Willingness to pay for solar adoption: Economic, ideological, motivational, and demographic factors

Abstract

Residential solar energy installations are a critical component of the energy transition. Nonetheless, just a small fraction of all eligible households have installed solar panels. We investigate household willingness to pay (WTP) for a residential rooftop solar system using a stated preference approach and including socio-demographic, ideological, economic, and psychological factors.We implemented an online survey of 580 households in New York State who had not previously adopted a residential solar system. Respondents were presented with hypothetical PV systems with varying upfront costs and monthly savings that allow us to understand discount rates and payoff preferences. This allowed us to explore not only WTP and how it varies across the factors described above, but also how those factors affect discount rates and attitudes towards uncertain future payoffs from the systems. We limit our analysis to New York to control for variation in solar adoption policies from state to state, but these results are broadly generalizable to other US States and, with caveats, to advanced industrialized democracies.We find an average WTP of $7388.5 for installing a residential rooftop solar system. Respondents' WTP is $11.66 in upfront costs for each additional $1 of average monthly savings. We also find substantial heterogeneity in WTP and in trade-offs between upfront costs versus savings. Age, children in households, income, education, motivation, and ideology are all independent factors associated with WTP. We discuss a range of implications for policy and marketing to further increase rates of adoption in the future.