The Illusion of Free Electricity: Household Responses to Solar Panel Program in Singapore

Abstract

This paper investigates the impact of solar panel program announcements on household utility consumption. Using anonymized monthly block-by-flat-type electricity and water consumption data from January 2011 to December 2020 in Singapore and a staggered difference-indifferences approach, we find that households in public housing buildings affected by the solar program tender announcements experience a 2.2% increase in monthly electricity consumption and a 2.4% increase in water consumption, respectively. We attribute this to a misconception about the financial benefits of solar energy, after ruling out alternative explanations such as changes in energy prices, wealth effects, and moral licensing. Our findings highlight the importance of effective information dissemination for the successful implementation of solar energy initiatives.

Keywords: solar panel, residential utility consumption, misconception, information provision

JEL Classification: D83, D84, D91, Q41, Q48