The rebound effect of solar panel adoption: Evidence from Dutch households

Official URL: https://risc01.sabanciuniv.edu/record=b2748992_(Table of contents)

Households adopt solar panels for different reasons, but always with a reduced electricity bill in mind. However, the access to solar power at near zero marginal costs may well induce rebound effects which shift households’ demand curve and distort the net effects of solar PV investments. By analyzing high frequency data on electricity consumption and production of the households, we estimate the rebound effect of residential solar panel adoption. We document a rebound effect of 7.7 percent, a result that is robust to different sample and model specifications. We also find that households shift their consumption to the time periods when solar electricity production is higher. The solar PV rebound effect shows heterogeneity across time, production level and household characteristics, with higher rebound effects during seasons characterized by higher solar irradiance and among energy illiterate households with higher environmental awareness.