Prepare for a surprise on the effectiveness of renewable energy incentives, specifically the California Solar Incentive.
While many hail the California Solar Incentive (CSI) as an overwhelming success, a new study finds that using the same amount of money in a carefully optimized program to provide systems to low-income households at little or no cost would have done more to stimulate the adoption of rooftop solar systems than the incentive-based approach that the initiative used.
A study conducted by researchers from Vanderbilt University used an advanced method called “data-driven agent-based modeling.” The study was performed by doctoral student Haifeng Zhang and Assistant Professor of Computer Science Yevgeniy Vorobeychik at Vanderbilt University in collaboration with Joshua Letchford and Kiran Lakkaraju at Sandia National Laboratories.
This $2.2 billion program, launched in 2007, has been touted as one of this country’s most aggressive incentive programs targeting the installation of rooftop solar electric panels for homes and businesses. CSI has provided a per-watt rebate for installing residential and commercial photovoltaic systems.
CSI is overseen by the California Public Utilities Commission (CPUC). It provides incentives for solar system installations to customers of the state’s three investor-owned utilities, including Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E). Incentives include upfront money for solar systems installed on existing residential homes, as well as existing and new commercial, industrial, government, non-profit, and agricultural properties within the service territories of the IOUs.
Advocates state the California solar industry has experienced double-digit growth during this period, installing more than 245,000 systems capable of producing 2,365 megawatts of electricity. Here’s the rub to these numbers, however, states the Vanderbilt research team. There is a problem with assessing the success of programs like CSI because you need to compare them with what would have happened in the same world without the incentives.
“The problem with assessing the success of programs like CSI is that you need to compare them with what would have happened in the same world without the incentives,” said Yevgeniy Vorobeychik in a statement. Since such a comparison isn’t impossible, Vorobeychik used data-driven agent-based modeling methodology, a technique that analyzes the data and makes predictions on how it would behave under different circumstances.
Here is how the research was undertaken. The research team used CSI data on rooftop solar installations from May 2007 to April 2013 in San Diego County for their analysis. This included detailed information on 8,500 projects, including system size, reported cost, incentive amount, whether the system was purchased or leased, installation date, location and acreage of the lot and size of the home. A model then determined the effects economic benefit and peer influence would have on an individual’s decision to install a rooftop solar system.
Here comes the surprise from the research. In testing the effectiveness of financial subsidies on the market, the researchers looked at a range of incentives from zero to eight times the actual the level and were “surprised to find very little difference in adoption rates between no subsidy and the actual subsidy.”
“Despite the fact that policy makers have paid overwhelming attention to increasing the economic benefits by reducing costs to get people to adopt solar technology, our analysis indicates that this has much less effect than generally perceived,” said Vorobeychik. “That is what the data is telling us.”
The researchers point to the increased use of solar leasing as one possible factor for this discrepancy, an attractive alternative to traditional out-of-pocket investment. In recent years, however, installers began offering attractive leasing packages that have become increasingly popular. When systems are leased it is the installers who receive the rebates and, according to the data, they have not been passing the incentive along to the homeowners.
For those interested in calculating incentives, go to the EPBB Calculator homepage. The calculator provides an estimated CSI system size and incentive amount of a solar electric system.
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