Peer effects on photovoltaics (PV) adoption and air quality spillovers in Poland

Abstract

Peer effects played an important role in the diffusion of Poland's residential rooftop photovoltaic (PV) systems. I apply a panel econometric analysis to estimate the impact of peer effects. I lag the difference in time between a submitted PV installation request and installation completion, and control for endogenous group formation and correlated unobserved variables with a set of fixed effects. Additionally, I use a cohort model to analyse the variability in exposure to treatment, i.e. an installed base in a particular area, to observe the relationship between PV diffusion and air quality. First, peer effects were important for the diffusion of PV systems in Poland, as adding one installation in the previous month increases the probability of a new PV adoption in the same area by an average of 0.06 pp. Second, the supply of certified PV installers was not a constraint to the market development as their number increased with the expansion of PV systems. Finally, I demonstrate that areas with PV installations saw an average decrease of PM10 emissions by 0.01–0.09 μg per month. The study has relevant policy implications as peer effects (1) allow for the creation of local networks of stakeholders that would enhance the diffusion of clean energy sources and (2) create clusters of installations in well-developed regions, showing the need to intensify support efforts in underdeveloped areas.