An evaluation of feed-in tariffs for promoting household solar energy adoption in Southeast Queensland, Australia

Abstract

Solar feed-in tariffs (FiTs) aim to incentivise electricity generation through Photovoltaics (PV) systems and to promote household solar panel adoption. Previous studies assessed the effectiveness of FiT policies using descriptive statistical methods, without considering the temporal and spatial effects of households’ responses to FiT policies. This paper applied a rigorous spatial econometric analysis model for the first time to evaluate the effectiveness of Australia's household solar energy FiT policies, using the data from 177 postcodes of Southeast Queensland during the period from 2007 to 2018. Based on time lag and spatial autocorrelation analyses plus likelihood-ratio and Hausman tests, a fixed effect dynamic spatial lag model was selected for the evaluation. The results confirmed that the installation of household solar panels was highly correlated with the change of FiT policies. Installation of solar panels is an investment behaviour which is not only based on a rational interpretation of policies, but also influenced by the neighbourhood peer effect and market speculation. These factors should be considered to formulate more effective FiT policies.