Household dynamics of technology adoption: A spatial econometric analysis of residential solar photovoltaic (PV) systems in Germany

Abstract

The growing share of small-scale residential installations in the German PV market has attracted interest in the determinants of household adoption dynamics. While models of technology diffusion are well established in literature, the spatial patterns of household adoption remain understudied. The present paper contributes to this emerging stream of literature by providing a comprehensive analysis of factors governing regional differences in residential PV adoption rates across Germany. The analysis focuses on economic factors, socio-demographic and attitudinal adopter characteristics, and settlement structure. A key characteristic of this paper is its measurement of regional spillover effects between neighboring counties, which might contribute to the geographic clustering of PV systems. The empirical analysis is based on aggregate panel data for 807,969 residential photovoltaic systems across 402 German counties for the time period 2000–2013. The analysis is performed by estimating a diffusion equation using a spatial autoregressive and a spatial error panel model. Results indicate that differences in economic incentives influence the spatial and temporal patterns of PV adoption. Further, socioeconomic status is found to have an impact on PV adoption, but the effect of environmental attitude and settlement structure is ambiguous. Significant spatial spillover effects are found between neighboring counties. These findings imply that there is potential for new policies and business models to increase the geographic and social diversification of PV adoption patterns.