-through rate of direct incentives of nearly 100%, though with minor regional differences among California counties. These results suggest a relatively competitive market and a smoothly operating subsidy program, at least from an incentive pass-through perspective.

Suggested Citation

  • Dong, Changgui & Wiser, Ryan & Rai, Varun, 2018. "Incentive pass-through for residential solar systems in California," Energy Economics, Elsevier, vol. 72(C), pages 154-165.
    • Handle: RePEc:eee:eneeco:v:72:y:2018:i:c:p:154-165
    DOI: 10.1016/j.eneco.2018.04.014
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    Cited by:

    1. Li, Yumin, 2018. "Incentive pass-through in the California Solar Initiative – An analysis based on third-party contracts," Energy Policy, Elsevier, vol. 121(C), pages 534-541.
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    3. O'Shaughnessy, Eric, 2019. "Non-monotonic effects of market concentration on prices for residential solar photovoltaics in the United States," Energy Economics, Elsevier, vol. 78(C), pages 182-191.
    4. Li, Yanan & Lin, Jun & Qian, Yanjun & Li, Dehong, 2023. "Feed-in tariff policy for biomass power generation: Incorporating the feedstock acquisition process," European Journal of Operational Research, Elsevier, vol. 304(3), pages 1113-1132.
    5. Evert Reins, 2021. "Seductive subsidies? An analysis of second-degree moral hazard in the context of photovoltaic solar systems," IRENE Working Papers 21-03, IRENE Institute of Economic Research.
    6. O'Shaughnessy, Eric & Nemet, Gregory F. & Pless, Jacquelyn & Margolis, Robert, 2019. "Addressing the soft cost challenge in U.S. small-scale solar PV system pricing," Energy Policy, Elsevier, vol. 134(C).
    7. O'Shaughnessy, Eric, 2022. "How policy has shaped the emerging solar photovoltaic installation industry," Energy Policy, Elsevier, vol. 163(C).
    8. Kulmer, Veronika & Seebauer, Sebastian & Hinterreither, Helene & Kortschak, Dominik & Theurl, Michaela C. & Haas, Willi, 2022. "Transforming the s-shape: Identifying and explaining turning points in market diffusion curves of low-carbon technologies in Austria," Research Policy, Elsevier, vol. 51(1).

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    More about this item

    Keywords

    Incentive pass-through; Solar photovoltaic; California solar initiative;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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