Mechanisms for Rebound Effects of Solar Electricity Prosuming in Germany

Abstract

Private households adopting solar photovoltaic panels can reduce their average electricity unit costs either by feeding the self-generated amount of electricity into the grid or by self-consuming it, or a combination of the two. Due to the achievable cost savings on the electricity bill and changes in consumer behavior and attitudes, rebound effects in solar prosuming can occur, leading to higher electricity consumption than otherwise. We estimate the solar rebound effects using a representative sample for Germany. Utilizing a propensity score matching approach, we show that the initial differences in electricity consumption are eliminated when comparing households which are similar in characteristics that help to explain electricity consumption, but differ in the binary adoption of solar panels. By using different regression specifications and sets of covariates, we differentiate also empirically between the distinct mechanisms that explain rebound effects in the context of solar prosuming. We find that the variation in rebound effects are mainly induced by the changes in the incentives to feed-in or self-consume the generated electricity.

Keywords: Rebound Effects, Propensity Score Matching, Residential Energy, Electricity Consumption, Solar Photovoltaics, Germany

JEL Classification: D01, D04, D10, D40, Q42, Q48