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Deconstructing Solar Photovoltaic Pricing: The Role of Market Structure, Technology, and Policy

Author

Listed:
  • Kenneth Gillingham
  • Hao Deng
  • Ryan Wiser
  • Naim Darghouth
  • Gregory Nemet
  • Galen Barbose
  • Varun Rai
  • Changgui Dong

Abstract

Solar photovoltaic (PV) system prices in the United States display considerable heterogeneity both across geographic locations and within a given location. Such heterogeneity may arise due to state and federal policies, differences in market structure, and other factors that influence demand and costs. This paper examines the relative importance of such factors on equilibrium solar PV system prices in the United States using a detailed dataset of roughly 100,000 recent residential and small commercial installations. As expected, we find that PV system prices differ based on characteristics of the systems. More interestingly, we find evidence suggesting that search costs and imperfect competition affect solar PV pricing. Installer density substantially lowers prices, while regions with relatively generous financial incentives for solar PV are associated with higher prices.

Suggested Citation

  • Kenneth Gillingham & Hao Deng & Ryan Wiser & Naim Darghouth & Gregory Nemet & Galen Barbose & Varun Rai & Changgui Dong, 2016. "Deconstructing Solar Photovoltaic Pricing: The Role of Market Structure, Technology, and Policy," The Energy Journal, , vol. 37(3), pages 231-250, July.
    • Handle: RePEc:sae:enejou:v:37:y:2016:i:3:p:231-250
    DOI: 10.5547/01956574.37.3.kgil
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    References listed on IDEAS

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    1. Shrimali, Gireesh & Jenner, Steffen, 2013. "The impact of state policy on deployment and cost of solar photovoltaic technology in the U.S.: A sector-specific empirical analysis," Renewable Energy, Elsevier, vol. 60(C), pages 679-690.
    2. Chouinard Hayley H & Perloff Jeffrey M, 2007. "Gasoline Price Differences: Taxes, Pollution Regulations, Mergers, Market Power, and Market Conditions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-28, January.
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