Authors
Cyril Martin de LagardeAbstract
This paper analyses the diffusion of residential solar panels in France, and the impact of financial incentives (feed-in tariffs and local subsidies) on this dynamics. We use a unique database provided by Enedis, the main French DSO, giving the number of connection requests for 33,842 municipalities and 31 quarters, from the end of 2008 to mid-2016. Using solar irradiance, panel system costs, and national and local subsidies, we compute an internal rate of return per municipality and per quarter, which serves as an indicator for projects’ profitability. Due to the high number of zero-installation data points, we adopt a two-stage ("hurdle") methodology. We first model the probability of having at least one installation, and then the (strictly positive) number of installations, the vast majority of which are 3-kW panels. Controlling for individual characteristics of the municipalities, we find that financial incentives have had a positive and significant effect on both the probability and the number of adoptions. Furthermore, we show that the diffusion process exhibits "epidemic" and "stock" effects, which are consistent with the "S"-shaped diffusion curve observed at the national and regional levels. Considering only epidemic effects, we show that an additional past installation in a city has the same effect as a one-point increase of the IRR, that is, an increase of the odds of installing at least one solar panel by roughly 10%. Hence, better informing households could help promote renewables at a lower cost. This could be done for example through more implication of citizens at the local level.
