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Solar Panel Adoption in SMEs in Emerging Countries

Author

Listed:
  • Pedro I. Hancevic

    (CIDE/Universidad Panamericana)

  • Hector H. Sandoval

    (Bureau of Economic and Business Research)

Abstract

We analyze the determinants of adoption of distributed solar photovoltaic systems, focusing on small and medium-sized commercial and service firms. We make use of monthly billing data that is perfectly matched with data from the ENCENRE-2019 –a novel survey that gathers data on electricity consumption, stock of electric equipment, and a rich set of firm characteristics in the Metropolitan Area of Aguascalientes, Mexico. Using an econometric model, we find evidence that a set of explanatory variables such as business characteristics, the economic sector, ownership status, stock and usage of equipment and appliances, presence of other solartechnologies, and views about the use of renewable energy are important determinants of the probability of adoption of solar panel systems. Furthermore, using machine learning methods to identify the best predictors of solar adoption, we indirectly validate the theory-driven empirical model by assessing a large set of explanatory variables and selecting a subset of these variables. In addition, we investigate relevant cases where a priory solar panel adoption seems to be costeffective but structural adoption barriers and adoption gaps might coexist for certain groups of electricity users. We also calculate the social cost savings and the avoided CO2 emissions. Finally, based on our results, we provide several policy implications and recommendations.

Suggested Citation

  • Pedro I. Hancevic & Hector H. Sandoval, 2023. "Solar Panel Adoption in SMEs in Emerging Countries," Working Papers 222, Red Nacional de Investigadores en Economía (RedNIE).
    • Handle: RePEc:aoz:wpaper:222
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    File URL: https://rednie.eco.unc.edu.ar/files/DT/222.pdf
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    References listed on IDEAS

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    Cited by:

    1. Owusu-Sekyere, Enoch & Cissé, Fatoumata Nankoto & Achandi, Esther Leah, 2024. "Impact of solar energy subscription on the market performance of micro, small & medium enterprises in Nigeria," Energy Policy, Elsevier, vol. 188(C).
    2. Hector H. Sandoval & Pedro I. Hancevic, 2023. "Split Incentives in Emerging Countries," Working Papers 242, Red Nacional de Investigadores en Economía (RedNIE).

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    More about this item

    Keywords

    small and medium-sized enterprises (SMEs); distributed photovoltaic generation; electricity consumption; technology adoption; Mexico;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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