Passive and active peer effects in the spatial diffusion of residential solar panels: A case study of the Las Vegas Valley

Abstract

This research analyzes the role of peer influences on the adoption of residential rooftop solar photovoltaic panels (PV) within the context of the Diffusion of Innovation Theory. PV literature indicates that adopters are influenced by word of mouth (WOM) information exchange with peers, i.e., active peer effects, while other studies suggest that living near households with visible rooftop PV installations influences adoption, i.e., passive peer effects. We bridge the gap in this literature by conducting a mixed methods analysis. We develop and administer a survey to Las Vegas Valley (LVV) residents to identify current and potential PV adopters' perceptions of peer-effects and consumer intention variables. We conduct a spatial analysis of Google's Project Sunroof data to identify LVV neighborhoods in the later stages of the PV diffusion process, i.e., those with the highest PV adoption rates. Key results show that current PV adopters living in early diffusion areas report significantly higher active and passive peer effects compared to adopters in later diffusion areas. Potential adopters in later diffusion areas report higher passive peer effects than those in early diffusion areas. Overall, because LVV has a low PV adoption rate (<3%), short term strategies aimed at increasing PV adoption should emphasize WOM active peer effects. We caution against long-term green marketing strategies focusing solely on peer-effects as the PV market matures.