Public perception and adoption of Solar Water Heating systems in Chile: The role of supply side income tax credits

Abstract

During the last decade, the Chilean government introduced a corporate income tax credit for construction companies installing Solar Water Heating (SWH) systems in new housing developments. The credit aims to provide hot-water solutions to the residential sector with a cheaper and more environmentally-friendly than fossil fuels. The tax benefits were initially granted from 2010 to 2013, during which time a total of 40,705 SWHs were installed. The credits were renewed for the 2016–2020 period, and SWH installations surpassed 100,000. The main objective of this paper is to evaluate the public perception regarding the use of SWH systems and the specific role of the tax credit program in the diffusion of SWHs during the initial period. Moreover, the analysis discusses the incentive mechanism applied in Chile and highlights several of the challenges regarding its implementation. Data was gathered using a face-to-face survey of households in three regions of Chile: Metropolitan Santiago, Valparaíso and Coquimbo, where most of the SWH were installed. The results showed that an average of 76% of the beneficiaries were highly satisfied with the SWH installations and operation, nearly 99% of respondents believed that this type of energy should be expanded to more households in Chile, and most agreed that the Government should play a significant role in such expansion.