What drives households’ choices of residential solar photovoltaic capacity?

Abstract

Enhancing residential solar photovoltaic adoption greatly contributes to the energy sector's decarbonization. However, even though expanding the capacity will increase the amount of solar-derived energy, little is known about what drives households' capacity choice. To bridge this knowledge gap, the current study utilizes revealed data provided by a Japanese solar photovoltaic installer on households' capacity choices and conducts a survey of households that have installed solar photovoltaic systems through diverse installers. The descriptive evidence shows that the Japanese feed-in tariff implemented in 2012 drastically expanded capacity per installation. The revealed data also record house attributes, meteorological information, and municipality demographic variables, on which we regress the solar photovoltaic capacity. We found that capacity is determined by the marginal cost and marginal benefit of installing an additional capacity. The survey results suggest that installers play a critical role in determining capacity through recommendations, once they gain households' trust. Thus, policy interventions that incentivize installers to expand capacity can enhance the generation of solar-derived energy.