Pass-Through of Solar PV Incentives to Consumers: The Early Years of California’s Solar PV Incentives

This study examines the early years of California’s most recent wave of distributed solar PV incentives (2000-2008) to determine the pass-through of incentives to consumers. Examination of this period is important due to the high level of incentives provided and subsequent high cost to ratepayers; policymakers’ expectations that price declines accrue to consumers; and market structure characteristics that might contribute to incomplete pass-through. This analysis shows that incentive pass-through in the California residential solar PV programs was incomplete. The analysis also identifies a lower degree of incentive pass-through for consumers in the highest income zip codes. Whether expectations of incentives’ pass-through align with reality is critically important in the beginning years of emerging clean energy technology programs since this can affect the likelihood of future government investments and public support. Given the often-held policy assumption that consumer prices are declining in response to incentives, it is useful for policymakers to understand the circumstances under which such an assumption may not hold.

Speaker: Carla Peterman, California Public Utilities Commission