Photovoltaics and the solar rebound: Evidence for Germany
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Date
2020
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Abstract
Recent research suggests that households would increase their electricity consumption
in the aftermath of installing photovoltaics (PV) panels, a behavioral
change commonly referred to as the solar rebound. Drawing on panel data originating
from the German Residential Energy Consumption Survey (GRECS), we
employ panel estimation methods and the dynamic system estimator developed
by Blundell and Bond (1998) to investigate the solar rebound effect, thereby accounting
for simultaneity and endogeneity issues relating to PV installation and
the electricity price. Our empirical results suggest that PV panel adoption of households
hardly reduces the amount of electricity taken from the grid. As we derive
theoretically, this outcome implies that the rebound reaches a maximum that is
bounded by about 30% for German households. Yet, we are skeptical of whether
there is such a large solar rebound effect given the strong economic incentives to
feed solar electricty into the public grid in the past.
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Keywords
Feed-in tariffs, German Residential Energy Consumption Survey (GRECS), GMM system estimator