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Using Income Contingent Loans for the Financing of the Next Million Australian Solar Rooftops

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  • Kenneth Baldwin
  • Bruce Chapman
  • Umbu Raya

Abstract

Rooftop solar systems have two major benefits: a reduction of carbon emissions (a public good) and future energy bill savings for consumers. However, the availability of solar energy systems to low-income households is constrained by access to finance for the initial investment cost, an issue which could potentially be addressed with the use of income contingent loans (ICLs). By applying unconditional quantile econometric methods to HILDA income data we illustrate that for a $10,000 loan for home owners ICLs can be used with little or no cost to government to help finance the next one million solar energy devices.

Suggested Citation

  • Kenneth Baldwin & Bruce Chapman & Umbu Raya, 2015. "Using Income Contingent Loans for the Financing of the Next Million Australian Solar Rooftops," ANU Working Papers in Economics and Econometrics 2015-627, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2015-627
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    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp627.pdf
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    References listed on IDEAS

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    1. Joseph E. Stiglitz, 2014. "Remarks on Income Contingent Loans: How Effective can they be at Mitigating Risk?," International Economic Association Series, in: Bruce Chapman & Timothy Higgins & Joseph E. Stiglitz (ed.), Income Contingent Loans, chapter 2, pages 31-38, Palgrave Macmillan.
    2. Bruce Chapman & Tim Higgins, 2009. "Income Contingent Loans for Mature Aged Training," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 12(2), pages 167-179.
    3. Severance, Craig A., 2011. "A Practical, Affordable (and Least Business Risk) Plan to Achieve "80% Clean Electricity" by 2035," The Electricity Journal, Elsevier, vol. 24(6), pages 8-26, July.
    4. Bruce Chapman & Linda Courtenay Botterill, 2009. "A Revenue Contingent Loan Instrument for Agricultural Credit with Particular Reference to Drought Relief," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 12(2), pages 181-196.
    5. Bruce Chapman & Timothy Higgins & Joseph E. Stiglitz (ed.), 2014. "Income Contingent Loans," International Economic Association Series, Palgrave Macmillan, number 978-1-137-41320-8.
    6. Paul Simshauser & Tim Nelson, 2014. "The Consequences of Retail Electricity Price Rises: Rethinking Customer Hardship," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 47(1), pages 13-43, March.
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    More about this item

    Keywords

    income contingent loans; solar energy;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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