Capital and policy impacts on Australian small-scale solar installations

Abstract

This paper investigates whether capital constraints are evident for uptake of small-scale solar photovoltaic installations, using cross-sectional regressions with Australian regional data up to March 2019. There is an inverse U-shaped relationship between a number of different measures of capital and small-scale solar installations for both the 0–10 and 10–100 kW capacity categories. The positive relationship between capital and solar installations at the low end of the capital distribution suggests that capital constraints may provide an ongoing challenge for policymakers seeking to encourage the uptake of small-scale solar installations. There is also a negative association between average income and small-scale solar installations. Policymakers seeking to increase small-scale solar installations may achieve efficiency gains by targeting capital constraints rather than income constraints. An effective capital subsidy for addressing capital constraints, the Small-scale Renewable Energy Scheme, has had a substantial impact on solar uptake for systems in both the 0–10 and 10–100 kW capacity categories. In contrast, there is a lack of evidence of a substantial effect of several other policies targeting community organisations.