State Financial Incentives and Solar Energy Adoption in the United States
Open AccessSolar energy brings multiple environmental and social benefits, and state governments use public money in many ways to promote its adoption. This dissertation explores the effects of state financial incentives for solar energy adoption in the United States. The first chapter provides a review of the existing literature on this topic from various perspectives, including the effectiveness and efficiency of state financial incentives for solar energy, and social equity issues related to these incentives. The second chapter uses county-level data across 16 states to test whether state financial incentives promoted residential solar PV adoption over the 2010-2020 period. I find that income tax credits increased residential PV adoption with statistical and substantive significance, while the effects of cash rebates were smaller and vaguer. I also find evidence suggesting the success of property tax exemptions. The results reflect a major change from the pre-2010 period when cash incentives were found most effective and tax incentives had insignificant effects. The third chapter examines the distributional effects of the California Solar Incentive, an example of income-based financial incentive programs for renewable energy. I find that for single-family PV systems throughout 2011-2016, the incentives were significantly progressive as low-income households enjoyed much higher rebate rates than higher-income customers. However, because of the market power of top suppliers and over-subsidization in the low-income targeted program, customers rather than suppliers received only 35% of rebate benefits overall, and the lowest income only received 25%.
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