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Third-Party Ownership Business Models and the Operational Performance of Solar Energy Systems

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  • Jose A. Guajardo

    (Haas School of Business, University of California, Berkeley, Berkeley, California 94720)

Abstract

The nonresidential solar energy market has grown rapidly in the United States. Companies considering the adoption of solar energy have an important choice: whether to purchase the system (direct ownership, or DO) or opt for an agreement with a service provider that offers third-party ownership (TPO). Although this decision is financially very important, empirical research comparing the two models from an operational perspective has been scarce. These issues are particularly relevant considering that federal and state incentives are commonly used to stimulate adoption. This paper presents an empirical analysis of the role of TPO in the operational performance of nonresidential solar energy installations in California. Using a panel data estimation framework, and accounting for factors that influence TPO adoption, the analysis shows that TPO systems performed, on average, approximately 4% better than DO systems) in terms of their production yield. This performance improvement is consistent with better system design under TPO, but not with better solar panel technology selection by TPO providers.

Suggested Citation

  • Jose A. Guajardo, 2018. "Third-Party Ownership Business Models and the Operational Performance of Solar Energy Systems," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 788-800, October.
    • Handle: RePEc:inm:ormsom:v:20:y:2018:i:4:p:788-800
    DOI: 10.1287/msom.2017.0687
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    References listed on IDEAS

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    Cited by:

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    5. Vibhanshu Abhishek & Jose A. Guajardo & Zhe Zhang, 2021. "Business Models in the Sharing Economy: Manufacturing Durable Goods in the Presence of Peer-to-Peer Rental Markets," Information Systems Research, INFORMS, vol. 32(4), pages 1450-1469, December.
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    7. Erica L. Plambeck & Kamalini Ramdas, 2020. "Alleviating Poverty by Empowering Women Through Business Model Innovation: Manufacturing & Service Operations Management Insights and Opportunities," Manufacturing & Service Operations Management, INFORMS, vol. 22(1), pages 123-134, January.
    8. Guo, Qiaozhen & He, Qiao-Chu & Chen, Ying-Ju & Huang, Wei, 2021. "Poverty mitigation via solar panel adoption: Smart contracts and targeted subsidy design," Omega, Elsevier, vol. 102(C).
    9. Hyun Seok (Huck) Lee & Saravanan Kesavan & Camelia Kuhnen, 2022. "When do group incentives for retail store managers work?," Production and Operations Management, Production and Operations Management Society, vol. 31(8), pages 3077-3095, August.

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