I Spot, I Adopt! Peer Effects and Visibility in Solar Photovoltaic System Adoption of Households

Abstract

We study peer effect variation in rooftop photovoltaic adoption by households. Our investigation employs geocoded data on all potential adopters and on all grid-connected photovoltaic systems set up in Baden-Württemberg, Germany through 2010. We construct an individual measure of peer effects for each potential adopter. For identification, we exploit exogenous variation in two dimensions of photovoltaic system roof appropriateness: measures for their average inclination and orientation. Using different models of adoption with panel data, we only find evidence for causal peer effects for visible systems. We show that visible PV systems cause an increase in the probability of installing which is around 8 times higher in comparison to not visible PV systems.

Keywords: Causal peer effects, installed base, discrete choice, technology adoption and diffusion, solar photovoltaic panels, visibility

JEL Classification: O33, C35, Q55, R10