Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/305620 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11378
Publisher: 
CESifo GmbH, Munich
Abstract: 
We study the optimal design of income-contingent subsidies for residential solar panels. Using remotely sensed data on solar panel installations across the contiguous US and a border-discontinuity design, we estimate that the responsiveness of installation rates to subsidies is strongly decreasing in income. Using these empirical elasticities, we estimate a model that embeds a solar panel installation decision into a dynamic consumption/savings framework with borrow-ing constraints. Counterfactual simulations reveal that switching to production-maximizing income-contingent subsidies leads to a three-fold increase in public funds received by low-income households and a 2.4% increase in national solar production. Means-tested subsidies are justified on both equity and efficiency grounds.
Subjects: 
rooftop solar
subsidies
renewable energy
JEL: 
H21
H23
Q42
Q48
Document Type: 
Working Paper
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