The Effect of Electricity Prices on Residential Solar PV Adoption

Fukushima as a Natural Experiment

Takahiko Kiso, H. Ron Chan

Research output: Working paperDiscussion paper

10 Downloads (Pure)

Abstract

There are a range of private financial benefits of residential solar photovoltaic (PV) installation, such as a reduced electricity bill, tax incentives and a feed-in tariff for generated electricity. To empirically analyze how rising electricity prices affect household adoption decisions, we use the 2011 Fukushima nuclear disaster as a natural experiment. The shutdown of nuclear power plants across Japan led to a sizable increase in electricity prices that varied by region, allowing us to identify the effect of electricity prices on household PV system adoption. We find that higher electricity prices are significantly more influential on PV adoption on existing homes than on newly-built homes. Our estimated electricity price elasticity of PV systems ranges from 0.9 to 1.2 for existing homes and is much smaller and statistically insignificant for newly-built homes. We discuss behavioral mechanisms explaining this difference and implications for policies stimulating residential adoption of renewables.
Original languageEnglish
PublisherUniversity of Aberdeen Business School
Number of pages28
Publication statusPublished - 2018

Publication series

NameDiscussion Papers in Economics and Finance
PublisherUniversity of Aberdeen Business School
No.10
Volume18
ISSN (Electronic)0143-4543

Fingerprint

Natural experiment
Electricity price
Household
Electricity
Nuclear power plant
Japan
Disaster
Price elasticity
Tariffs
Tax incentives

Keywords

  • Solar PV adoption
  • Electricity prices
  • Fukushima
  • Natural experiment

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Kiso, T., & Chan, H. R. (2018). The Effect of Electricity Prices on Residential Solar PV Adoption: Fukushima as a Natural Experiment. (Discussion Papers in Economics and Finance; Vol. 18, No. 10). University of Aberdeen Business School.

The Effect of Electricity Prices on Residential Solar PV Adoption : Fukushima as a Natural Experiment. / Kiso, Takahiko; Chan, H. Ron.

University of Aberdeen Business School, 2018. (Discussion Papers in Economics and Finance; Vol. 18, No. 10).

Research output: Working paperDiscussion paper

Kiso, T & Chan, HR 2018 'The Effect of Electricity Prices on Residential Solar PV Adoption: Fukushima as a Natural Experiment' Discussion Papers in Economics and Finance, no. 10, vol. 18, University of Aberdeen Business School.
Kiso T, Chan HR. The Effect of Electricity Prices on Residential Solar PV Adoption: Fukushima as a Natural Experiment. University of Aberdeen Business School. 2018. (Discussion Papers in Economics and Finance; 10).
Kiso, Takahiko ; Chan, H. Ron. / The Effect of Electricity Prices on Residential Solar PV Adoption : Fukushima as a Natural Experiment. University of Aberdeen Business School, 2018. (Discussion Papers in Economics and Finance; 10).
@techreport{63cd1f0ff8de4f6c8e7b5736828d83ae,
title = "The Effect of Electricity Prices on Residential Solar PV Adoption: Fukushima as a Natural Experiment",
abstract = "There are a range of private financial benefits of residential solar photovoltaic (PV) installation, such as a reduced electricity bill, tax incentives and a feed-in tariff for generated electricity. To empirically analyze how rising electricity prices affect household adoption decisions, we use the 2011 Fukushima nuclear disaster as a natural experiment. The shutdown of nuclear power plants across Japan led to a sizable increase in electricity prices that varied by region, allowing us to identify the effect of electricity prices on household PV system adoption. We find that higher electricity prices are significantly more influential on PV adoption on existing homes than on newly-built homes. Our estimated electricity price elasticity of PV systems ranges from 0.9 to 1.2 for existing homes and is much smaller and statistically insignificant for newly-built homes. We discuss behavioral mechanisms explaining this difference and implications for policies stimulating residential adoption of renewables.",
keywords = "Solar PV adoption, Electricity prices, Fukushima, Natural experiment",
author = "Takahiko Kiso and Chan, {H. Ron}",
year = "2018",
language = "English",
series = "Discussion Papers in Economics and Finance",
publisher = "University of Aberdeen Business School",
number = "10",
type = "WorkingPaper",
institution = "University of Aberdeen Business School",

}

TY - UNPB

T1 - The Effect of Electricity Prices on Residential Solar PV Adoption

T2 - Fukushima as a Natural Experiment

AU - Kiso, Takahiko

AU - Chan, H. Ron

PY - 2018

Y1 - 2018

N2 - There are a range of private financial benefits of residential solar photovoltaic (PV) installation, such as a reduced electricity bill, tax incentives and a feed-in tariff for generated electricity. To empirically analyze how rising electricity prices affect household adoption decisions, we use the 2011 Fukushima nuclear disaster as a natural experiment. The shutdown of nuclear power plants across Japan led to a sizable increase in electricity prices that varied by region, allowing us to identify the effect of electricity prices on household PV system adoption. We find that higher electricity prices are significantly more influential on PV adoption on existing homes than on newly-built homes. Our estimated electricity price elasticity of PV systems ranges from 0.9 to 1.2 for existing homes and is much smaller and statistically insignificant for newly-built homes. We discuss behavioral mechanisms explaining this difference and implications for policies stimulating residential adoption of renewables.

AB - There are a range of private financial benefits of residential solar photovoltaic (PV) installation, such as a reduced electricity bill, tax incentives and a feed-in tariff for generated electricity. To empirically analyze how rising electricity prices affect household adoption decisions, we use the 2011 Fukushima nuclear disaster as a natural experiment. The shutdown of nuclear power plants across Japan led to a sizable increase in electricity prices that varied by region, allowing us to identify the effect of electricity prices on household PV system adoption. We find that higher electricity prices are significantly more influential on PV adoption on existing homes than on newly-built homes. Our estimated electricity price elasticity of PV systems ranges from 0.9 to 1.2 for existing homes and is much smaller and statistically insignificant for newly-built homes. We discuss behavioral mechanisms explaining this difference and implications for policies stimulating residential adoption of renewables.

KW - Solar PV adoption

KW - Electricity prices

KW - Fukushima

KW - Natural experiment

M3 - Discussion paper

T3 - Discussion Papers in Economics and Finance

BT - The Effect of Electricity Prices on Residential Solar PV Adoption

PB - University of Aberdeen Business School

ER -