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Solar PV Adoption in the United States: An Empirical Investigation of State Policy Effectiveness

Solar PV Adoption in the United States: An Empirical Investigation of State Policy Effectiveness February 2015 Ilya Chernyakhovskiy, B.S., University of Massachusetts Amherst M.S., University of Massachusetts Amherst Directed by: Professor Christine L. Crago State policy incentives for solar power have grown significantly in the past several years. This paper examines the effectiveness of policy incentives to increase residential solar PV capacity. County-level solar adoption data and controls for demographic characteristics, solar resources, and pro-environmental preferences are used to estimate a model of residential solar adoption. Empirical findings show that financial incentives, solar-specific mandates, and loan financing programs are important drivers of residential PV capacity growth. Incentives that reduce the up-front cost of adoption and that are subject to low uncertainty are found to have the largest impact. Results also point to a significant positive relationship between hybrid vehicle sales and residential PV capacity growth, indicating the importance of pro-environmental preference as a predictor of solar PV demand.